There is no disputing the fact that the media world is in a state of chaos. While (once) new media struggle to establish profitable business models, legacy media is rapidly falling out of vogue, struggling just to keep up. Advertisers and their agencies have an insatiable desire for all things digital and, as legacy media falls farther and farther behind, they move into new channels without the security or certainty of proven business models.
How did legacy media get into this mess and what is the way out?
There is an old expression, "If it ain't broke don't fix it." Our problem is that the media business has been broken for 50 years. It made gobs of money so nobody dared or cared about fixing it.
We are the victims of having blindly employed an irrelevant currency for trading in advertising exposures: CPM, the COST PER MAYBE.
We embrace a currency based on systems that count the wrong thing: the mere opportunity for ad exposure. OTS or "Opportunity to See," is a system built on the concept of opportunity. Some synonyms for opportunity are: a fighting chance; possibly; good luck; prayer. We have a system built on a rather weak foundation of maybes.
We busily measure, tirelessly argue and vigorously negotiate the opportunity for ad exposure, while we have been tasked to buy and sell something quite different: actual connections with prospective buyers - the count of prospects likely to see the ad.
We quite naively refer to a count of the audience of a program, a magazine, a newspaper or tuning of a set top box as advertising exposure. We do this in our decks, in the trades, in our reach/frequency theory, in our meetings, in bars and right here at Mediabizbloggers.com. We take hugely and variably exaggerated (and just plain B.S.) numbers and run them through reach/frequency models, proprietary optimizers and develop pseudo-complex theories; This is the stuff of Mad Men!
We have quite conveniently forgotten about the primitive nature of our OTS (Opportunityto See) measurement systems. We've built a huge business around the rather benign opportunity for an advertising exposure, and have criminally removed the word "opportunity" from our media vocabulary.
Imagine if every deck, conversation, reach/frequency theory, statement or blog which discusses advertising exposure inserted the word opportunity in the appropriate places. We could also use synonyms like "maybe," "conceivably" or "prayer." Could we confidently say things like, "A Cost per maybe a thousand?" Could we write, "We may conceivably reach 80% of the target audience?" How about employing my favourite synonym for opportunity and saying, "We have a fighting chance of an average frequency of exposure of 3 during the purchase cycle?"
Our industry is off course, disconnected, and in a whole whack of trouble. It is no wonder that advertisers, their CFO's and procurement folks have little respect for us. They have figured out that we are prone to exaggeration!
We have been lying to ourselves and to advertisers for years. It bears a sad resemblance to the story of the emperor's new clothes, brought to life in a $150 billion advertising marketplace. It is, in a word, shameful!
Along comes the Web, then search and CPC (cost per click). Advertisers are attracted to the certainty of a click, the tangibility of their metrics, and they abandon legacy maybe media in droves. Agencies have taken some time to get it, but have eventually figured out that digital practice is good for their margins and even better for their valuations. What is legacy media to do?
Like the downtown real estate developers of the '60s, legacy media companies have started developing in the suburbs, and through acquisition and ventures like Hulu, they are trying to keep pace. But if they let downtown fall into disarray, the successful new suburban real estate developers (read Google), will buy up downtown for ten cents on the dollar and rejuvenate it.
Legacy media must rejuvenate itself; it badly needs a reboot.
Any legacy media salesperson, and every legacy media buyer, inherently believes in what they do. We know that the fruit of our labour bears ROI. We've experienced ROI first hand, research supports it. We however will never have a solid metric for understanding or explaining the role of media in ROI as long as we continue to hide behind the medieval fakery of OTS.
We can choose to continue to count the wrong thing, remaining in the dark ages, or we can wake up and join the media renaissance.
We must quickly abandon cost per thousand (CPM) like the bubonic plague that it is, and move to a more relevant metric, Cost per Customer Contact (CPCC). We must run from "maybe, perhaps we have a fighting chance to expose a thousand," and embrace a relevant currency based on certainty - the cost to contact one prospective customer.
If we are brave enough to reduce the "maybe thousand" down to the 500 who are likely to see the ad, and then take a pragmatic look at the 100 of those who have intent to buy the product, we'll easily find that a $10 CPM does not become a foreboding $100 CPM but rather an attractive $0.10 Cost per Customer Contact (CPCC).
Suddenly, a legacy media exposure looks comparable and cost competitive to a click! Do the math.
Mark Sherman is the founder and CEO of Media Experts, Canada’s largest independent media buying firm and can be reached at marks@mediaexperts.com