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TV News in a Postmodern World:
The Economy of Unbundled Advertising
My two brothers and I grew up in a small, two-bedroom bungalow in Grand Rapids, Michigan. We didn't have much, and back in the 1950s, there wasn't much on television to remind us of that. TV families always seemed to have enough, but abundance wasn't the norm. Lucy and Desi lived in an apartment, as did The Honeymooners. The Cleavers and the Nelsons lived in nice neighborhoods, but they were hardly extravagant. You don't miss much when you don't know what you don't have.
We bought our food at the A&P store and did all of our clothes (and toy) shopping via the Sears Roebuck catalog. We had little need for advertising; the catalog was our window on the retail world. We let our fingers do the walking, and whether it was shoes or a model airplane, mom and dad ordered what we needed. Ours was a typical post-war family, and mass marketing specialists were just beginning to refine the craft of manipulation for profit. How times have changed.
One of the big questions that I'm asked as I talk about unbundled media and the collapse of the mass market is where will people go for consumer information in an unbundled world? Despite the downsides of excesses, conventional thinking goes, surrounding ourselves with messages at least keeps us informed about where to buy what, to say nothing of helping us find new goods and services available. If newspapers shut down and network TV goes out of business, how will our economy be served?
These kinds of questions arise from a belief in the artificial dependence that exists between messenger and consumer in a hierarchical culture. This illusion views consumers as an enemy to be conquered, because even if the consumer doesn't WANT the marketer, he or she NEEDS the marketer. Even the word "consumer" suggests — to borrow from Doc Searls — a passive open mouth that's crapping cash for the merchant and, let's not forget, the marketer.
The language of mass marketing is all about warfare. We "target" this; we "launch" a thrust here; we "attack" and "saturate." It's all so exciting. Ries and Trout called their seminal book, "Positioning: The Battle for Your Mind" — a battle with victory being sales.
But the advertising industry forgot to ask people for permission to play war games in their minds, and now things like DVRs and the internet are enabling people to simply shut the door. Nobody wants to be targeted. Nobody wants to be positioned. Nobody wants to be manipulated. The consumer is now the one with the power, and people with goods and services to sell need to start thinking of them again as customers.
New media economic genius Umair Haque has written extensively about the differences between what works in the mass marketing world (the blockbuster) with what works in the Media 2.0 paradigm (the snowball). In the blockbuster concept, he notes, attention has the highest value and therefore commands the most dollars, because attention is a scarcity that can only be overcome with a significant marketing budget. In the new world, however, where the customer is at the controls, attention isn't the scarcity, because the customer is already providing it — quality snowballs are where the new scarcity exists, and that's why the value shifts from attention to production. This has profound implications for television, because its core competency is the providing of attention.
In the illustration below, for example, the business must pay either employees or an agency (or often both) to determine how best to reach a consumer with a message about its product. Huge dollars are spent buying the attention required to reach a mass audience, wherein the business believes (scientifically, of course) that their customer will be among the many. This is inefficient at both ends of the equation, and the only way the business knows its message is getting through is by sales figures. This process has been governing most buying and selling during the last century.
But now we've entered the world of unbundled media, where people download individual songs instead of buying CDs, watch programs when and where they want (without the commercials), and read news stories or snippets of stories via the World Wide Web instead of going out to the driveway every morning. Movie-going is down; music radio is falling fast; and you can now watch Lost on your Video iPod instead of Wednesday night on ABC. The mass audience is disappearing and with it, and the economy it supports.
If unbundled media is where we're headed, then unbundled advertising must necessarily follow. This is a scary concept, however, for there is no command and control mechanism or manipulable infrastructure in the unbundled world. The upside, though, is that it costs very little to participate. All that's necessary is the release what I call "ad pieces" into the seeming chaos of the internet, where other businesses will take those pieces and reassemble them when summoned by customers who are trading their scarcity for information they actually want.
Ad pieces don't have to be slick, finished ads. Think of them as parts of a conversation with customers.
What appears to the traditional marketer as the swirling vortex of a black hole is actually a highly efficient machine that sorts and filters based on product, service, price point, location, and a whole host of variables determined by the customer and/or his liaisons with all those pieces — aggregators. In the illustration below, the customer has at least three options in acquiring knowledge: search, dumb aggregators (where aggregation is strictly a software solution) and smart aggregators (where human "editing" enters the picture).
An advertiser can influence positioning with search results by paying for it. This is how Google makes its money, but it's essentially mass marketing, because the advertiser's message is placed in front of lots of eyeballs. Similarly, an advertiser could buy positioning in a dumb aggregator. After all, any software can be "instructed" to give precedence to the highest bidder.
But a smart aggregator is a different animal altogether, and it's here where potential customers will increasingly provide their scarcity while the unbundled media world is exploding. With options expanding exponentially, people will turn to each other (as they always have) for advice on purchasing decisions. New businesses — perhaps subscriber-driven — will flourish based on their ability to cull the wheat from the chaff and meet the needs of their customers. Buying influence here may ultimately be acceptable, but the price tag for the smart aggregator will be transparency, and that may negatively impact customer appeal. In all things Media 2.0, we must never forget that the customer is in complete control.
The software generating the ad pieces is a simple content management system (CMS) that publishes an xml file via RSS. Aggregator businesses that make their money by satisfying customers, will gather and sort all ad pieces and publish an aggregated RSS feed to be viewed by customers or other filtering aggregators. A business that wishes to sell its goods or services need only release updated ad pieces into the system. This could be hourly, daily, weekly, monthly, or whatever. The business is able to precisely control its message and get an accurate count of potential customers at the other end, but it can't influence the process by throwing money at it.
Along the way, merchants can be very specific both in terms of time and merchandise they're offering without spending a lot of money. A jeweler, for example, may come across a great deal on bracelets that can be offered at a discount on one weekend. This jeweler would then release ad pieces detailing pricing and including photos or perhaps video, which would then be "found" by smart aggregators on a constant search for jewelry deals for their customers.
This potentially levels the playing field for smaller businesses and offers considerable economic incentive for the production of quality products and services at reasonable prices. You won't be able to buy your way to business success in this paradigm. Leave your blue smoke and mirrors at the door when entering the world of unbundled media.
Let's examine, for another example, the automobile industry in this model. Automotive advertising accounts for the largest chunk of local television's revenue, whether it comes from dealers, regional associations or manufacturers. I once worked for a station that had turned its newscasts into programs with five commercial breaks, so that the five big auto dealers in town could each have exclusivity in an ad pod. This is the extent to which local TV will protect those big ad dollars.
Like everything else, the auto industry is going through big changes. CSM Worldwide, the leading provider of market intelligence and forecasting to the automotive industry, warns in its latest Automotive Production Barometer of a "difficult transition across many facets of the industry" in this country as it evolves from the traditional "Big 3" to the "New 6" that will include Toyota, Honda and Nissan.
Smaller suburban dealers are disappearing, largely because the cost of per-vehicle advertising for them is more than 50 percent above the national average, according to Borrell Associates, a Virginia-based research and consulting firm that tracks local Internet advertising. Many of Borrell's clients are newspapers, who are staring at 24 straight months of declines in auto advertising.
The industry is shifting ad dollars to the internet, in part, because car buyers are doing research online before walking into a dealership. This has implications for all media, because automotive is such an important ad category. Borrell:
By 2009, newspapers will lose 11 percent in total auto ad revenue while online media will more than double theirs. And while total new vehicle ad spending will grow from $36.5 billion this year to $47.6 billion by 2009, only cable, radio and online will see gains in their shares of this market.
Unbundled advertising in this space would have a dramatic impact on all trends, because it runs on creativity and business smarts and not on the muscle created by huge ad dollars. It levels the playing field and would reduce the customer acquisition costs for smaller dealers as well as large. Autotrader.com, Vehix and other search applications may allow buyers to drift through the inventory of dealers in town, but a smart aggregator is much more current and tailored to the needs of the customer today.
The "smart" in the aggregator would be directing customers to the best deals and inventories moment-by-moment from information provided as often as the dealers wished to provide it. A suburban dealer, for example, could offer a special deal of a particular vehicle THAT AFTERNOON and reasonably expect that potential customers would see it. The smart aggregator provides a direct conduit to people in the market for cars in that community, and all that's required of the dealer is attention to releasing ad pieces into cyberspace for use by a hundred forms of new media.
Does the technology for this exist today? Absolutely. Does the system exist? Not yet, but it's simply a matter of time. Meanwhile, the people formerly known as customers continue to redefine all markets through new habits that exploit the power of the internet. According to a holiday shopping study by Nielsen//NetRatings, Goldman, Sachs & Co., and Harris Interactive, "consumers" spent 27 percent of their holiday budgets online at e-commerce sites this year--up from 16 percent in 2002. Was this the result of mass marketing telling people what to do, or did people come to this decision on their own? The answer to that question is one that few in the status quo wish to explore.
In many ways, the Web takes me back to my childhood and the days of the "Wish Book" we used to get in the mail a few times a year. It's much more efficient, of course, and it isn't restricted to Kenmore appliances and Craftsman tools.
Reading it in the bathroom only requires a wireless laptop. My mom and dad would've loved that.
© Terry Heaton
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