March 26, 2009

Advertising And Evolution

Yesterday we started a 2-parter about the death of advertising. We talked about a dumb piece written by a Wharton professor.

Today we're going to talk about a smart piece written by Bob Garfield of Ad Age. Bob doesn't actually come out and say that advertising is dead, but he does say, "the post-advertising age is under way." I'm not sure what that means, but he makes a much better case for a massive shake-out in the media world than for the death of advertising.

Garfield does an excellent job of cataloging all the horrors currently facing the media industry.
  • The media industry is in crisis.
  • The "Marketing-Media Complex", in which advertising revenues were capable of supporting almost unlimited media options, is not long for this world.
  • There will be a period of chaos until a new equilibrium is found between the supply of media and the demand for media.
Unlike the "advertising is dead" maniacs, Garfield wisely states
This isn't about the end of commerce or the end of marketing or news or entertainment. All of the above are finding new expressions online, and in time will flourish thanks to the very digital revolution that is now ravaging them. The future is bright.
Here are a few reasons why advertising will survive:

1. Shit doesn't just happen. Shit evolves : Stephen Jay Gould, a brilliant evolutionary biologist, developed a theory called "punctuated equilibrium." The dumb blogger version of punctuated equilibrium goes like this: Species don't evolve smoothly and gradually over time. They pretty much stay the same for most of their geological lives, but once in a while a big fat mutation occurs. This is what is occurring in the media world right now.

The web and the awful economy are creating a massive, nasty ongoing event for the media industry which will be manifest as a "punctuation" in the equilibrium it has enjoyed for many decades. In other words, the shit is hitting the fan.

As in all environmental crises, those well-adapted to the new realities will survive, and those poorly adapted will die. We will lose newspapers, tv channels, maybe even networks, magazines, radio stations, etc. (we'll also lose ad agencies, but that's another story.) However, the strong will survive. Remember the dot-com bust? A million little economically unfeasible web companies disappeared. Nonetheless, last time I looked, Amazon was still in business.

2. Nothing moves in a straight line: If you would have told people 5 years ago a guy named Barack Obama would be president now, they'd have said you're nuts. Just when you think you understand what's going on, you find out you don't know shit.

3. The mirage of abundance: Garfield says:
"Mass media thrived on the economics of scarcity. The internet represents an economy of unending abundance."
I think what he means here is that mass media had a limited supply of time and space to sell. Consequently demand was always chasing supply, creating ever-increasing prices.

This is where I think Garfield goes wrong. The internet may represent an unending supply of media abundance, but it is, for the most part, an abundance with little or no value. No one in his right mind would cancel his tv schedule and run his advertising on this blog. This blog and zillions of other web entities may represent an "unending abundance" of media space, but it is an essentially valueless abundance.

Most of the advertising inventory on the web has a value of zero. In the short term, gullible marketers will waste money experimenting with these online advertising venues, but in the long run they will stop pissing away their marketing budgets on this "unending abundance" and put it where it will do them some good.

The value of an advertising medium is dependent primarily on two factors:
(a) Its ability to attract people.
(b) Its ability to successfully communicate the advertiser's message to those people.
A media entity that can't do these things has no value, regardless of the abundance or scarcity of space it has to sell.

The internet has so far proven to be very good at (a), and very bad at (b). Advertisers may be stupid, but they're not crazy. Abundance without value is like dirt. It's cheap because it's useless.

4. The other mirage of abundance: In the current environment, it seems as though there is a great abundance of "content" (God, I hate that fucking word) on the web.

However, the web content that is compelling is not the moronic home videos (oops, excuse me, User Generated Content) of YouTube, or the idiotic musings of bloggers (shut up), it is mostly the news, videos, music, and entertainment that the web is stealing from the traditional media. If these traditional media are dying, where is all this abundant free content going to come from? Are CBS, the NYTimes, and SNL going to continue to supply content to the web after they're dead?

If you think the web is going to make up for this potential scarcity of content by creating its own, I think you're wrong. To date, the web has produced almost no entertainment of value. It has mainly sliced and diced the entertainment produced by other media, or by people willing to create free entertainment for the web in the hope there's a payout for them in traditional media, or on websites supported by, duh, advertising.

And if the web does start to produce its own type of quality entertainment, it's going to cost money. Where will that money come from?


5. The laws of economics have not been repealed. What made the old advertising model work so well is supply and demand. There has been a demand for entertainment (I refuse to say content one more time) and a limited supply. So advertisers have made an agreement with consumers--we'll show you Monday Night Football, if you'll watch our beer spots.

Because the internet has been stealing entertainment from other sources and re-purposing it, the supply of entertainment and news has gone up dramatically which has driven down the prices the media can charge. But demand for entertainment has not gone down. Television viewing is at its highest point ever in its history.

Let's assume for a moment that Garfield is right (I believe he is) and lots of tv outlets and cable outlets are going down. That means there will be far fewer tv entities, which means increased scarcity of entertainment, which means a larger audience for those that are successful, which sounds a lot to me like tv in the 50's, which if I'm not mistaken was called the Golden Age of television. This same logic applies to all endangered media. The weak will die. The survivors should have lots to eat, just so long as they can keep the web from stealing their product.

6. The unforeseen: If everything I said so far is wrong, advertising will still survive. New forms that we can't even imagine now will be created to connect marketers to consumers. I promise you there are a thousand brainiacs who want to get rich who are at this very moment working on new ways to annoy the unsuspecting, innocent citizens of the world with ads.

Advertising doesn't really care what media live and what media die. It will use what's available. Car dealers still have to let us know that they have 1.9% APR on all half-tons in stock. Burger meisters still need to tell us they have Tim Geithner action figures with every kid's meal. Beer makers still need to make fart jokes.

I am advertising, and like the lady said, I will survive.

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