Advertisers Are Media Disruptors

Advertisers are disrupting the media business. Some advertisers no longer assume that media content is the best way to find their target audiences. Some advertisers are relying less on demographics (age and sex) to define their target audiences because they can define them better through behavioral targeting.

Traditionally, advertisers buy time and space in a medium (such as magazines or TV). The medium provides content, essentially a loss leader, designed to attract audiences. Advertisers have assumed that adjacency to content gains them the attention of those audiences. Media audiences had to be identified in measurable ways: by volume (circulation numbers, ratings points, ticket sales), and, less directly, by demographic (age and sex) and interests (sports, say, or fashion), often extrapolated through audience research tools such as surveys, panels, and focus groups. 

Today more advertisers are questioning some of these basic assumptions and disrupting the way the media business works.

First, more advertisers are using “programmatic buying” for digital media: algorithms bid and place advertising in real time, rather than in advance. Programmatic buying allows advertisers to follow particular users around the web to deliver an ad. Instead of determining which media content will deliver the targeted audience, advertisers can target audiences directly. According to Paul Afieri from the data management firm Turn, “We are not buying content as a proxy for audience. We are just buying who the audience is.”

Ben Winkler, of OMD (Omnicom), explains how programmatic buying is changing the media business, “It’s allowing advertisers to assign value to media rather than publishers”; in other words, the software sets the price rather than the site (the “publisher”).  The automation of ad placement not only undermines agency expertise in media planning, it also pushes prices downward as the market value of almost infinite digital availability is no longer subject to the scarcities of media pages or airtime.

Second, advertisers are identifying audiences more and more by behaviors instead of by demographics. (See Philip M. Napoli’s book and blog for an excellent overview of this transition.)

 Traditionally, an advertiser of athletic shoes, say, buys time or space in media designed to deliver the attention of a certain demographic, such as men age 18-34, based on the probability that these men are more likely to buy athletic shoes than other groups. But this “demo” is a stand-in for the actual targeted audience—the customers who actually buy athletic shoes.

Digital media’s behavioral targeting, on the other hand, is capturing data about how users actually behave: where they go and what they buy. If behavioral targeting shows that Democrats in certain neighborhoods buy more athletic shoes than Republicans, why buy access to everyone when only part of the audience will buy? 

Behavioral targeting allows advertisers to reduce wasted media buys. Department store magnate John Wanamaker is supposed to have said, “Half the money I spend on advertising is wasted. The trouble is I don’t know which half.” Perhaps advertisers are in the process of learning just which “half” is wasted.

This may have profound effects on the media industry. First, traditional media’s bottleneck control is ending not just because digital media causes disintermediation of supply chains but also because advertisers are reconsidering the need for any mediation. It may become increasingly difficult for media companies to continue to charge advertisers high prices for access to audiences merely on the basis of adjacent content. Premium content notwithstanding, an advertiser may not need the Wall Street Journal to reach the WSJ reader most likely to buy.

Second, advertisers’ understanding of their audiences is changing. The currencies of demos, ratings, circulation, and the like will lose value. As advertisers shift away from demographics and other proxies, they will increasingly imagine their audiences in new ways.

Critics of these new advertising strategies, such as Jeffrey Chester of Center for Digital Democracy, complain that  digital advertisers are “dehumanizing” audiences by buying their attention in real time—as if advertisers haven’t always commoditized audience attention. Many  are concerned that  programmatic buying and behavioral targeting erode consumer privacy.

Although privacy is a serious concern, the fact that advertisers now understand their audiences as active, opinionated, mobile, and engaged is an important development. We the audience are no longer the passive mass; we are no longer reduced to our age and sex. Our media consumption is no longer the best predictor of our behavior.

So, despite the fears of media industry denizens and consumer advocates, I think that advertisers’ shift to direct engagement with consumers will, in the long run, probably be a positive development for consumers and audiences. Stay tuned.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s