AUDIENCE(6)
Jaw dropped. Mind blown. I probably called in sick to school the next day so my eight-year-old self could sit contemplating how many triceratops it took to fill up our Ford Econoline van.
Of course, my dad was pulling my leg. He knew full well that oil, coal, and natural gas didn’t come from dinosaurs but rather from organic plant materials subject to millions of years of pressure under the Earth’s surface.3 Granted, it’s far less cool than the dinosaur theory, but it’s still pretty amazing to think that the majority of our energy comes from ancient resources that companies extract from the ground, refine, and sell to us.
Sort of like advertising.
Yes—you heard me right. Advertising is the fossil fuel of marketing. I say that without any intent to cast aspersions. In fact, there’s a strong argument to be made that advertising has never been more alive than it is today.
Advertising is the fossil fuel of marketing.
Companies today run ads via traditional print, radio, and television outlets as well as all manner of Web, video, mobile, and social-powered networks. With the help of tracking cookies, advertisers can use consumer demographic, Web surfing, and purchase data to better target and retarget those ads to increase their performance in ways that look like something straight out of the science fiction film Minority Report.
Yet no matter how geo-targeted, data-driven, or socially infused today’s ads are, they still rely on a basic economic exchange:
An advertiser pays a fee to receive a limited amount of time in front of an audience whose attention is obtained by a third party.
With fossil fuels, big energy companies drill and mine the earth in order to lay claim to vast repositories of oil, coal, and natural gas. With advertising, media companies mine consumers for their attention that they then sell back to advertisers in pages, impressions, clicks, and 30-second increments. In both situations, a middleman controls access to the natural resource, adding cost and building an addiction of convenience.
The Rising Cost of Super Audiences
There is perhaps no more public barometer of the value of audiences than the Super Bowl. As the game has become a cultural event, audiences have grown and so has the cost to reach them; however, rates are going up due to greater demand rather than bigger audiences.4 AUDIENCE (U.S., millions) 30-SECOND AD COST (USD)
2004: 89.8 $2,200,000
2005: 86.1 $2,400,000
2006: 90.7 $2,500,000
2007: 93.2 $2,600,000
2008: 97.5 $2,700,000
2009: 98.7 $2,700,000
2010: 106.5 $2,500,000
2011: 111 $3,000,000
2012: 111.3 $3,500,000
2013: 108.4 $3,800,000
That’s right. In just one decade, Super Bowl ad costs jumped 72 percent while the television audience grew only 21 percent. Clearly, it pays to have proprietary audiences that lots of brands want to reach.
This is why the fossil fuel analogy works. The Paid Media audience is an energy source collected by others and drawn from a finite natural resource—consumer attention. And just like fossil fuel, Paid Media also has some downsides:
1. It puts companies at the mercy of third parties. You are always “renting” audience attention from someone else. While some quality assurances about audience composition are provided, companies that advertise are always left feeling as if half their budget was wasted; they just don’t know which half.5
2. It leaves marketers subject to the whims of the marketplace. Just as drivers cringe when prices at the pump rise, so too do marketers when the cost to reach an audience increases 50 percent year after year. CPM (cost per thousand impressions), CPC (cost per click), 30-second spot, and other advertising-unit price spikes strain budgets and force marketers to make up for sales or lead shortfalls elsewhere or miss their numbers. And nobody wants that.
3. It “pollutes” the consumer environment. Estimates suggest that the average American consumer is exposed to thousands of advertising messages per day.6 That’s all noise pollution that your message must break through in order to connect with consumers.
If you’re not a high-volume, multichannel advertiser, it’s safe to say that relying solely on the fossil fuel of advertising is a path to certain extinction. Increased competition for fewer and fewer resources has never been a great survival plan. Just ask the dinosaurs.
Renewable Marketing Energy
Renewable energy is a very romantic notion. You install a solar panel, put a wind turbine on the prairie, or tap the geothermal energy under your home, and you’re no longer at the mercy of the energy barons. You can suddenly access all of the clean, abundant energy you need—without ever having to pay a third party ever again.
Only it doesn’t quite work that way. At least not yet.
Solar is viable only in certain sun-soaked areas of the world. Wind turbines are great if it’s windy, but they tend to kill birds and require a backup power supply when the wind stops. And while geothermal is a great system for newer homes, it’s expensive to retrofit. Despite these issues, renewable energy advocates see our future not in fossil fuels but in abundant, natural resources—the sun, wind, tides, and Earth itself. With the help of technology, they hope we can harness these forces to reduce our dependency on fossil fuels.