Answering Wanamaker's Question: How To Make All Ad Dollars Work

by , Mar 29, 2013, 7:30 AM
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He opened the first department store in Philadelphia, is credited with inventing the price tag, and he may well have created the idea of the seasonal sale. In 1874, he became the first retailer to place a half-page newspaper ad, and the first full-page ad five years later. John Wanamaker is widely considered to be among the fathers of modern advertising.

While he never had the opportunity to experience commercial radio or television, I’m sure he would have understood and approved of them both.

Wanamaker is also credited as saying:  “Half the money I spend on advertising is wasted; the trouble is, I don't know which half.”    

His words survive as one of the most frequently quoted aphorisms in marketing and advertising,  surviving even as radio and then TV became the dominant ad media. The relevance of Wanamaker's words may be about to change, with the advent of addressable television.

By now, we are all inured to the omnipresence of online advertisements that seem to be targeted directly at our individual interests and prior behaviors. Data analytics make it possible to identify each of us online with increasing and, at times, unnerving accuracy.

The technology already exists for cable and satellite providers to do the same with the households they serve. If they can maintain your DVR inventory, invoice on-demand programming and diagnose your set top box remotely, they know who you are. Digital profiles of you and your household are already out there and getting better every day. The only step missing is to put them together.  Don’t be surprised when it happens.

From the viewers’ point of view, the only noticeable difference will be a greater prevalence of commercials relevant to our personal needs or those of a family member. This might possibly result in more attention being paid by viewers to the spots and less zapping through them. For providers and advertisers, however, this will represent a radical change in how TV time is bought and sold.

Since the advent of commercial television, time buying has remained essentially the same, albeit becoming more refined and analytic over the years. The model has been content-driven; profile you market and then buy time on programs that best serve those demographics.

With addressable television, the model changes dramatically. If you are selling luxury cars, for example, now you will be able to cherry-pick affluent households and advertise on the programs most popular with those households. Ideally, you would even be able to select households intending to purchase or lease a new luxury car in the near future.

For their part, the cable/satellite service providers will be able charge a premium per-household rate for such laser-targeted messaging,and still sell the remaining inventory of time on a particular program to customers with different demographic needs.

We can expect to see this work first at the level of the local cable operator. For example, the local Lexus dealer might buy the upscale demographic, while a discount muffler franchise purchases the balance. The logistics become exponentially more complex when you get to national network buys, but that just means it will take a bit longer to develop the necessary computer models.

Advertisers, on the other hand, will now have the ability to measure, on a house-by-house and demo-by-demo basis, who has been exposed to a message, how often they received it, and whether they made a purchase based on both online and offline data acquisition. The result is definitive data on campaign efficiency, effectiveness,and ROI, unlike anything we’ve yet seen for TV or cable.

For the advertising community, things become a little murky. Media plans will need to become fluid and negotiations will be more complex. It is not inconceivable that buying addressable time may evolve into a real-time bidding system, with in-demand household demos going at premiums and others being sold off at discounted rates.

Campaigns will be increasingly driven by analytics, and multiple creative executions may be developed to address demographic sub-segments. Ultimately, there should be no limit to how tightly a message can be targeted.

And finally, after all these years, we may have the answer to John Wanamaker’s question. 

2 comments on "Answering Wanamaker's Question: How To Make All Ad Dollars Work".

  1. John Grono from GAP Research
    commented on: March 29, 2013 at 9:15 a.m.
    Does anyone know when this famous quote was first attributed to John Wanamaker? I was always told that it was said by Viscount Leverhulme and it appears to have been referenced to him in The London Gazette of December 29, 1911. Any further information available?
  2. David Reich from Reich Communications, Inc.
    commented on: March 29, 2013 at 10:20 a.m.
    Wikipedia (if you can believe it) says Wanamaker's partner talked about half their ad dollars going to waste in a speech to the NY Merchants Assn on March 16, 1898, as quoted in the NY Daily Tribune.

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