The Bandwidth Economy: Part Two

If you read Thursday’s post, you know one of two things: Either I’m really naive about the way DMPs price themselves, or I’ve uncovered an important insight about the shift toward a “bandwidth economy” -- one in which we value things based on the amount of bandwidth we utilize of something, not the intrinsic value of it. Today’s post will also address why that’s not necessarily a bad thing, so long as it’s applied to an intrinsically meaningful band. Some of you no doubt know which one I’m alluding to, and the rest of you will have to wait to find out: It’s just a matter of time.

But first, let’s expand on the bandwidth economy concept a little more. I would have done it in yesterday’s post, but I didn’t have enough of that (second hint) bandwidth).

So before I waste any more of yours, let me get to the point. I don’t usually look at things like sudden inflection points, but as progressions. But when that progression comes together in a way we can visualize it, we see it as an epiphany, or at least, an insight, and it suddenly becomes meaningful to us. That’s pretty much the way I’ve covered everything in our business for the past 3+ decades. As a journalist, most of the stories I cover are the “trees.” After looking at enough of them, sometimes we pull back and try and explain the “forest.” This is one of those forest stories.

But first another tree. I should explain that immediately before overhearing the DMP salesman’s pitch on my commute Thursday morning, I was already predisposed to this bandwidth economy angle, because the last thing I did Wednesday was buy my son a new iPhone and sign him up for a Verizon account.

It’s been a while since I activated a new phone plan, and I was struck by how simple the options for this one had become. In the past, I had to consider all sorts of “plans” and wasn’t always clear to me what service they were associated with, but this one was crystal clear -- binary, in fact. There were only two elements to consider: Getting the line ($20 per month, flat); how much bandwidth I wanted to associate with it (in increments of $20 each).

My first reaction was the WTF revelation of how far we’ve come since my original Verizon “unlimited” data plan, some self-abuse about how and why I gave that deal up, and then the recognition that this was absolutely the right economics for allocating this form of bandwidth -- where the service provider’s costs and the end-user’s benefits were directly tied to the allocation of the same resource: capacity.

The problem was when I realized this same capacity model was now being applied to a programmatic media industry model where value should be defined by something other than data usage capacity. Again, the DMP anecdote I provided may be the outlier, but even if it is, it shows how distorted the economics of data are becoming. That the economic value of it isn’t being placed on the quality of the information, insight, ability to perform, (fill-in-the-blank), but the gross amount utilized. I can understand how the DMP got to this place, and I can definitely understand why its customers would lean into that pricing model. Like my Verizon mobile bandwidth example, it’s simple. But in this case, it’s also stupid -- if you ask me.

So what kind of bandwidth economics make most sense for the programmatic media industry -- actually for the entire advertising, marketing and media industry? Well, since I have by now squandered so much of yours already, let me get to that point: It’s time.

The allocation of time is absolutely the right way for the programmatic media marketplace to think about bandwidth economics, because in the end, it’s the only metric that matters. We can argue what kinds of time should be factored in the model I’m proposing, but I would argue they could all be reduced to some pretty simple, and universally agreed upon denominators that we can all agree on. Fundamentally, it’s about how people spend theirs.

Seriously, I don’t mean to oversimplify this, and I know at first blush it’s almost too obvious -- so obvious, in fact, that it may seem counterintuitive, but if you go back to the earliest precepts of media-planning theory, it’s all baked in there somewhere. We may have used proxies like “reach” and “frequency,” or even highly subjective terminology like “engagement,” but fundamentally all we’ve ever been talking about is how people spend their time with media. And secondarily, how they spend their time with brands because of that. We may have invented new terms to make that process seem more complicated than it needs to be -- “attribution” is a beautiful one -- but it all comes down to how much time people spend with brands, and to what extent the time they spend with media contributes to that.

Easier said than done, right? Wrong. I think it’s pretty easy to do. You just have to want to do it. In the past several years, I’ve finally begun people in the industry begin to articulate this notion. For the sake of time, there are two I’d like to give a shout out to right now. One is Joe Marchese, the founder of True [X], a business conceived and developed on the basis of recognizing, targeting and rewarding consumers and brands on the basis of the time they spend together. I don’t think True [X] completely fulfilled that model, but it got close enough that big brands and agencies began using it, and a humongous media company -- Fox -- liked it so much it acquired it.

Marchese used to write about these themes regularly for MediaPost as part of the Spin Board, but he got so busy building and selling companies to Fox, creating his own ventures and venture capital funds, that he packed it in, much to my chagrin and that of other MediaPost readers. You can find some of his most recent thinking on the subject on his posting on Medium, but I’ll single this one out here. I’m also embedding a video below of some recent remarks he gave on the broader themes surrounding it. Normally, I don’t like talking head videos, but I guarantee you, this one is, well, worth your time.

Before I run out of mine, the second shout out goes to Marc Guldimann at Sled Mobile, a pretty cool mobile rich media inventory supplier that has completely flipped its economic model based on the concept of the bandwidth economics of time. You can read Guldimann’s own thoughts on it here, as well as a story I wrote last summer about how he is bringing it to market here. I met with Guldimann recently and he said Sled has just completed the first campaigns utilizing the model and he promised to share those results with us soon.

Stay tuned.

For now, I know we’ve run out of time. But thank you for yours. And I promise you, there is not Part Three.

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