Value Exchange Changing, Execs Say They Don't Know What The New 'Exchange Rate' Is

BOSTON -- The advertising, media and marketing technology community demonstrated just how strong it truly is here Wednesday during an OMMA Boston conference that covered both very current issues like ad blocking and the shift from ad tech to marketing tech, as well as long-term ones like a consumer-controlled, permission-based ad model and even AI.

“Consumers have the control in this equation. Although they don’t’ have control of it,” is how Josh Engroff, Chief Digital Media Officer of MDC Partners’ The Media Kitchen, characterized the current paradox of the digital advertising marketplace during the last panel of the day, which focused on how a “data-driven” consumer marketing scenario might evolve by 2021.

Engroff said consumers have grown accustomed to “being quantified,” and see it as a benefit so long as it creates explicit value or service for them, but that all too often the ad industry applies it in ways that treat consumers as a “quantified object.”



“That means you are being quantified by someone else,” he said, adding, “that doesn’t work at all.” And for all the lip service Madison Avenue pays to the “user experience,” Engroff said the reality of the current digital media and advertising environment is that “we made the user experience shittier.”

The seemingly obsessive focus on improving consumer experiences with digital media and advertising reflects the fact that consumers are either ignoring it (ie. “banner blindness”) or avoiding it altogether (ad blockers, etc.), which is forcing the industry to rethink the core tenants of the so-called “value exchange” advertising has historically provided.

“We’re still in the early days of the [new] value exchange,” acknowledged Robert Tas, CMO of Pegasystems Inc., adding that after 20-plus years of conditioning consumers that they can find and access “most content easily” and can get most of it for free, the original exchange in which advertising subsidized or underwrote the cost of media content simply no longer works.

That was a point made eminently clear during the “Sustainable Media Future” panel moderated by former New York Times Co. digital chief Martin Nisenholtz, now a professor at Boston University, which revealed that the sustainability of high quality newspaper journalism may depend on a much more explicit value exchange: money.

Asked by Nisenholtz why so few people actually pay for newspapers these days, The Boston Globe CEO Mike Sheehan indicated that is beginning to change. He said the Globe how has 70,000 digital subscribers paying $1 a day and that the paper upped the cost 54% last May and that nobody complained about it.

He said part of the paper’s shift to a paid digital subscription success was due to the fact that it removed much of its exclusive Globe content from its free-to-access website, as well as the fact that there simply is an increasing regard for the value of the newspaper’s content, especially following Hollywood’s treatment of it in the Oscar-winning movie “Spotlight.”

“We have to tighten up our walls and make sure they can only get it by paying,” he said.

While that doesn’t necessarily bode well for the prospects of an ad-supported mass circulation model for newspaper publishing, it revealed how the value exchange between consumers, media and advertisers is entering a new phase.

Nowhere was that clearer than during OMMA Boston’s opening panel, which focused largely on the impact of ad blockers and strategies for dealing with them.

In fact, panelist Alan Pafenbach, creative director, SapientNitro, went so far as to characterize it as “the exchange rate” is in the process of changing. He said that consumers may still understand the implicit model that advertising is “necessary to move the economy along,” that it actually helps consumers discover things they didn’t realize they needed, and that it pays directly or indirectly for much of the media content and access they receive, but that digital technology has effectively changed the value of the exchange rate.

He said that consumers simply don’t have a tolerance for intrusive advertising that doesn’t provide a direct benefit to them, and technology enables them to avoid -- or in the case of ad blockers -- remove it altogether.

Panelist Vegard Johnsen, product manager, Google, who is leading the search and display giant’s ad blocking blocking efforts made a strong case for their appeal to consumers, noting that they are frictionless, fast and easy to use -- by his count, taking just “18.73 seconds” to install on a phone -- and they are being spread by word-of-mouth, with friends recommending them and passing installation links along to friends. Even worse, he said, was that they are a “sticky” experience and once a user installs an ad blocker, they are likely to keep using them unless given a reason to stop.

He said Google is currently in the midst of conducting consumer surveys about their ad blocking experiences and is encouraging the industry-at-large to come together to define standards and best practices for dealing with them. The first step, he said, was to come up with common definitions of what constitutes an “obnoxious” advertising experience that a consumer would use an ad blocker to block. At least then, he said, the industry would have a basis for creating experiences that consumers don’t want to block.

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