Less Than Minimum Wage -- Way Less

Two months ago, Publicis Chief Growth Officer Rishad Tobaccowala rocked the ad industry when he made a couple of seemingly innocuous statements during an interview at an industry conference. 

They included what some have seen as an aggressive projection: The supply of consumer attention to advertising will decline by as much as 30% over the next five years.

On Monday, Research Intelligencer will publish the math Tobaccowala used to derive that projection. Today, we are focusing on the other sensational point he made to explain why consumer time with ad-supported media is eroding so fast.

“We don’t value their time,” Tobaccowala said Feb. 1 at the Coalition for Innovative Media Measurement (CIMM) conference in New York City. He estimated the value the ad industry places on consumer time is “less than minimum wage.”

In the weeks following that statement, Tobaccowala and I went back and forth to work out the back-of-the-envelope analysis you see above, which may be the first time Madison Avenue has ever put an explicit number hourly rate on consumer attention.

The number was derived from dividing gross estimate for U.S. ad spending by the amount of time the average American spends with ad-supported media daily, courtesy of PQ Media’s ongoing tracking of those macros.

On a gross basis, the ad industry values the average American’s time to ad-supported media at $1 per hour. The fact that it’s a nice round number is a coincidence. But it backs up Tobaccowala’s point that the industry has been valuing consumer attention at something considerably less than minimum wage.

We’ll break that estimate down further in Monday’s edition, including a granular analysis of the explicit value of pure advertising time, courtesy of a supplemental analysis provided by PQ Media’s Patrick Quinn and Leo Kivijarv. Keep an eye out for that.

We promise, it will be worth your time.

2 comments about "Less Than Minimum Wage -- Way Less".
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  1. Henry Copeland from Racery, March 30, 2018 at 2:21 p.m.

    Shouldn't the calculation be based on the amount of time people actually spend viewing the ads?

    I'll offer some other examples of how an artificially inflated or deflated denominator can skew our pereption of the value of an economic transaction:

    * Restaurants charge people an outrageous $1 per bite! 
    * Homes are priced at $100,000 per square foot, because we're rarely home and only occupy two to six square feet most of the time we're at home.
    * American consumers used to value a postage stamp at $145 an hour, because it was only licked for .5 second, but perversely don't value them at all now, since they never lick them. 
    * Most Americans don't enjoy or appreciate sex because most don't pay for it.

    Focusing on how much time people spend looking at ads, I'm guessing the industry values people's time at $30-$100 an hour, since most people only focus on the ads for 30-120 seconds and hour... if that.  

  2. Peter Rosenwald from Consult Partners, March 30, 2018 at 3:06 p.m.

    It certainly seems like it should be. Reading the first part took me perhaps two minutes.

    That was worth quite a lot and while I wonder if your comparison of 'wage' and 'hourly value' (aren't we all worth a lot more than we are being paid?) isn't stretching the apples and apples comparison rather thin. like any fellow magician, I can't wait to see how you get the Easter bunny into the hat.

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