Commentary

Dis-aggregation: A Digital Strategy

Have you noticed how trying to aggregate consumers today is like trying to keep kittens in a box? Sure, you might get a few in, but they'll inevitably jump out when you go to get the others.

Kittens are, after all, curious. And when it comes to staying put, they're the ones in control.

Same holds true for today's consumers. Yet, we in the advertising business keep trying to aggregate them so that we can justify--well, what exactly? While differences of opinion exist, it could be argued that we keep trying to aggregate so that we can continue to justify the princely sums that we charge our clients.

Mass media has been very good to the ad industry. For many, it's meant mass millions. Complaints were few when an impression was the most that could be measured. After all, whether an impression had any effect really didn't matter. We were still able to charge for it.

Things are different in the digital world. Along with impressions, involvement can now be measured. Which could well start to eliminate aggregation as a strategy.

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Let's take a look at how the current compensation models are constructed, both for media and production. Media is somewhat more straightforward--the more impressions delivered, the more money made. Granted, the percentage that agencies take home is lower than in the past, but a correlation still exists.

As for production, well, the only way that agencies can justify today's exorbitant costs for a :30 spot--somewhere in the neighborhood of $375,000--is that the spot is going to be seen by millions of people at least three times each.

Can agencies in good conscience still charge $375,000 when they know only 200,000 actually watched the spot? Oh, sure they'll try, but will marketers pay? Would you, if you were a marketer?

The digital world, with its granular measurement capabilities, is less about how many had the chance to see and more about how many actually started watching a commercial, and how long they watched. By measuring involvement, marketers can pay for how long a viewer watches a commercial rather than how long the agency worked on it.

Let's say that you're a marketer and you know--not assume, but actually know, since the data, after all, will be right there in front of you--that most viewers watched only the first 10 percent of your spot. Knowing this, will you, or will you not, be hard-pressed to pay your agency full fare for the other 90 percent?

It's a question that marketers will soon need to answer because this digital data already exists. How come you haven't seen it? Simply because it's being closely guarded behind locked doors at every cable company, broadband provider and satellite distributor. TiVo also has this data, and, for the first time, it is starting to share it. It should prove interesting. In his recent book, What Sticks, co-author Greg Stuart states that Mr. Wanamaker was wrong about 50 percent of advertising not working. According to Mr. Stuart, the correct figure is 37.3 percent. What if, when the data finally does come out, Mr. Stuart is also mistaken--and the number is actually closer to 90 percent?

Yes, what then?

Well, for one thing, the stuff that does work well, the type of creative that does involve the viewer, will be very, very valuable. As will the agencies that know how to create it.

Obviously, agencies will need a way to monetize the information so that they can turn this digital data into dollars. But these monetization models are near. And once introduced, the locked doors will magically open. Agencies will be able to make a better income talking to the few that are interested, rather than the many that aren't.

Until then, we will keep aggregating to make our old compensation models work. But while doing so, let's 'fess up. It's compensation--not aggregation--that we are truly worried about. And while the future may be hard to predict, this much we do know. Consumers, like kittens, will be spending more time outside the box than in.

And if that is indeed the case, shouldn't our thinking be there, too?

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