The Sell: The Value of Scarcity

Champagne is simply sparkling wine made in the champagne region of France. Because it can only be made in one small area, there is a rather limited supply. Consumers are willing to pay much more for champagne than sparkling wine from California, which may taste just as good but lacks the same cachet. The lack of resources, i.e., scarcity, drives up prices. Scarcity is at the heart of the media planning and selling equation, and no topic is more relevant given the current trend of multiplatform viewing in media.

Technology has redefined audience fragmentation. Previously, fragmentation meant only that more content (e.g., TV shows, radio stations, Web sites) was available. Now, fragmentation means that each piece of content can be viewed in many different forms.

That's why time-sensitive programming that delivers consistent, predictable audiences will garner more advertising dollars than less predictable, though perhaps higher-rated, programming. Time-sensitive programming is in short supply and therefore generates a great deal of demand.

Part of the reason for that is the immense control consumers have over when and where to watch a TV show or movie. Cable, VOD, online video, and portable devices such as iPods are now legitimate methods of video distribution. In many cases, TV networks show the same content on multiple screens. These additional screens diminish the amount of TV programming with large, aggregated audiences.

Of course, consumers benefit from the abundance of ways to watch their favorite programs. Thanks to ABC's multiplatform approach for its hit show "Lost," the show is everywhere. Fans can watch the show Wednesdays at 9 p.m. EST or view it on with fewer commercials. They can buy episodes from Apple's iTunes Music Store or get the entire season on DVD. New technology means programming is no longer scarce. Fans can watch "their shows" on their own time.

Theoretically advertisers would benefit, too, because they have a personal entry into consumers' lives, but that isn't necessarily be the case. In the old media economy, advertisers could bank on people running home to watch their favorite show on television. That was great for time-sensitive advertisers (think studios with new movie releases or department stores with big sales coming up) who needed to capture audiences at predetermined times. Now, marketers still have time-sensitive ad messages, but networks are delivering less predictable audiences.

Today, advertisers would certainly pay a premium for a predictable audience. The only way to do that is to make TV programming scarcer. In this way, the needs of the advertising community run contrary to the desire of the public at large. While viewers demand unfettered program access on their own time, advertisers want reliable, predictable audiences. As the content becomes more available, and therefore less scarce, certain advertisers will ultimately see less return on their investments.

On the other hand, sports and news programming continue to rely upon the old broadcast model. Sports and news have always had the lowest percentage of VCR (now DVR) use of all television programming. By nature, these are timely events with minimal replay value. TV news has lost viewers to online news, but it still remains a consistent performer. Consumers have little desire to time-shift this kind of programming. This is good news for both media companies and advertisers. TV networks have reliable, live-view programs that advertisers will pay premiums to access. In this manner, scarcity creates a valuable opportunity for buyers and sellers alike.

Programming that doesn't have that time-sensitive hook will lose value as technology continues to fragment audiences. More consumer access means each component (TV, Web, MP3 files, and wireless content) becomes less valuable. The individual parts may not be worth as much as the whole. Why pay more for a program's audience through VOD when Web streaming is just as good but at a fraction of the cost? This explosion of distribution possibilities has far-reaching implications for those who generate the content (TV and cable networks) and those who pay for it (advertisers).

Andrew Ettinger is the associate media director of Earthquake Media. (

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