Observations on Digital Media Spending

Some great thoughts from Rick Webb (Barbarian Group) on the tension between Silicon Valley and the marketing/advertising industry.

On the proliferation of digital media channels:

Brands don’t actually want or need any more media channels. As far as they’re concerned, the internet can stop now. We have enough channels. We were happy when we had like seven (TV, print, outdoor, radio, in-store, direct and theater), got a little interested in the first few new ones. Urinals? Uh, okay. Banners? Interesting. Google? Yes. Groupon, Farmville, GroupMe? OKAY I AM GETTING TIRED NOW. Silicon Valley seems to think that advertising’s appetite for new media channels is unending. It is not. Marketers are changing. They are not the daft old man who doesn’t understand the new thing but knows he needs it and spends money on it. It’s a woman and she is getting smarter. Even she knows there’s a point where they’re reached their customers enough. They have fixed budgets. I could tell you EXACTLY how much they will spend, because I spend that money. It is not bottomless.

On precise targeting and data options:

The endless quest for advertisers to know everything about their customers may never end, but its budgets will not increase forever. We will pick the best 3-10 data sources and stick with them. And in the meantime, the VCs will have effectively funded a massive R&D effort to radically improve those sources (THANK YOU) but in the end, we’ll still be paying about the same amount a year for the same 3-10 (say 100 if you’re P&G or WPP).

When the Valley says it wants advertising dollars, what does it *really* mean?

Though the valley can’t usually articulate it, this [media dollars or working dollars] is the other big batch of money they’re going for, because it’s what Google and Yahoo! did. They got big brands to spend some of their giant media money on them instead of yellow pages or newspaper ads. Despite the Valley’s obsession with advertising, they still massively misunderstand it. They think it can be solved with algorithms, and not people. They also thought this about lawyers at one point. LegalZoom is doing great I hear, but so are lawyers. Not every penny of advertising will ever go to computers.

Really great thoughts – online and digital may change advertising even more, but not until the media truly understands its ultimate customer.

via rickwebb’s tumblrmajig (On The Bubble).

Related reading:

Noah Brier (through whom I found Rick’s post)

Chris Dixon’s thoughts on the “bubble” (which ignited Rick’s own thinking)

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