What does scale mean in an advertising world where it doesn't matter?

I have been thinking a lot lately about scaleable ad units and how they relate to digital media.  This is a question I ask myself as an investor and as a media buyer.  The latter part is probably more important as I’m consistently buying media in market each day thru The Media Kitchen.

Today, for the most part, we have text ads and display banners (of different shapes and sizes).  Both of these types of units (search & display) have been adopted and make up the majority of global digital advertising spend.  For the online world, they scale.  There are deep takeovers and experiences that can be bought, but they don’t scale nor do they makeup the majority of online spend.

For the offline wold, we too have very defined creative units which provide scale for publishers.  These defined units can be a 30 second spot, quarter page advertisement, FSI, or a 10 second live read (amongst others).

Scale allows dollars to flow, as it provides less friction to move money to purchase many media impressions.  If everyone accepts a 300X250 advertising unit, then its easy to invest behind $1,000,000 in media because there is enough inventory to support it.  There is even enough for $10,000,000 or $100,000,000 of media.

TV advertising is significant not only because it is one of the only mediums to convey both audio & video, but its mass reach with standardized units is almost frictionless;  it’s also really easy to buy.  Additionally, when it emerged as a media channel to purchase, it trumped it’s peer set and with limited other options, it became almost a must-buy.  TV ad spend as a percentage of United States GDP has been a pretty consistent 2.2% since 1919 (since first commercial).

Fact:  There are many ‘haters’ of online display ads because they are standardized.

Well, television advertising is standardized too, and there are some recent examples of run away creative (and business) success:  Nike’s Write the Future spot, NFL Play 60, and the older Jordan/Bird/Barkley McDonald’s commercials.  Note, these are all sports examples as I am a focus group of one, but the common thread they have were that they debuted not only against a high target audience composition but also with contextual relevance.  I generally see the NFL Play 60 spot during NFL games and the Write the Future spot appeared during the World Cup.   Audience plus context helped give these advertisements meaning.    In the future, audience plus content plus location will give advertisements meaning.

Within digital, we are still nascent, but we are starting to figure out some of the native characteristics of the digital platform.  A few recent examples of successful digital campaigns such as Elf Yourself, Old Spice Man, Whopper Sacrifice, BMW ActiveE (our agency), Giorgio Armani/The Room (our agency), have a common thread:  the foundations of the campaign are not immediately scalable.  Why?  Because unlike offline media, these examples require user interaction to be successful, which is virtually impossible with unplugged offline media.  In a television world, the best spots allow us to reflect on our emotions as we watch.  In a digital world, the consumer/viewer is able to create emotions with engagements on the fly. Think about this (*).

When creating effective digital communications, take advantage of the medium.

Paid media dollars are no longer the only dollars that are driving scale.   This is where the POEM (paid, owned, earned media) strategy becomes vitally important.  The best digital strategies are done with the POEM approach in mind.

A couple more words about scale:

1.  Historically, advertisers rent audiences.  We pay large media companies to rent their audiences for a period of time.  This is not a winning proposition, as the minute you stop spending, your audience returns to zero.  However, this is changing with the ability to use digital means to connect with your audience and disintermediate the media companies.  Nike’s Trevor Edwards (VP Global Brand & Category Management) had a great quote in the NY Times about 5 years ago, “We’re not in the business of keeping the media companies alive,” Mr. Edwards says he tells many media executives. “We’re in the business of connecting with consumers.”

2.  Scale is still used to help get word out and will be necessary in the future.  I’m not saying that media buying and advertising is going away, but the way we look at the traditional paid media model is changing.

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* Inspired by a pre-read of this post by buddy Chad Stoller

** This post started out about native advertising opportunities and quickly morphed into a post about scale.  It wasn’t my original intention but that’s the way my brain worked while writing.  So, pardon the inconsistencies but I think I do get my point across.

*** Scale does matter in certain businesses and within components of the advertising ecosystem.  Example:  the more you buy (larger scale) on an exchange platform, the more bid requests you see.  Theoretically, the more bid requests you see, the better the performance you might drive.

  • http://twitter.com/kirbywinfield Kirby Winfield

    Great post Darren. I like the idea of “audience rental”. To push the metaphor further, perhaps the most successful digital campaigns are “rent to own”? 

  • http://www.darrenherman.com dherman76

      I like it!