Not the best question that a marketing professional should be asking, but bear with me on this.
The price of advertising (or anything, for that matter) is typically predicated on value. That "value" is subjective (at best). Perceived value, if you will. When it comes to advertising, we are typically looking at metrics like how large the audience will be (that will see the ad), when they will see it (time of day), how they will see it (staring at a TV, listening as they drive...) and how much of the audience's attention it will receive (three ads in a row or right before a big ball game). At a more fundamental level, advertising has always been based on the scarcity model. There used to be three major television networks, and if you weren't on at 8 pm, that slot was gone. Poof! Gone forever. There were only a handful of shows and everyone was watching them. Now, think about digital advertising. Sure, you can only get the homepage of some big website on any given day, but how many other websites like it are there out there? How many other (perhaps more targeted) options could you compile?
Is advertising suddenly out of the scarcity model and into a world of abundance?
Have you ever had a sales representative from Google spend any time with you? They have a lot of information to support this notion as well. Google will often tell big advertisers that they are under-indexing in terms of their spend. Meaning, for all of the people that are searching for whatever it is that you sell, Google has the data to show you how much of that audience you're not reaching. And, these are the people that are proactively looking for you (forget the other opportunities to get a digital ad in front of your potential audience). Abundance. Opportunities everywhere. Still, the price of advertising continues to climb. Now, with all of these specialty television channels, the price goes up because of how highly targeted the advertising is, but the options are boundless. Tons of space to still play with. In fact, may great brands have been built without any television advertising at all.
Let's take this scary advertising question from another direction.
Let's say you're awesome at this digital advertising stuff. Seth Godin and Avinash Kaushik bow down before your digital-first and performance-based advertising mentality. You're nailing it. Shouldn't the cost of advertising go down? As you get better at it, as your testing and learning, you are able to lower your cost per acquisition and get laser-focused on what works and how to optimize it. Does that sound crazy? In the past few days, there were two news items that may, in fact, support this theory (remember, this is just a theory and not true practice for many brands). Advertising Age published the article, P&G Squeezes Marketing Harder As Currency Woes Mount. From the article: "We continue to drive marketing effectiveness and productivity through an optimized media mix with more digital, mobile, search and social presence, improved message clarity and greater non-advertising marketing efficiency. We expect marketing spending to come in below prior-year levels due to productivity movements in marketing and advertising costs." From a similar songbook, AdAge then runs another article, Dr Pepper Snapple Group Trims Marketing Budget, that states: "the company is shifting more money into cheaper digital buys. 'We're enhancing marketing ROI analytics and capabilities to ensure our marketing investments are giving us maximum return and value,' the spokesman said."
So, is digital better... or just cheaper... or easier to monetize... or more measureable... or...
Of course, there's no one size fits all to digital (in fact, that's what makes it so powerful). Brands could be laser-focused on performance based advertising but have significant branding challenges in the digital sphere... and vice-versa. Still, there is something happening here, that most advertising agencies (and brands that are primarily focused on general advertising) don't want to talk about: digital is still a very different beast, and we're all still trying to quantify it like we did with our traditional television and radio advertising spend. This is the tactical error. This is where the confusion lies. This is where talks of cutting advertising makes everyone very anxious. When we say that advertising dollars are being cut, we start thinking that the marketing work is going away, but that should not be the case, because we may - in fact - just need a new perspective.
A new perspective in advertising.
What if marketers looked at it this way: as a brand finds it place in this new world, the cost of advertising should decline. It should become more efficient. It should become more measurable. It should become leaner, smarter and cleaner. In fact, perhaps we should look at a world where a brand that is doing everything it can to be a better marketer is best defined by how little it is spending on it's advertising. Radical? Maybe not in a world where marketing can play a much bigger and direct role with consumers. We are no longer in world where a consumer's only interaction with a brand happens via an ad or a purchase. Let's not forget that advertising is a sub-set of marketing... and marketing may be able to take a much bigger slice of the advertising dollars and push it to work in much more efficient ways.
It's something to think about.