Wednesday, 6 December 2006

The Devaluation of Interactive Media

When I worked at a large Ad agency, one of the many challenges we faced being in the interactive division, was trying to convince the powers that be that digital media was going to be their bread and butter in the future, that TV advertising was in a state of decline and one day, the world was all going to be viewed through a digital screen.

As you can imagine a rather tough sell, particularly to agencies that have a business model based on a percentage of traditional media buys. Let me give an example that pretty much says it all. We had a meeting where someone from the US brought us a new tool created for 360 media planning. What you were supposed to do is use their process and plug in a whole bunch of variables. The tool based on some really really smart mathematical calculation, would automatically generate a media plan; specific percentages allocated to specific mediums.

So being the cynical pain in the butt that I am, I took the tool and started plugging in a bunch of different things. What was hilarious, is that NO MATTER what i did, whether I said our target audience was grandmas from Alaska or ten year old kids from NYC the result was almost identical. 80% TV and then divide up the rest between a whole bunch of "other" stuff.

This just reflected a business model and frankly a mind set that didn't understand the changing fragmented media landscape and the importance of digital.

But it gets worse. One of the biggest struggles we had was in our pricing models. Because the interactive division was not usually on a retainer model based on a media buy like the main agency, we had to bill on a project basis at least for production. While a typical print ad would see itself in the say 10K and up range depending upon photographer, we were under constant pressure to have online advertising fall around 2-3K (of course stock photography only). Even when it came to micro sites, which on a good day would be the equivalent of 30 print ads dimensionally connected to each other in full graphic motion, we would be under pressure to keep them under 25K. The argument always went the same way.

Yeah but the client says they have 2 kids in their basement who can slap a website together for cheap. How come we are so expensive?

The traditional agency account people reflected that of their leadership and continued to undervalue and support the notion that the interactive divisions were over priced.

I just read this morning in marketing magazine, that Canadian online advertising is to pass 1 billion dollars. This still a fraction of the overall media spend in Canada.

As the TV budgets start to falter and the media shifts to online, I wonder how the Agencies are going to fare?

All I can say is that its a damn shame they didn't see this coming...(i mean, who knew?) and spent all that time devaluing the skills and efforts and therefore appropriate margined budgets required for interactive.

At the very minimum maybe these new media numbers will get a bunch of people re-thinking their business models.


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