In just two years, predictions like these are now our reality. The 2006 upfront was plagued by currency battles and speculation of an eBay-type auction. Second Life has reached its 1 millionth registrant and is climbing. YouTube was purchased for $1.6 billion. Newspaper advertising is in free-fall. Google is becoming a media company. Wikipedia is entering the search space. And just this month, Meredith Corp. announced its acquisition of two interactive-marketing agencies. We have a good enough glimpse of the future to know that nothing will ever be the same.
In theory, chaos tends to happen suddenly. Once tamed, a new normality or order is established. But the chaos we are experiencing today -- consumer control, the unrelenting march of new devices and technology, the frenzied pace of information sharing -- is much more enduring, with no end date.
You can bet this keeps CMOs up at night.
"The Chaos Scenario" was written with clients, creatives and media owners in mind. But please spare a thought for those who, like me, have jobs measuring and monitoring all this new stuff while constantly looking over their shoulders for the next ROI stick to be unleashed.
And there is a lot of work to be done. Consider the uncomfortable truth:
All the syndicated sources we support have absolutely no relevance to the new realities. We claim to understand how consumers multitask and consume messages from an endless list of contact points, but when it comes to measurement, we are decidedly mono. Really, is it good enough that the only way to get a holistic view of a campaign is to apply random duplication?
But most worrying of all is that the way we measure media does not speak to marketers -- the CMOs, CEOs and CFOs -- who need to dispassionately value advertising investments. It's no coincidence that our inability to track performance to a basic business objective has marginalized the ad agencies' value in the boardroom. Marketers want their advertising to capture attention, yet we keep serving them exposure numbers.
It's a serious disconnect in need of repair very quickly.
CMOs can be proponents of advertising; they can also be the industry's greatest skeptics. Which side of the line they choose to stand on depends on how well their partners evaluate investment and deliver in a metric that speaks to their goals. The ad community deserves a D in this endeavor. Sorry.
Our industry is in structural change on a scale probably not last seen since the introduction of commercial TV. This force of change requires an equal or greater counterreaction. And speed is critical or else we simply miss the point. Don't get me wrong. It's good that issues such as commercial ratings are now being debated properly, as is Nielsen's bold aim to measure all screens. But if this is the sum of our preparation for the future, then we should be very scared. Just take a look at broadband.
We are fooling ourselves if we believe we can squeeze any more value from the current currencies. More important, as the impact of the internet and digital increases, we have to ask ourselves if we are actually measuring the right things anymore. The internet quickly realized that it needed to move on from click-through as the medium's measure of worth. Now we see internet providers releasing data and metrics that much more closely relate to real business outcomes -- consumer intent and actual behavior, right up to and including purchase. And all in real time.
We must search for a new way now.
Let's begin with a few reality checks on today's media metrics:
1. Suspect credibility
First, let's stop deluding ourselves: The ad industry is not, and has never been, dealing with fact. Take prime-time network TV. Given falling audiences and despite the 2003 enlarged Nielsen panel, most shows are based on estimates from a few hundred homes extrapolated to 300 million people. Now with 120 channels measured, half of which score average household ratings below a 1 (many of them lower than 0.1), we are dealing with numbers with suspect credibility. Such problems are not confined to TV.
2. Outdated currency
Print, aside from some innovations, is still traded on the same currency as it was 30 years ago.
3. Archaic systems
The radio industry faces archaic opposition to move off diaries even though more relevant research systems are out there, and the outdoor rollout of GPS research will reach the top 10 markets by the time most of us in the business have bowed out from it.
As you can see, we are an industry obsessed with sample-based research, an unhealthy inclination that is choking our collective progress. The fact is, sample-based research is not the only solution for an industry in desperate need to prove its contribution and accountability credentials. There is hope. And more than that, there's proof that some in the industry are at least facing the right direction.
Take Project Apollo, the Nielsen HomescanArbitron Personal People Meter service initiative to capture advertising impact to actual sales. Then there's the much-welcome industry debate around engagement. There is a genuine attempt to understand the effect of advertising from a placement perspective and not merely from counting of eyeballs. Indeed, studies of the Weather Channel and, more recently, the captivation study by MediaVest show that "engaging" placement produces like-for-like commercial-recall figures upward of 30% higher than random placement.
Apollo and engagement tell me that our industry is not yet ready to lie down.
In this environment, advertising needs to understand its new role very quickly. Old message-dispersion models based on reach and frequency have lost their relevancy. Conversations, offline or online, have replaced them. And advertising has a role in this.
Research by Keller Fay's TalkTrack demonstrates that every day the average person talks to someone else about 10 brands; 45% of those brand conversations refer to an advertising message.
Offline research and search analytics from Google and Yahoo are making significant breakthroughs, not only in measuring word-of-mouth but also in using data to predict business outcomes on the back of it. This is our future.
It's time for the industry to get behind new metrics such as these or go home. Those in the digital space are laying the groundwork for future measurement because they know it is better to be 80% right today than 99% right in three months' time. Waiting for validation has already cost us dearly.
The measurement currencies are close to a breaking point. And we are vulnerable. If we don't rally behind new metrics, and our currencies fragment like our media, then we'll know what chaos is for sure.