A story in today’s New York Post exposes the silliness, stupidity, the strategic blindness of advertisers, who insist on creating scarcity — and higher prices — where it does not exist (probably because that’s how their agencies get paid):
It’s a conundrum for advertisers: even as ratings fall, ad prices on network TV are soaring.
Although it seems counterintuitive, it’s the law of supply and demand. As the TV audience shrinks, advertisers have to buy more ads to reach their target number of viewers. But that increased demand for ad slots creates scarcity, which in turn leads to rate hikes.
This year, a number of factors conspired to drive up ad prices, in particular for advertisers that waited until the last minute to shop for ad time on the open “scatter” market rather than buying spots in advance.
In the fourth quarter, advertisers on average paid 18 percent more for primetime “scatter,” or spots purchased on the open market, compared with the year-earlier period, according to SQAD Inc., a media research firm that tracks TV ad costs.
At the same time, the average rating sold in the fourth quarter, when retailers are eager to reach holiday shoppers, was down 14 percent from a year ago, the figures show.
Of course, there are no end of new ways to reach that audience — and reach a more targeted audience. But that would require advertisers — and their agencies — to work a little harder and move past the one-stop-shopping of TV and upfront to putting together networks online. Actual work? Heaven forbid.
I screeched about this two years ago when advertisers complained about a shortage of inventory on Yahoo’s home page — when most people ignore home pages today. And the other day, I complained about newspapers still insisting on selling to big advertisers instead of creating an infrastructure to sell to a mass of small advertisers.
It’s their own damned fault, paying higher prices or missing new revenue. They keep assuming that the essential structure of media economics is unchanged. Silly advertisers. Stupid media. Nothing’s the same.