The alleged ad scarcity

Gary Stein at Jupiter argues that the ad scarcity is real. I argued that it is a false scarcity created out of laziness or ignorance on the part of media buyers. Stein says:

Large brands seeking to make a significant impact will always seek high-profile placement.

Is that laziness? Not really. It is ego. Even if no one ever bought a Coke because they saw the neon sign in Times Square, it is still important enough to Coke’s brand and culture to demonstrate that they are big enough and strong enough to put that message in that spot. So, as long as there are new-model-car releases, brand-launches and opening-weekends, there will be a reason to pay tons of cash for the home page of Yahoo! Scarcity will exist for that, and it will keep prices high.

But the problem comes in if you say “well, Yahoo’s home page is gone, so there goes the campaign”. Online advertising is all about technology innovation and the twin turbines of targeting and optimization are will both increase the revenues for publishers as well as the effectiveness for advertisers.

The shortage? It’s just gonna lead to more technology innovation. Any network/serving technology/targeting system who can (really) do optimization is in a good place right now. They’re the ones who will benefit the most from a shortage.

Yes but….

The importance of any home page on any portal will decrease as more and more traffic is generated directly through searches and links. The problem remains that advertisers want to re-create TV; they want one-stop-shopping mass buys; they want upfront. But they shouldn’t want that because it only creates a scarcity that drives up prices. That’s why I say it’s laziness, because if they really did their homework and figured out that they can get better targeting, better reach, more efficiency, more effectiveness by engineering ad hoc networks tailored to their needs, they’d benefit greatly. But that takes work: not just the effort of putting together one flight but research and education and experimentation.

One agency and advertiser will figure this out and then the others will catch up for the same reason Gary cites: ego.

  • Mike G

    His analysis is correct, but that doesn’t mean sewing up a high-profile media placement like a Times Square billboard isn’t kind of stupid. (I admit there are times when it has PR or other value– I can see when it would be advantageous to dominate Sunset Boulevard with your newest singer’s album, for instance. But that still just means that instead of buying into the stupid buzz, you’re exploiting how other people stupidly buy into buzz.)

    There’s a great big country out there (both in the real world and the virtual one) and it has a lot of money. If you’re smart, let somebody else get in a bidding war for the few tiny Manhattans and Malibus of the online world, and focus on the other 98% which is still dirt cheap. Remember that most of the time, your competition in marketing is the kind of people who had NO idea there was a market for a Jesus movie to make $200 million in between JFK and LAX.

  • It’s definitely a “kind of stupid”, the kind called “irrationality”. Certainly not the most solid basis of an economy, but definitely a real world driver.

    Thanks for the link.