I heard interview once where a prominent recording artist was asked how he was dealing with the decline of the Music industry. He responded that he was quite optimistic – for it was only the industry that was in decline – the love of music was at an all time high.

I would suspect a similar view could be taken on the Television industry. While according to Nielsen, “Americans are watching more TV than ever” – DVR’s and “time shifted” viewing has risen above 30% penetration nationwide (Nielsen Wire – http://bit.ly/atmeOt), making it harder for advertisers to reach their consumers using the television medium.

It’s crazy to think about how much TV has changed in the last 30 years – I’ve copied pictures below to show the contrast:

Television in 1970

Television in 2010

What’s even more incredible is that networks and advertisers still buy and sell television commercials largely the same way they did in 1970. While the technology related to user experience has sky rocketed, the technology around buying, selling, and tracking advertising has progressed at a snail’s pace.

Why can’t we track TV viewing digitally the same way we can track online banner ads? Why can’t we target TV ads to certain households depending on who lives there – or what content those viewers tend to prefer? Why can’t we allow users to select which commercials they would like to see and adjust what they are shown accordingly? With 30+% penetration of Digital Video Recorders, which foster two way digital communications between TV providers and viewers, certainly these ideas are within reason – and they may only require a simple software update!

The force that nearly destroyed the music industry was the irrational attachment to a legacy distribution system (namely, selling albums at record stores). The reason Apple/iTunes was able to snatch up so much market share so quickly was because they were not afraid to change and were not attached to any legacy systems.

A similar resistance to change can be seen in the way TV ads are bought and sold. Where the music industry was irrationally attached to a legacy distribution system – the TV advertising industry is irrationally attached to a legacy measurement and buying system: Nielsen Ratings and GRPs. These systems, which comprise the main currently of TV commercial buying and selling, can only provide estimates of TV viewing on a aggregate level and account dubiously for the effect of DVR time shifted viewing. As in industry, they’re the only systems we have – but they haven’t changed in 30 years, meanwhile the way we watch TV has changed dramatically.

This begs the question: who will be the iTunes of the TV advertising industry?

Why do we sleep? In an increasingly complex and busy world, lying in bed seems like an awful waste of time. Further, why do we dream? If sleep is time for us to “turn off,” why do our brains stay on?

Related to this subject (and quite apropos of my recent vacation) I picked up Richard Restak, M.D.’s ‘Think Smart: A Neuroscientist’s Prescription for Improving your Brain’s Performance.’ Restak doesn’t have all the answers, but key to his thesis is the idea of brain plasticity – that the brain can actually change structure as a result of learning and experience. When do these structural changes take place? When we sleep. It may even be the case that dreams are simply a side effect to our brains changing shape and forming more connections (synapses) between brain cells (neurons).

There is something distinctly appealing to me about the idea of my brain changing structure (creating more and stronger connections), however if dreams are indeed related to this process, is there deeper meaning to the content of our dreams? When I dream about driving am I actually becoming a better driver? When I dream of eating am I becoming a better eater? How about when I dream of falling? If dreams are indeed related to how our brains are changing, what is happening to my brain when I have nightmares?

I find this whole area of study very interesting, but also quite puzzling. If advanced brain function is (arguably) the single greatest feature that makes humans unique – then why are so many components still a mystery?

Maine is beautiful. A symphony of lush green mountains, diamonds dancing on deep blue lakes, and bright stars poking though the night sky. The perfect week long summer retreat.

Today I woke up with the sun for an early morning jog through the woods. About half way through I stopped to rest and I heard something I had not heard in a long time: silence. No noisy highways, no buzz from our neighbors A/C unit, no shouting on the street, no nothing. It was amazing. I sat down on a rock and just absorbed the scene.

I find that it is important to spend time with nature on occasion. It’s true that it’s calming, restorative and a great change of scenery. But its more than that. It’s a reminder that the world is a very big place, filled with beauty and wonder – and when it comes down to it we are just guests here.

Walking through central park this weekend, I saw a woman who looked to be 100 years old sitting beside the sailboat pond in the southeast section of the park. She was just sitting, alone, watching the children play as the remote-controlled sailboats bobbed along in the background.

What must the world look like to a person who is 100 years old? Think of how much has changed over the past century and the innovations that have fundamentally changed the way the world looks since they were children. To aid your imagination, here is a small sample of “new technology” that people born in the early 1900’s would have seen come to life:

1902: The invention of Air Conditioning

1903: The Wright Brothers Fly

1905: Einstein publishes his Theory of Relativity

1908: First sale of the Model T Ford

On top of that – add two world wars, the atomic bomb, commercial air travel, and the internet – and you get a group of people who have lived through the single greatest period of innovation in history. It must be very overwhelming to deal with so much change. How would you deal with so many new gadgets? New worries? New dangers? Would it even be possible to relate to today’s issues? What would it be like to watch the news or talk to young people? These are all good questions.

However, I suppose the biggest question is: What will the world look like 100 years from now?

How many times do you have to see an ad before it has its intended affect on you? One time? Two times? Ten times? Surely anything over 50 is just overkill – right? Before you go on reading – think of a number in your head that represents how many times you need to see an ad before it affects you. Got it? Ok, keep reading.

Optimal ad Frequency is probably one of the most highly ambiguous subjects in advertising. If you were to ask 10 different people their opinion on ideal ad frequency, you would be likely to get 10 different answers. At the core of the Ad Frequency issue, there is a simple principle: you want to make sure that people see your ad enough times for the message to stick.

In an attempt to quantify this principle, in your head you can picture an “S” curve (like the generic example I’ve copied below) where “ad effectiveness” is on the Y axis, and “number of exposures” is on the X axis. In this example, there is an “ideal” frequency of exposures that intersects the inflection point of the curve. Think of it like Goldilocks – not too few exposures (for fear your message will not stick) and not too many exposures (because you’ll be wasting your money) – you want to get it just right.

Most people will probably agree with the shape of the curve and the inflection point goal – however the major dispute is the scaling of the curve. At what frequency level does the inflection point exist?

Although this question seems simple – it is actually an impossible question to answer. There is no one “ideal” frequency – it varies from person to person. Each time a person sees an ad, it is a unique experience – it simply cannot be effectively modeled in aggregate.

We can make models, estimates, and hypotheses – but in real life, the way advertising affects each one of us is as unique as the number we thought of in the first stanza of this entry.

It’s an interesting question. Would you buy penthouse in Manhattan? Would you buy a private jet? Go on exotic vacations? Buy fancy clothes?

It’s a fantasy I’m sure most of us have considered, even if just for a passing moment. Some even take it one step farther and play the lottery, hoping against stacked odds that they will be among the few to get money for nothing.

Here’s another question: if you did win the lottery, or gamble your way to wealth – and you got to buy everything you wanted: would you be happy?

In my experience, a component of enjoying a nice experience (e.g. going to a baseball game, a Broadway show, or going out to dinner) is knowing the work you did to get there. If nice experiences did not feel “earned” – somehow it would cheapen them, and they would not feel quite as sweet.

I’ve heard the adage: “Work to live – don’t live to work,” but I would argue that this saying is misguided.

It’s the work that makes life enjoyable.

Following up on last week’s entry, below are some entries that have been submitted by some of my co workers. They all have great thoughts to share.

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Manny Moreno (Analyst, Media Analytics)

The best way to reach consumers in 2015 will be to hit them wherever they pay attention. As media consumption grows in complexity and fragmentation, the winners will be advertisers who consistently deliver compelling messages with a clear value proposition across all touch points. Consumers make no distinction between paid and unpaid media – they only see content. Once we stop thinking in 30-second slots and 300x250s we will be able to provide communication that is mutually beneficial and that ultimately fosters better relationships.

And attribution (through data) will be the key to making sense of an increasingly convoluted space.

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Vic Ruvolo (Svp, Group Media Director)

My hope is that in 5 years consumers will TELL US how to reach them. We’ll know from tracking technology available, where, when and with what message to reach them.  In addition, they’ll tell us if they prefer to hear our message from us, experts, or their friends and family.

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Lindsey Bono (Assistant Media Planner)

Although this generation is technology-inclined, connected, and educated, they are also becoming desensitized to conventional advertising.  Advertisers should focus on whom they are reaching and build lasting relationships with these consumers.  They should engage with their audience, give them a face, something tangible that consumers can feel connected to.  New technology is used as a way to “be connected” at all times.   Advertisers must tap into this desire of “instant connection” by reaching their audience in places they are everyday, a bus stop, a sidewalk, etc.  They need to surprise consumers by connecting with them in personal and innovative ways. 

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Nick Rane (Assistant Media Planner)

Trust: the ever elusive holy grail for all advertisers. What is the inherent value in a consumer who is forced to sit through paid messaging in order to access their intended content? The best way to reach consumers in the near future will be through the distribution of thoroughly useful, educational, and/or entertaining content which can be consumed voluntarily by the audience. Customers become loyal advocates as their trust in the brand increases. Building that coveted trust is a matter of proving that the brand has intentions beyond the bottom line while maintaining the customer’s best interest as the priority.

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Jen Beio (Media Planner/my partner on the “100 words” project) (http://www.lilmissjen.com)

Five years from now, I’m hoping we’ll be of the mindset that providing relevant information to information-seekers yields greater returns than screaming our messages at the masses.
I’m sure we’ll still be buying SuperBowl spots and wallpapering Times Square with glittering, high-def awareness messaging. I hope we’ll also be continuing to use the internet to do more refined listening to consumers, to active information-seekers, and carefully and respectfully distributing relevant content as such. With major media channels becoming less passive, we need to proactively step away from old-timey objectives and instead provide interested consumers with the information they actually need.

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Thanks to all who participated! Anyone who has thoughts to share on this subject are welcome to contribute below.

For this week, I’ve challenged a few of my coworkers to answer the following question in 100 words of less:

What is going to be the best way to reach consumers in 5 years?

Here is my first try – I invite you all to reply with your own take.

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Five years from now – Data will be King.

New complex tracking and data capture techniques will allow for all advertising, regardless of media channel, to be purchased based on audience demographics and lifestyle variables. Reach, Average Frequency, and GRPs will give way to much more precise metrics and – not without a touch of irony – the media industry will no longer find importance in the channel of media distribution, there will only be content and audience.

The kind of data-driven quantitative analysis that has revolutionized Wall Street over the past 10 years will soon make its way uptown to Madison Ave.

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I look forward to hearing your view.

Passion is one of the subjects I think about the most. I see examples every day.

The young professional who plays with the dream of becoming an inventor and artist (http://snaketies.com/), the father, who mid-career starts a rock-and-roll band (http://www.youtube.com/user/thegratefuls), and the brave young girl who posts videos on youtube with the dream of one day being a professional musician (http://www.youtube.com/user/jaaaaaaa#p/u/54/Jk5L0-SIceg).

I am a student of passion.

What makes passion beautiful, including the first two examples above (my roommate [snaketies] and my girlfriends father [the rock group]) is that it drives people to do things with no guarantee of success or future reward. Taking it one step further – I would argue that truly passionate people would still pursue their dreams, even if they knew with absolute certainty that they would fail. It’s not the expectation of reward, or where you hope to end up. Rather, it’s the love of the journey – that’s the important part.

Happy 4^th of July Weekend!

In some ways, advertising is one of the riskiest industries. For every ad you buy, there is rarely anything close to a guarantee that you will get a positive return on your investment – even if such an investment had paid off in the past. Below is diagram showing the main sources of risk that can affect advertisers (note: this is just one of the many ways to diagram risk in advertising).

Risk 1) Reach: For your advertising have a positive effect, step one is that it must reach your target audience. This is the least risky part of the equation because advertising is typically purchased based on guaranteed reach. Some metrics that apply to this step of the process are: reach against your target audience, average frequency, GRPs, and impressions. Risk level: low – this is typically guaranteed by publishers.

Risk 2) Impact: Reaching your audience is one thing, but having an actual effect on them is another. When the people you want to see your ad, see it – it has to change the way they feel. This element is typically measured by survey, with measures designed to evaluate brand opinions, favorability, and brand associations. Risk level: Medium.

Risk 3) Action: The advertising doesn’t only have to change the way your target audience feels, it also has to change the way they behave. This typically happens after you’ve given your target audience all the information they need to make an informed decision about purchasing your product. This step of the equation is largely immeasurable except possibly by survey of consumer sentiment. Risk Level: High.

Risk 4) Positive Return on Investment: All prior steps must add up to a positive ROI for the advertiser. The amount of money expended on the advertising must not exceed the amount of money, or tangible goodwill, that the advertising has earned. This is somewhat measurable by lift in sales, but it can be very hard for larger advertisers to isolate exactly which programs led to their sales lift. Risk level: High.

In most advertising scenarios, there are three main parties involved: the Advertiser (who has a product or service to sell), the Agency (who helps that advertiser with creative messaging and media placement), and the Publisher (who helps the advertiser’s message reach consumers).  In most industries where there are multiple stakeholders, the risk is shared. By sharing the risk (and also sharing the reward) all parties are better hedged and therefore better positioned for long term success. However, in advertising this is not typically the case – instead all of the risk is usually piled on the advertiser.

How could we restructure to share risk more efficiently? That is the thought for this week.