The ultimate end of the media world (or, broader, the modern commercial world) as we know it probably began more recently than with the advent of the Internet. It likely began with the introduction of the DVR in 1999. Both TiVo and ReplayTV (with Marc Andreessen as an investor) launched at the Consumer Electronics Show in Las Vegas in 1999. The premise was to give a viewer control of the TV programming schedule, quite groundbreaking in and of itself, but even more earth-shattering, to provide the technological wherewithal to bypass advertising. Voilà. The media paradigm had been disrupted.
There commenced a long rearguard action to delay the inevitable, but soon enough it was hard not to come to terms with an ultimate nightmare scenario of a world that would no longer willingly tolerate advertising.
Even now, with television’s continuing hold on high-priced advertising, everybody is well aware that it is possible to watch as much television as you’d like without seeing any advertising at all.
Likewise, more and more when you do come upon television advertising, instead of its being a seamless part and parcel of the television experience, a minor toll, it can appear as a quite unnatural and discordant, even fairly incomprehensible, moment—a broken synapse. In other words, there is a growing advertising free world from which it might not be possible to return to an advertising-ubiquitous world, even for brief visits.
This is partly technology and pricing. Technology enables the unbundling of content from ads (first, rebelliously, through the TV ad-skipping devices, and then officially in OTT—over-the-top content—venues) and new payment options, enabling the consumer to directly pay for content. But it also would be ignoring the obvious not to note that the effectiveness of advertising, that is, traditional, high-margin, display advertising—that builder of brands and creator of desire—has reached some sort of plateau or even a level of net negative impact among jaded media consumers. Every major advertising holding group, those worldwide collections of agencies, marketing services companies, and media buying intermediaries (all with their programmatic buying desks), sees almost all of its growth coming from parts of the world that have only recently become consumer societies. No surprise that advertising tends to work in those markets in the manner it worked here at the dawn of consumer time—it’s a cost-effective way to enhance the desire to buy.
Digital advertising works less well even beyond its own clumsy presentation because all advertising works less well, and, alas, digital allows a finer measurement of this ever-falling response rate.
No one in responsible positions in digital or conventional media would, as a function of both fiduciary responsibilities and lack of imagination, openly speculate on the end of their core business basis. And yet it is possible to see most of their efforts at redefinition and future market positioning as a response to the great changes and gradual end to the advertising market as we have known it.
From virtually 100 percent ad supported, television now gets half of its revenues from non-ad businesses—subscription, licensing, foreign sales. At the same time, it retains (and can be expected to maintain) a set of special, high-profile, one-time, real-time, can’t- avoid-the-ads events (the Super Bowl first among them, but in a sense all sports), in which advertising’s value, against the trends, continues to increase. Television, in a profound sense, no longer sells mere audiences, a game now of commodity and measurement, but rather unique product and cultural currency. In quite an extraordinary development it has converted lowbrow television entertainment, supported indirectly by advertising, into something valuable enough to be directly supported by the consumer and then, as an increasingly valuable currency, traded into one of the fastest-growing business sectors, the new world market for media and entertainment (where, in these markets, it is able to benefit once again from high advertising spending).
The head of a big digital agency said to me: “We don’t do story. We facilitate the handshake by moving the cash register closer to the consumer. That’s much more economical and efficient than trying to create demand and desire.”
In contrast to this model, digital media, disappointed in its efforts to attract a meaningful amount of high-margin brand advertising, has doubled down on its direct-selling advertising abilities, aping the low end of the advertising business—direct-response, call-to-action, act-now advertising.
It’s the traditional bifurcation of the media business. On the one hand, there is the influential, the prestigious, the culturally significant, a business and medium of value, need, originality, and exclusivity. On the other hand, there’s the cheap, crass, and low, a constant and immediate arbitrage between what you spend to create the medium against the short-term sales it produces. One side of the business produces content meant to stand on its own (the content is the asset), another side makes the circulars, direct mail, advertorial, freestanding inserts (the junk in Sunday papers), telemarketing calls, crap magazines, and cable ads that in the end only justify the creation of the ad rather than any independent-value content. It’s all media, but with fundamentally different models and to a different effect.
Facebook’s value as a technology company may seem high, but its actual value comes from the enormity of its meaningless, undifferentiated traffic. It has no other product it can sell than some ads next to complaints about neighbors’ dogs, party pics, and humblebrags.
There are different degrees of acknowledging advertising’s dominance over content, from a defiant pretense otherwise (travel magazines, for instance), to the direct mail business, where there is no pretense. But the spectrum forms the essence of the media business— and most everyone, at some level, knows where they fall on it.
Except when they don’t.
What would otherwise be hack publishing can, in this new environment, appear to be a great experiment in an evolving market. Unlike any other medium, generating traffic, any kind of traffic, doesn’t tarnish prestige; it creates it.
The digital media circumstance, in almost every instance where there is not meaningful subscription revenue (and there are few such instances), is a classic schlock model: advertising priced on the basis of its measurable response and immediate sales performance means low per-user revenues means cheap content— content that effectively converges into advertising (e.g., BuzzFeed’s “native content”). The only thing that truly distinguishes it from the cheap direct-response publishing model of long standing is the belief that technology has made such businesses almost infinitely scalable. BuzzFeed (or, for that matter, Facebook) may have a low-value user base, but it can grow one of almost infinite size.
The ultimate result is that there will be no advertising.
There is, in entrepreneurial fashion, quite a bit of fake-it-till-we-make-it hopefulness here. BuzzFeed, with its massive traffic growth fueled by its schlock skills, nevertheless touts the journalism it also tries to produce. (It’s a kind of kids’ version of the early CBS strategy, using its “Tiffany Network” image for news to offset what was arguably the nadir of prime-time programming, including The Beverly Hillbillies and Hogan’s Heroes.) The ultimate hope here is that, at some tipping point, a different kind of advertising, one not based on immediate response but on investing in shifts of mood, opinion, desire, of creating the grand illusions and stories that propel consumer life—and big media margins—will migrate to BuzzFeed and to Facebook from television.
But the cycle is not going to be an easy one to break.
Digital media has created, perhaps inexorably, an ever-larger, ever-more-low-value audience. As a response to this, or in tandem with this, advertising agencies have de-emphasized, even hollowed out, what had been their core talent and purpose—crafting vivid and theatrical consumer fantasies—in favor of being operators that profit off the transaction of ad placement, the measurement of response, and even the facilitation of payment.
As the head of a big digital agency said to me: “We don’t do story. We facilitate the handshake by moving the cash register closer to the consumer. That’s much more economical and efficient than trying to create demand and desire.”
In other words, the ultimate result is that there will be no advertising, not advertising of the kind that believed in investing large amounts of money to transform attitudes and behavior. Instead there will be more process and efficiency, the stuff that technology is good at, but that undermines the uniqueness of media and hence its value.
Reprinted from Television is the New Television by Michael Wolff with permission of Portfolio, an imprint of Penguin Publishing Group, a division of Penguin Random House LLC. Copyright © Michael Wolff, 2015.