The advertising winds are changing.
Prior to reading this article, how many of you clicked on a banner ad in Facebook? How many clicked on the thirty second spot prior to watching a YouTube video? How many of you clicked on the first one or two search (paid search) results after throwing a query to Google?
And let's say one percent of you who read above did do this – how many of you actually purchased?
And then of that percentage, how many paid with cash or credit card and didn't use PayPal, Apple Pay, or Google Pay?
Why is paying with PayPal, Apple Pay, and/or Google Pay good for the data business? It allows companies to reconcile advertising dollars with bought product.
We are in the throes of going through the same radical change in the late 1990s and early 2000s as online advertising did when they said hits were no longer important. It was page views that meant anything. And then later it became the 'visit' that the view consisted of. Was it an anonymous visit or an identified visitor via social sharing, newsletter sign up, cookies, or using data forensic tools?
The change is showing the difference between the concept ad recall lift versus real consumers, watching real ads that are pertinent, to actual product purchase.
Social media was the supposed savior for locking real advertising to real eyeballs.
However, followers are not always real. Either followers are bots or they are bought. While in the Philippines, I personally encountered several startups whose revenue was promising social media followers in the tens of thousands for monthly subscription rates creating a social media black market.
E-commerce with recommendation engines were the next way to lock in a golden grail of advertising such as the one created by Amazon. However, how many ads show up after you have purchased a product? As I am typing this article, I am receiving several banner ads for a product I already own and purchased weeks ago on Amazon.com.
Web cookies and browsing history predict the future on the recent past – even if that means you have already spent money.
Regardless, the digital advertising space is heating up as Walmart last year purchased ModCloth for $75 million USD after a year earlier purchasing Jet.com for $3 billion USD. And it's more than Walmart ($121 billion USD) trying to compete in the e-commerce space against Amazon's $177 billion USD in e-commerce revenue.
As Facebook earlier this year revealed, it was selling your data to the highest bidder in order for its services to be free. Finally, it was acknowledged that all these online companies are generating this new sellable data oil but keeping it in a black box away from the peering eyes of the consumers who generate it.
Another source of this new data oil is coming from media companies such as Netflix.
When people talk about this current golden age of television with the help of Netflix changing all the rules, especially exploding the budgets of normal content production, people are less likely to talk about the free cash flow and the $6 billion USD in debt that Netflix currently holds. While it talks up its $8 billion USD in content budget for its pipeline of upcoming shows, documentaries, and series. One of the reasons you won't see Warren Buffett or Berkshire Hathaway not investing in Netflix anytime soon or better stated – ever – is the lack of sustainable value.
How is Netflix attempting to generate value?
On another front, Netflix says it’s keeping costs internally by getting rid of the outsourcing model of creating content by keeping everything in house. However, the company could learn a thing or two from the failure of ABC's mid-1980s show "Moonlighting".
ABC attempted to create its own IP when it debuted "Moonlighting" with Bruce Willis and Cybill Shepherd. It also created a brand new category of series called dramedy.
But ultimately, the cost per episode and lack of new episodes caused ratings to plummet. "The Dream Sequence Always Rings Twice" episode for "Moonlighting" cost a then-unheard-of sum of $2 million in 1986 dollars.
It wasn't a total failure. "Moonlighting" did inspire recent favorites such as "Community" that introduced meta concepts and breaking the fourth wall thanks to writers such as Donald Glover. Also, both won accolades by several Emmy nominations and generated huge followings.
Netflix's "Stranger Things" season two cost $8 million USD dollars per episode. This overpricing of price per episode is said to be what finally leads to an implosion within the industry.
However, Netflix's strategy to drive profits is to keep pushing subscriptions, especially internationally. However, the more content that people want to watch, the more sharing of Netflix logins are occurring that is plateauing the rise of its subscription base. That's why they are always toying with a concurrency strategy. Note that there is a direct correlation to the rising price Netflix charges for this monthly subscription to the aggregation of subscribers under the same login, especially when you look at international markets.
So we are facing an oncoming train wreck – advertising that can't be directly linked to product purchase, content that is overpriced by those who create it, and consumer data that is not usable because it's an invasion of privacy especially as Europe passes new data privacy legislation GDPR.
That means over the next decade a media technology startup must rise that will find a way to create original programming that lures audience with an optimal pricing (not too high, not too low) per episode, create commercials that consumers actually want to see, and give them a one- button solution to purchase without seeming like they are stalking them online.
Amazon Prime is nearly there. It offers retail and it offers products to purchase, but it's dependent on its recommendation engine – based on past, rarely present experiences to link the two together.
However, 108 Media, the decade-old international media company originally out of Toronto but now with offices in Singapore, Tokyo, and soon-to-be Hong Kong, thinks that there is a simple, easy way to solve all these issues. Full disclaimer – I am the director of innovation.
As I have asked during numerous conferences:
"Have you ever looked at someone else's ATM receipt which is lying around while you are withdrawing or depositing money?"
I pause and then answer, "I always do."
The reason I look at ATM receipts is I want to know where I belong. I want to compare myself with others to gauge my success or my "tribe". This is based off of a Map of Me analytics engine we built with SAP HANA back in 2010 – that we have later ported to other open source technologies.
I have believed for nearly a decade now that allowing the users to see themselves, or what I call the "art of transparent data science," and allowing consumers to change their behavior on their terms. I have even gone so far to say that banks should give the seven-year-old expired data from their data warehouses back to the customers themselves. Media shouldn't be any different.
Allow customers to pay for subscriptions if they do not want to be bothered by ads (as it stands now). But if they want free content, allow your customers to choose the ads based on tasks – grocery shopping per day, per week, per month. Or allow customers to choose tasks such as home improvement or back to school to have ads be shown as options. Also give them the option to choose the things they like such as favorite actors for branding, favorite products they use on a regular basis, and favorite locations – cities, city blocks and/or neighborhoods.
Then the customer chooses a piece of content they want to watch and swipe a commercial into the three available slots pre-defined.
Now the ads that show up at the top of the options are called "lazy ads" and are bought such as paid search. They can be branded and paid for optimally using Google AdWords. The commercials will be subset by customer preferences but will not be limited. The target for these commercials are simply by lazy consumers who just want to watch the content already.
There have been some options of this already, especially if you have watched the recent TBS show "The Last O.G." with Tracy Morgan and Tiffany Haddish where viewers can choose to watch a pre-cued advertisement for 60 seconds or choose an interactive 30-second ad.
Other options offer "you watch us, we watch you" analytics where we show you what other people of your same demographic, location are a watching much like Spotify shows your social media friends of what songs they are listening to while you are watching.
Mostly importantly, when the credits began to show, all the commercials you chose turn into QR Codes that can be downloaded into an e-Wallet or emailed to you to be used at your favorite retail store. So the more you watch, the more you save.
See a demo of the 108 prototype below.
Right now commercials are thrown at us sometimes at random – as I say, "Like a wacky wall walker." Sometimes it's entertaining, but mostly it’s a waste of time and you just end up throwing it away.
Giving the consumer the choice to choose content plus commercial allows the creative a lot of freedom.
Imagine finding the organic clustering of which content goes with what ads. And because of the "choose your own adventure" aspect and allowing consumers to only cue eight commercials in a row to watch content and not create endless playlists of commercials and content you can never get to – it allows for a more real-time analysis of what shows are hot. Also shows branding opportunities for creatives to utilize when locking funds for projects.
Because your show makes the products being sold money, they will likely sponsor or do product placements to keep costs of production down.
More importantly, it allows for creatives to dictate the story arch of their online shows. A writer or director can choose where the commercial goes – as each story has a three-chapter arch – allowing them to build a show to a pitch and the consumer chooses the commercial break.
As opposed to video on-demand services such as Hulu that allows you to select certain types of commercials but arbitrarily they slice content to put in an ad. Maybe they prevent a much-needed beat to happen in a show to build tension.
We are a long way from the days of the 1950s New York’s Madison Avenue ad executives such as George Lois (who Don Draper was based upon).
Or are we?
What if the inventory of ads that have been collected over time can be loaded up as options? That one of the preferences of the system is to allow consumers to choose their favorite commercials of all time? Or choose the decade of ads they want to see as a selection prior to watching content?
But what if the future ad agencies – equipped with what shows sell exactly what products and when – can create branded ads that link directly into shows or messages being told in stories?
Imagine a day when consumers watch all the commercials with the same enthusiasm as those in the United States watch Super Bowl ads.
Also imagine the day that the decades of advertising sitting in digital vaults no longer have to be YouTube fodder but can now be loaded up as options to be chosen as commercials to be watched prior to watching any content.
Such as Coca-Cola re-releasing its Mean Joe Green ad for you to choose.
But that would mean a drastic shift in how media and advertising currently works. It's a radical idea to give the consumer the choice to know what you know about them from a data perspective, allow them to change their own viewer behavior, save money on the products they want to purchase already, and all the while entertain.
The future of the creative and commercials is throwing caution to the wind. Allowing the consumer to choose in what direction they want to go.
Allowing them to dictate their own conversation.