Trends Report: Saturation
by Sam Harrelson
I’m flying
back to the East Coast via Chicago and realizing there is
nothing more beautiful than a lightning storm this high up.
I’m crammed into a small plane and the air condition doesn’t
work. The seats beside me are occupied by a family with a
young girl watching a cartoon DVD on a portable player. The
young man behind me has his cd player on an unhealthy volume
and I can hear the treble of the music. The elderly man
directly in front of me immediately reclined his seat to the
furthest position it could go when we hit cruising
altitude. At this point, the last place I want to be is on
this plane. From my window seat I can see the sparsely
populated area on the ground and it appears serene and
peaceful. This plane is saturated. It is saturated with
people, the smell of airport fast food, stale airplane air,
sounds of children and phantom music and conversations. The
pilot just dinged the seatbelt sign and warned us of “choppy
air.” I’m not sure what that means but it doesn’t sound
fun.
I imagine
many of you who attended AdTech are in my exact position
flying back to your homes. The saturation of this flight
reminds me of the current consumer experience that our
industry faces in 2004. The industry is like a full flight
packed with loud and reclining passengers who aren’t wholly
considerate of one another but focused only on their
immediate situation. The email market, once the savior of
online marketing to many, has been ransacked by barbarians
invading for quick loot. Inventory faces critical mass as
regulations and external market forces such as ISP and
consumer pressure continues to force limitations on
commercial messages online. Pricing is therefore held at an
artificial pricing curve and threatens many in both the CPA
and CPM markets who rely on the shoulders of media buyers
with limited budgets. 2004 presents a patch of “choppy air”
for these three components of our industry and will
ultimately determine how we do business with one another and
consumers.
Email still
has a bright future. According to published reports by
researchers, consumers still prefer to receive email as a
form of communication from businesses by a very wide margin
over postal and especially over telemarketing. In one form
or another, there is no doubt that the medium will survive
and do well. However, the large question is in what form is
it most viable and the least corruptible by things such as
spam and bulk mail abuses that result in saturation. In
general, advertisements are becoming little more than
cultural artifacts and pop-art. The pop-art of Andy Warhol
and Roy Liechtenstein made advertisements sacred by
importing new meanings of cultural signification. But in
doing so, Brillo Boxes and Campbell Soup ads meant less as a
mode of selling and more as a mode of art. Once an object
becomes art, it is freighted with an entirely different
meaning than its original purpose. This is entirely
legitimate, but it means that advertising looses its ability
to sell commodities and instead points to other cultural
signifiers of material consumption. Walk through any
airport or mall and notice how the pastiche of ads do little
to actually drive sales, but instead becomes background
decoration and artwork. Branding is important, but there is
a fine line. In much the same way, email is quickly loosing
its grip as a communicable vehicle to drive consumer
action. Aside from the continuing rise of email readers who
delete instead of read, there are growing numbers who have
stopped thinking of commercial mail all-together and view it
as a part of the internet experience. Commercial mail has
even taken on a comedic edge in jokes on late night TV and
by modern artists who meld commercial mailings together to
form strange poems.
This is
dangerous for open rates, but it is even more dangerous for
the future of commercial email as a viable communication
vehicle worthy of media spending. Of course the culprit is
saturation. As a result of our actions, your next email
campaign teeters on the brink of becoming a future exhibit
in the Museum of Modern Art rather than a source of ROI or
ROAS.
Related is
the concurrent saturation of inventory in the industry. As
a former media buyer who still has many friends doing media
buys, I know first hand how difficult the job of supplying
affordable, reliable and legit media for a campaign can
become. It is not a job for the weak at heart. Why is it
so hard today? Saturation. As an industry, we’ve
cannibalized our inventory out of the game. Not enough
attention was, or is, placed on generating new data and
media that is not only sufficient for the ever increasing
demand, but also credible enough to appeal to
brand-conscious media buys. Resultingly, the saturation has
meant that the space has a self imposed glass ceiling
keeping it from attracting new media and new players with
large budgets. It is a vicious cycle and will take a
dynamic paradigm shift in how we think about acquiring and
handling consumer data to solve.
Lastly, and
related to the email and inventory saturation, is the
continued results of artificial pricing curves keeping the
price of media. I’ve hit on this subject before in Trends
Report, but it is important to consider the ramifications of
what such an artificial curve means to a saturated
marketplace. Specifically, will the industry out price the
CPA model for most advertisers and publishers? As CPM rates
continue to rise along the artificial curve, and media
buyers continue to seek new media in a self imposed limited
market sector, how will CPA survive? Of course, the answer
is not easy, if available at all. It lies in the murky
realm of figuring out a way to do CPA in the most optimized
manner. Some sector companies are already doing this and
the results are strong for themselves and their partners.
These are the companies with long term viability who will
keep the barbarians at the gate and who you should partner
with for the long term.
Consequently, my plane is finally landing and it has been a
stomach churning and bumpy flight. Hopefully, the industry
will fare saturation better in 2004 than my jet-lagged body
just did.
Sam Harrelson is the Co-Editor of the Digital
Moses Confidential. He can be reached at
sam@digitalmoses.com
