As a media person, I hear lots of distress about the future of the industry. Content creation jobs are becoming more scarce, budgets are tighter, and there is a general malaise about traditional media. It doesn’t help that today that Brightroll CEO Tod Sacerdoti has written a rather pointed attack on traditional media.
Sacerdoti, writing an “influencer” column on LinkedIn (by the way, executives publishing freely on social networks is another way traditional media is being disintermediated), points out that as advertising becomes increasingly analytic and programmatic, it’s cutting the fat out of the advertising supply chain — and pressuring prices.
This means that premium, expensive ads offered by traditional media companies are coming down in price as ad buyers increasingly go to program solutions offered by companies such as Google and the large ad networks.
“In short, software is eating the digital advertising business,” says Sacerdoti.
Sacerdoti references a Marc Andreessen essay from a year ago title “Why Software is Eating the World.”
He points out that the traditional media industry is filled with inefficiency and waste:
Programmatic media buying, which I define as using software to automate the process of buying and/or selling digital advertising, is bringing significant efficiencies to advertisers in terms of workflow, pricing and the avoidance of waste, which is dramatically altering the online advertising landscape.
So what’s the deal, is Sacerdoti right? Is traditional media doomed?
Mostly, I think he’s on the mark. But he’s also missing things. It’s true that with various ad networks, software programs, and automated ad buying approaches, you can get some more bang for your buck. But this is still largely a phenomenon at the bottom of the ad food chain — low-priced commodity ads, such as banners and video pre-rolls.
But what about Super Bowl? Super Bowl ads have been going up and up and up. Then never go down. This past year, a 30-second Super Bowl ad was $4 million, and many experts expect that to climb to $10 million soon!
What’s the message here: Super-premium ads will always be that. The ad market is like any other market, it’s about supply and demand. So you either need to go for volume and scale or you need to have content that is truly unique, that can’t be replicated, that attracts advertisers who want real value through scarcity.
The automated Internet ad networks are great for commodity inventory: Move ads in bulk in common formats to a huge range of long-tail content in anything from niche markets to mainstream consumer goods.
But if you want to survive in the premium market, there’s still room to create a product — a content product — that’s unique. Computer programs can’t create the next Harry Potter or Super Bowl (yet).
So take your pick in the media market: It’s a race to the bottom or the top, depending on where you want to go. And I submit to Mr. Sacerdoti: It’s not as simple as you make it sound.