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"Digital May Be the New Reality..."

Posted on Saturday, February 28, 2015 at 10:54 PM

..."but it's no cure," says Advertising Age magazine.

By William Dunkerley

The February 8, 2015, issue of Advertising Age touts itself as "The Digital Issue." It provides some insights from the ad industry point of view that we should all pay attention to.

The general gist of things is that there is a strong push by advertisers for greater digital involvement. But achieving solid and lasting results seems to be more complex than meets the eye. The concluding line of Ad Age's editorial lays it on the line:

"Digital holds much promise, but it is not an answer in and of itself."

What's Inspiring So Much Promise?

Ad Age claims "private equity keeps plowing dollars into digital publishers."

Author Michael Sebastian writes, "Last year, venture capital poured at least $683 million into digital media companies worldwide -- more than twice the $277 million invested in 2013," citing Preqin, a company that tracks venture-capital investments.

But That Presents a Problem

But being flush with cash is one thing. Profitability is another. And Ad Age author Simon Dumenco points out that that some digital publishing companies are not profitable. He suggests that the influx of investments leaves some of us to "compete against publishing startups that have the license to burn through tens of millions of dollars quickly, while having no particular mandate to become real businesses anytime soon."

In concluding advice Dumenco offers: "If you're in media and you're competing with startups that have been funded by deep-pocketed and delusional investors, it can feel like you're constantly climbing into the ring with opponents you know are on steroids. The trick is to try to stay on your feet, or at least cling to the ropes, until their dealers cut them off."

Does Digital Spending Yield Results?

"It's impossible to draw a straight line between digital spending and results," assert authors Jack Neff and E.J. Schultz. What kind of results are advertisers looking for? You'd think that sales or some other measurable business result would be the objective. But advertisers appear to be foolishly seeking statistical results that may not be directly connected with ultimate business success.

For instance, there's a strong interest in the simple metric of viewability. Certainly getting readers to view an ad is necessary for that ad to have a chance of success. But the connection of mere viewability to business success is somewhat nebulous.

Nonetheless, advertisers seem focused on simple viewability. An Ad Age sidebar by Alex Kantrowitz says: "Advertisers [say] to publishers: show me the viewability (or else). For publishers 100 percent viewability is not a future theoretical but a present reality. Viewability demands on three advertiser requests for proposals obtained by Ad Age show the standard is now a common requirement sent to publishers."

And then there's the reliability of digital metrics in general. Can they really be trusted?

Does Anything Else Inspire Promise?

Growth in the smartphone market is clearly attracting eyes to digital.

A comScore December 2014 report on the U.S. smartphone subscriber market indicates that 182 million people in the U.S. owned smartphones. With smartphone penetration reaching such impressive highs, many consumers are using this handiest of all Internet-access devices as a source of information. The trend is away from desktops and toward smartphones.

In March 2014 MarketingCharts.com reported "over the trailing 12 months, total minutes spent accessing the Internet from desktops declined by roughly 3.5 percent (not a precipitous decline, to be sure), while time spent with mobile apps surged by 43.7 percent. Total minutes spent accessing the Internet via mobile browsers, while small in comparison, also picked up steam, increasing by 41.4 percent between February 2013 and January 2014."

So are smartphones the place to be? Maybe, maybe not. Sebastian notes that "at the New York Times, for instance, more than half its digital audience comes from mobile, yet just 10 percent of its digital-ad revenue is attributed to these devices."

The Final Kicker

"The ecosystem itself is plagued by trust issues. Even when fraud isn't a concern, it still has trouble delivering ads that can actually be seen," editorializes Ad Age.

But that's not the worst of it. Despite the hyperfocus on digital media by the private investment community, and despite the competitive challenges that may present to others, Sebastian reports there are "widening concerns that another startup bubble has formed."

A bubble? Where's that going to leave us when it bursts?

There's more to the great digital transition than you'd think from all the glitz, glamour, and hype we're being subjected to. We need to get our acts together and figure out some practical strategies that will lead us to prosper from the transition and avoid bursting with the bubble!

William Dunkerley is principal of William Dunkerley Publishing Consultants, www.publishinghelp.com.

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