Google, Facebook and Amazon… these are the new Time Inc.’s, Hearst’s and Gannett’s and they’re not even publishers by any stretch of what we would have used to imagine.
“We have taught audiences to get content for free and to expect it for free. And in a way, it’s not only bad strategic decisions made 20 years ago when digital technology first began having its impact; if you think about it and go back 300 years, that was the offer then; the quid pro quo. Free or subsidized content in exchange for people’s grudging attention to advertising. It wasn’t so easy to ignore back then. And then when the digital revolution came around and publishers decided to attract an audience first and then figure out how to monetize it through digital advertising, not realizing that CPM’s were going to go down, down, down to the vanishing point, it was then that we reinforced the notion that content was free. So, it’s going to be really hard to retrain audiences to pay for what they’re using.” Bob Garfield
The Digital Revolution changed media and advertising, of that there’s no doubt. From the tangible ads that people were accustomed to holding in their hands to the commercials that begged our attention from our television screens each and every day; advertising not only paid the publishers and manufacturers bills; it gave us a connection to different brands that we could then assimilate to our own personalities. It was high cotton for everyone involved.
And then along came the Internet and the cyberspace that most of us couldn’t explain, but came to expect to always be there with free content and pop-up ads that we could either block or totally ignore. In fact, some years later, we’re even more adept and equipped to handle the job of eliminating those pesky ads from our vision and in turn, our minds.
(AP/Photo Michael Albans)
I spoke with Bob recently about the cessation of media and advertising as we once knew it. After many years of research and study, his words of wisdom are not blanketed with fluffy comforts and pats-on-the-head that everything is going to be alright; instead Bob takes a more aggressive insight and looks for ways to open up new avenues of revenue and communication between advertisers and publishers, such as the October 30, 2015, Media Future Summit which will be held at the Wharton School at the University of Pennsylvania. The summit will bring some top executives from all walks of publishing and media life together to try and make sense of the marketing and media landscape in today’s digital world.
Bob is determined to seek solutions to the revenue issues of today’s media world by studying and researching the panorama, while enlisting the minds of creative and business-motivated people who can contribute to the conversation to offer their views and ideas as well.
I hope you enjoy this fascinating and insightful conversation with a man who has spent his entire career up until now studying the habits and idiosyncrasies of advertising and media, Bob Garfield, columnist, critic, broadcaster, author and lecturer.
But first, the sound-bites:
On the most important change in advertising, marketing and the media industry over the last three decades: That’s easy. And it’s the same thing that’s affected advertising, marketing, media and production and everything else in that ecosystem, and it’s zeroes and ones. It’s the digital revolution and its earth-shattering impact on all of these industries.
On why he thinks the entire media industry was mesmerized by the digital revolution, yet couldn’t and still hasn’t determined a way to monetize it: I have two answers for that; I’ll give the more charitable answer first. There are a lot of really smart physicists and there are a lot of really smart economists and these people are very impressive; some of them win Nobel prizes, but there isn’t one physicist who can defeat gravity and there isn’t an economist in the world who can defeat the law of supply and demand; these are immutable forces of nature. And I don’t think all the king’s horses and all the king’s men can alter the economics that have been imposed by digital transformation.
On the Welfare Information Society that has been created with digital and whether he thinks it’s time to go completely back to print: We have taught audiences to get content for free and to expect it for free. And in a way, it’s not only bad strategic decisions made 20 years ago when digital technology first began having its impact; if you think about it and go back 300 years, that was the offer then; the quid pro quo. Free or subsidized content in exchange for people’s grudging attention to advertising. It wasn’t so easy to ignore back then. Some of the advertising was welcomed and most of it, we now know for certain, was not welcomed, but people couldn’t entirely avoid it and they knew that there was a compact; a quid pro quo, between the audience and the publisher.
On the thinking behind publishers’ devaluing of their subscription models and offering them for pennies instead of what they’re worth: You lose money on every issue, but you make it up in volume. And that’s what happens when you commodify audience and that has certainly happened; the prices go down and down. And this, by the way, is for print and paper magazines, we’re talking about. Just imagine that phenomenon in an exponentially more corrosive way in the digital world, because your audience grows and grows and grows and your CPM’s continue to go down because in a digital world, and I alluded to this earlier, but I didn’t actually say it explicitly, but in a world where there is infinite content, that means there is infinite advertising inventory. And in a world of infinite advertising inventory; what you can fetch as a publisher for any given bit of it is destined to be small.
On the increasing digital audience of publications and whether those people have any value to advertisers: There’s very little value of that audience to the advertiser. And that’s problem number one; it’s Trash Audience, which is not a judgment about human value, it’s a judgment of mercantile value. If your audience is in Lebanon and your distribution is only in the United States, it’s nice to have those people looking at what you’re producing, but it does you no good whatsoever. So, that’s problem number one.
On the solution to the problems, such as Trash Audience: I wish I knew. The summit will hopefully help with that. I mean, there are revenue streams. There’s incomers, affiliate marketing, rate of advertising, which I despise, there’s micropayments; there are ways to generate revenue.
On the nature of today’s media competition and how it’s gone from Hearst and Time Inc. rivaling for audience to Google and Facebook and even Amazon competing: Remember the good old days when there was ABC, CBS, NBC, Hearst, Hachette, Condè Nast and Time Inc.? There were a handful of giant companies and we actually worried about media concentration being antidemocratic. Well, now, despite the supposed democratization of publishing and the wide variety of voices that all have access to audience because of the zero-cost of production; we’re now looking at a universe where the competition is between Google, Facebook and Amazon, which is a bookseller. These are the new Time Inc.’s and Hearst’s and Gannett’s and they’re not even publishers by any stretch of what we would have used to imagine.
On whether he believes there is a dark side to the Internet and social media: Of course there’s a dark side. In fact, I’ve spent 15 years looking at both the Utopian and dystopian effects of these digital universes. Wide-scale plagiarism is something that we just examined. Of course, Jihadi sites and all kinds of criminal conduct; it all happened online and it’s not going to go away. We’re going to have to figure out a way as a society to deal with the fact that bad guys have access to the same knowledge that good guys have.
On whether he thinks brands are still important in this digital age: That’s a good question. I’m happy to report that brands still have value. Perversely, it seems to me that consumers, even millennials, embrace brands as never before. But what a brand has meant to audiences fundamentally is eroding. I say that because why did we have brands? They were shorthand; they were a proxy for actual understanding of the marketplace. Branding was a proxy for information and it created an important level of consumer trust; that was the most important thing that it did. But we no longer really need proxies for information; a few swipes of your thumb on your phone and you can find out absolutely everything about anything.
On what makes him tick, click and stick after 30 years in the business: (Laughs) That’s simple; I have offspring. And they’re very demanding. They want food and shelter; they want to be educated and they like weddings. (Laughs again) It’s not difficult to stay motivated.
On what keeps him up at night: I must tell you; what keeps me up at night has nothing to do with media or marketing. It’s political. I could go on and on with my answer, but let’s just say that I continue to be disappointed by the politics of at least half of the American people and a good part of the rest of the world too. And it troubles me deeply and it really makes me profoundly sad about, not just the country, but the species.
And now the lightly edited transcript of the Mr. Magazine™ conversation with Bob Garfield, columnist, critic, broadcaster, author and lecturer.
Samir Husni: Since we last spoke some 30 years ago, a lot of changes have taken place in the industry, but what would you say has been the most important change when it comes to advertising, marketing and everything you’ve been writing about, observing and critiquing all these years? If you had to pick one thing that you would consider the most important change of the last three decades, what would it be?
Bob Garfield: That’s easy. And it’s the same thing that’s affected advertising, marketing, media and production and everything else in that ecosystem, and it’s zeroes and ones. It’s the digital revolution and its earth-shattering impact on all of these industries.
There are ample benefits to the digital technology, but from a business point of view, it has been extremely destructive to publishers, agencies and marketers, who are having a very hard time dealing with all of the many ramifications of digital transformation. It’s great for keeping production costs down and for user convenience and for the democratization of voices that we have access to and all of those Utopian aspects of the digital world, but the dystopian effects are very, very profound.
Samir Husni: Supposedly people in the media business are smart, creative and excellent businesspeople; why do you think they were so stunned or mesmerized by this whole digital revolution that they couldn’t ascertain a way to monetize it?
Bob Garfield: I have two answers for that; I’ll give the more charitable answer first. There are a lot of really smart physicists and there are a lot of really smart economists and these people are very impressive; some of them win Nobel prizes, but there isn’t one physicist who can defeat gravity and there isn’t an economist in the world who can defeat the law of supply and demand; these are immutable forces of nature. And I don’t think all the king’s horses and all the king’s men can alter the economics that have been imposed by digital transformation. So, the one answer is there’s nothing anyone can do about it. The law of supply and demand, which is the real culprit here from a business point of view, has undermined the model that propped up the media and marketing for almost 300 years.
The second answer, which is closer to your question, is denial. The imperative of the incumbents to maintain the status quo; the notion that, just as you said, we’re really smart; we’ll find a solution here, just as if there were some magic beans that could be discovered that would make it all go away and restore profitable growth, but none of those things are going to happen. The universe has changed. The fundamentals of the economics of media have simply changed and that cannot be fixed.
So, what smart people have to do is figure out how to, and I’m going from metaphor to metaphor and I apologize for that, they have to figure out how to play the hand that’s been dealt and that hand will never include the kind of CPM’s (cost per thousand) for advertising that publisher’s used to enjoy. It will never change the fact that people don’t look at advertising anymore; they avoid it at every opportunity. And publishers have to work within that framework to figure out how to deliver their goods profitably to an audience that clearly wants more and more content. It’s a tough one.
Samir Husni: One of the things that I’ve been saying all along is that we’ve created a Welfare Information Society; that it’s going to be harder than hard to get people to pay for content because of the availability of content everywhere. And now with ad blocking and all of the things we’re hearing about it; do you think it’s time for us to just simply throw in the towel and say: let’s go back to the power of print?
Bob Garfield: (Laughs) Well, that would be great if you could put the toothpaste back in the tube; oops, there’s metaphor number five, I’m going for the record here, Samir. (Laughs again)
Samir Husni: (Laughs too).
Bob Garfield: It would be great, but you can’t go back and restore what we had as recently as 30 years ago; you just can’t do it.
But, you’re right. We have taught audiences to get content for free and to expect it for free. And in a way, it’s not only bad strategic decisions made 20 years ago when digital technology first began having its impact; if you think about it and go back 300 years, that was the offer then; the quid pro quo. Free or subsidized content in exchange for people’s grudging attention to advertising. It wasn’t so easy to ignore back then. Some of the advertising was welcomed and most of it, we now know for certain, was not welcomed, but people couldn’t entirely avoid it and they knew that there was a compact; a quid pro quo, between the audience and the publisher. Look at the ads and we’ll give you your Beverly Hillbilly’s for free or we’ll give you your Life magazine for $1, even though it costs us $4 to produce it. As a consequence, the subscription revenue was always a trivial cost for people and that’s what they came to believe was their birthright.
And then when the digital revolution came around and publishers decided to attract an audience first and then figure out how to monetize it through digital advertising, not realizing that CPM’s were going to go down, down, down to the vanishing point, it was then that we reinforced the notion that content was free. So, it’s going to be really hard to retrain audiences to pay for what they’re using.
There are various schemes out there for doing exactly that thing; I’m not especially optimistic about any of them becoming dominant. There are people who are trying to figure out ways to get people to pony-up, sometimes very cleverly, but the idea of that becoming the default way to monetize media, I think is a bit of a pipe dream.
Samir Husni: Recently I received yet another online offer from one of those magazine dealers, for lack of a better word, offering me subscriptions to almost all of the Time Inc. and Hearst publications for $2 and that was for an entire year.
Bob Garfield: (Laughs).
Samir Husni: When are we going to learn; when is the industry going to learn?
Bob Garfield: Yes; you lose money on every issue, but you make it up in volume. (Laughs again) And that’s what happens when you commodify audience and that has certainly happened; the prices go down and down. And this, by the way, is for print and paper magazines, we’re talking about.
Just imagine that phenomenon in an exponentially more corrosive way in the digital world, because your audience grows and grows and grows and your CPM’s continue to go down because in a digital world, and I alluded to this earlier, but I didn’t actually say it explicitly, but in a world where there is infinite content, that means there is infinite advertising inventory. And in a world of infinite advertising inventory; what you can fetch as a publisher for any given bit of it is destined to be small. And you can increase the value of your advertising with some targeting and you can increase it with video, but it’s still digital pennies versus analog dollars and those pennies will be moving to pay the bills. And that is the world we’re living in.
Which is why, as you know, I am organizing with the Wharton School at the University of Pennsylvania, a Media Post conference on October 30th in Philadelphia to examine the 12 or 13 different kinds of revenue streams that are available to publishers to see which is sustainable, scalable and ethical, and to discard the ones that are problematic and embrace the ones that have some potential as we try and get some level of consensus from all sorts of publishers, whether its E-books, daily newspapers, magazines or any type of published content. It’s a genuine summit where people from all over the media and marketing ecosystem will be present, top executives only, to try and make sense of all of this stuff. And short of collusion, (Laughs) try and get a bit of consensus.
Samir Husni: When we look at this growing audience for our magazines and newspapers; magazines that had circulations of 3 million and maybe an audience of 7 or 10, are now telling me they have audiences of 30 million on digital, but when you look at that audience, most of it is not from the United States. For example, everybody all over the world can now access Time magazine, whether you’re in Lebanon or Peking. Does that audience have any value to advertisers?
Bob Garfield: There’s very little value of that audience to the advertiser. And that’s problem number one; it’s Trash Audience, which is not a judgment about human value, it’s a judgment of mercantile value. If your audience is in Lebanon and your distribution is only in the United States, it’s nice to have those people looking at what you’re producing, but it does you no good whatsoever. So, that’s problem number one.
Problem number two is the advertising that you’re selling them, they’re not looking at. One thing we have learned, and this has all been enabled by the digital revolution, is if you give people the tools to avoid advertising, they will. We let ourselves imagine over 300 years that people would continue to put up with it, maybe every now and then they cherished it, and sometimes it was valuable to them, but we have now learned categorically that given the opportunity to avoid ads, people do just that. To the audience all advertising is Spam, full stop.
So, you’ve got Trash Audience; the audience that is not trash, that is theoretically valuable to you, is now looking at your ad, which by the way they may or may not be able to see because 50% of the ads that come through are not really viewable and that has to do with technology, but mainly fraud.
So, half of the industry is crooked and marketers are getting fooled by criminals and nobody is looking at the ads. And if they were looking at them, it doesn’t matter because they’re not in the target audience anyway. So, that’s a pretty unattractive business proposition. And I’m sorry to say I don’t really know the solution.
Samir Husni: And that was my next question; what is the solution?
Bob Garfield: I wish I knew. The summit will hopefully help with that. I mean, there are revenue streams. There’s incomers, affiliate marketing, rate of advertising, which I despise, there’s micropayments; there are ways to generate revenue, a lot of conferences and other kinds of box-office businesses that are spinoffs of the underlying media property.
But none of them, not even altogether, represent anything close to the revenue that we had in the good old days.
Samir Husni: What about the nature of competition among media? Suddenly, Facebook is looked upon as a media entity. Google is looked upon as a media entity. All of them are competing for the same eyeballs that used to belong to only media: television, magazines or newspapers.
Bob Garfield: Remember the good old days when there was ABC, CBS, NBC, Hearst, Hachette, Condè Nast and Time Inc.? There were a handful of giant companies and we actually worried about media concentration being antidemocratic.
Well, now, despite the supposed democratization of publishing and the wide variety of voices that all have access to audience because of the zero-cost of production; we’re now looking at a universe where the competition is between Google, Facebook and Amazon, which is a bookseller. These are the new Time Inc.’s and Hearst’s and Gannett’s and they’re not even publishers by any stretch of what we would have used to imagine.
And Facebook, you mentioned, may be and may provide the closest thing to magic beans, but again, that is the poster child for both the dystopian and Utopian aspects of digital revolution. It can, because of its reach and its tremendous data set, reach more people with a story, let’s say, from The New York Times, than The New York Times itself can. It can generate higher ad revenue, because of its targeting on Facebook, than the New York Times can, so the magic beans, the big solution could be The New York Times essentially feeds distribution to Facebook and gets more money, more advertising dollars times more audience. That’s a pretty good piece of arithmetic.
That’s something to think about; suddenly the distribution of The New York Times is in the hands of Mark Zuckerberg, who is not interested in journalism and isn’t interested in democracy; he’s interested in maximizing views and therefore he will favor stuff that is not necessarily the most robust journalism in the world. His algorithm will veer towards clickbait and therefore it will be the incentive of The New York Times to produce more clickbait and less of the journalism that has made it The New York Times all these years. It’s a public company and has responsibilities to its shareholders and its judiciary responsibility to them is to generate the most revenue and profits. So, what happens to robust journalism in that scenario? It’s a bit of a scary thought.
Samir Husni: And that brings me to my next question about the dark side of social media. When I interviewed Joe Ripp from Time Inc., he mentioned in passing that people are so excited about the digital world and social media, but none of us wants to think about the fact that there’s a dark side to the Internet and social media. Just look at the way ISIS is using it or the way Ashley Madison was using it; it seems that anybody can say or do anything they want with no curator looking out for the public’s best interests. Do you feel there’s a dark side to social media?
Bob Garfield: Of course there’s a dark side. In fact, I’ve spent 15 years looking at both the Utopian and dystopian effects of these digital universes. Wide-scale plagiarism is something that we just examined. Of course, Jihadi sites and all kinds of criminal conduct; it all happened online and it’s not going to go away. We’re going to have to figure out a way as a society to deal with the fact that bad guys have access to the same knowledge that good guys have. There are a lot of white hats, but there are also a lot of black hats out there too. And Joe Ripp is right; I don’t know what good it does complaining about it; it’s a fact of life.
Samir Husni: From your place of authority and expertise; what’s the power of a brand? Are brands still important in this digital age?
Bob Garfield: That’s a good question. I’m happy to report that brands still have value. Perversely, it seems to me that consumers, even millennials, embrace brands as never before. But what a brand has meant to audiences fundamentally is eroding. I say that because why did we have brands? They were shorthand; they were a proxy for actual understanding of the marketplace, so you knew that if Tide detergent had national distribution and you saw advertising for it, whether or not it was better than the competitors; you knew that it was in the ballpark. It might be superior or it might not, but it was a quality product or at the least a parody product. You knew that it was going to be backed up by its manufacturer, Procter & Gamble; you knew if something went wrong, they would refund your money and you knew that it was going to be there, not only that time when you went to the supermarket, but every time after.
So, branding was a proxy for information and it created an important level of consumer trust; that was the most important thing that it did.
But we no longer really need proxies for information; a few swipes of your thumb on your phone and you can find out absolutely everything about anything, including Tide and all of its competition, from 100 or more different sources through a Google search and other applications.
Strictly speaking, we don’t really need them anymore. Furthermore, distribution channels are going to change and there will be more direct sales, as the retail ecosystem also kind of collapses under digital revolution, the brand’s function for the trade is also less important. So, branding is under threat, and yet still counterintuitively millennials buy only brands and display them all over their bodies. (Laughs) So, there’s something else there.
Mainly I believe the other thing that a brand is, apart from being a proxy for information; brands did for years what Facebook does now, they’re badges. They helped people identify who they are and instead of just being an accumulation of your Facebook likes, brands still allow you to be an accumulation of consumer products that you prefer. You know; he’s a Ford guy or he’s a Maxwell House guy or just whatever. And people still cling to the notion that their brands help define them. And it’s a lucky thing because their fundamental purpose is really eroding.
Samir Husni: What makes you click, tick and stick in this business after 30 years?
Bob Garfield: (Laughs) That’s simple; I have offspring. And they’re very demanding.
Samir Husni: (Laughs too).
Bob Garfield: They want food and shelter; they want to be educated and they like weddings. (Laughs again) It’s not difficult to stay motivated.
It has been a bit of a nuisance that I’ve depended on my livelihood on a couple of industries which are in a state of collapse, both advertising and media; they’re both in a tailspin. (Laughs) And of course, I make my money in the media talking about advertising; that’s problematic, but I’ve been able to dine out on documenting the tailspin. So, until things actually crash, I guess I can still get a paycheck.
Samir Husni: My typical last question; what keeps you up at night?
Bob Garfield: I must tell you; what keeps me up at night has nothing to do with media or marketing. It’s political. I could go on and on with my answer, but let’s just say that I continue to be disappointed by the politics of at least half of the American people and a good part of the rest of the world too. And it troubles me deeply and it really makes me profoundly sad about, not just the country, but the species. And that does keep me up at night. I worry for our world.
Samir Husni: Thank you.
