Michael Wolff and I have been covering the Web for about the same time, which is since it was spun in 1994.
The difference is he’s famous and I am not. This is fine by me. I have a great life, and anonymity is a precious commodity, as anyone who is really famous will tell you.
Fame can also turn your head. You see yourself on TV often enough and you start to think that’s more real than life. It isn’t. It’s less so. TV isn’t real at all. It’s just another file format, one that over time is becoming cheaper-and-cheaper to move around.
What is rare is not TV, but audience. Defined markets are increasingly difficult to come by, and TV channels deliver them. The Womens’ World Cup Final drew a large, defined audience. CNBC telecasts draw a smaller, but still defined audience. We can estimate an audience’s value and assign a cost per thousand to it. We can then evaluate brand messages based on how well they perform, using tools that have been around for decades, with defined markets.
We can do the same thing on the Internet, but who needs to? Everyone’s definition of their market is different. You can build your company’s own defined market in pieces, at very low cost, with Google or Facebook or even Amazon. Those people won’t be experiencing your ad at the same time, the ad may not appear next to content that relates to the audience, but they will see it. And you can put a call-to-action into the ad and pay for just that action – no waste.
This is great for advertisers, or for anyone who is selling a thing, a service, or a proposition. If you look at the current Republican polls for President, you’ll notice that TV candidate Donald Trump is threatening to storm the field, but if you’re smart you’ll also notice that Dr. Ben Carson is right behind him. Why is Carson doing so well? It’s because he’s using the Internet, paying call-to-action rates to build his mailing list and target specific individuals. By contrast Trump is just saying outrageous things on the TV box and people who are asked by pollsters who they remember are saying his name. Will that translate into votes? Not likely. Will Carson’s strategy translate into votes? Very likely. It’s certainly getting him into the debates, and that’s what counts right now.
I don’t care for either of these men. They’re Brand X and Brand Y to me. They simply illustrate what is happening in the market. Michael Wolff says Trump’s rise proves his thesis, that “TV is the new TV,” that the Internet is dead as an ad medium, that only TV can deliver value. I say it’s Carson’s rise that is more significant. It’s happening under the radar, like the rise of Howard Dean 12 years ago. Carson is using intrinsic targeting – ads delivered based on who you are rather than what you’re looking at – to reach his target market at a very low cost, and the success of that effort is reflected in polls.
I have been studying the use of technology in politics since 1996, when it was based on static Web sites that had contribution buttons on them. I saw the rise and fall of webrings in 2000, the rise and fall of blogs that couldn’t scale in 2004, then the rise of Barack Obama’s scaled intimacy in 2008. The story of this cycle, so far, is low-cost Web advertising.
This is the story because it is different. What Hillary Clinton is doing isn’t that much different from what Obama did 8 years ago. What Bernie Sanders is doing isn’t that much different from what Howard Dean did 12 years ago. Carson is moving the needle without using TV, and doing it in a new way. That’s different. That’s called news.
It also illustrates the fallacy of Wolff’s thesis. What he’s really saying is that TV is better for programmers, right now, than the Internet is. It’s better for writers, for talking heads, for producers. In that, he’s right. What’s good for advertisers like Dr. Carson is horrible for Web sites. The last decade has seen an audience arms race among a new class of aggregation sites, born out of the blogging metaphor. Sites like Huffington Post have been met, and exceeded, by newer sites like Buzzfeed, Vox Gawker and Vice. These are sites that generate mass audiences, which essentially recycle content rather than producing it, because recycling is cheaper.
These sites are playing a loser’s game. They are like wheat farmers in the early 1930s. They’re trying to stay ahead of deflation, but they’re just running in place. Run of network ad rates keep declining, because the network known as the Internet keeps getting bigger. Even the value of a click or some other action keeps falling, because supply is overwhelming demand.
Advertisers call the tune, and they are voting with their dollars, not for TV but for the Internet. Internet ad revenues have now blown past cable TV ad revenues. They hit $42.8 billion in 2013. For just the first quarter of 2015 they were $13.3 billion. That’s a $53 billion pace, and 2014’s numbers were 16% higher than year before. All TV ad revenue is expected to grow from about $75 billion last year to $81 billion five years from now. Those lines are going to cross.
TV is not winning. TV is losing. What’s happening is that programmers are losing, talking heads are losing, and writers like me are losing. (So is Michael Wolff.) The big Internet story today is video, sticking a camera in front of a writer and letting him read what they wrote, or just collecting clips that can be indexed and displayed. The recyclers are generating video as fast as they can, which means they’re increasing their costs, but the deflationary impact of Internet economics says that this, too, is a sucker’s game.
What I wrote 20 years ago still holds true. Journalism is about making markets. It’s about putting buyers and sellers together. Online success will come from seizing more of each transaction’s value, not from putting up billboards next to content in hopes a buyer drives by it.
The next step in journalism’s evolution lies with merchants. When one sees the value of credibility, and combines that with direct purchasing, they will have created an efficient commerce machine that makes ordinary advertising obsolete. Watch what Facebook does, what Google does, and especially watch what Amazon does in the next few years.
