Monday, March 06, 2006

The futures of Advertising

With much teeth gnashing and finger gnawing among the ad industry intelligentsia (an oxymoron for certain), the future of the business is being debated. You see of course that all manner of technology and social forces (maybe even genetic ones too!) are conspiring to place control of one's attentions in one's own hands, rather than the formerly homogenous and concentrated media outlets.

iPods, Satellite radio, the web and bloggers even let you see what you want to see, hear what you want to hear, say what you want to say...when you want. So what's a poor ad exec to do when the job search goes nowhere? Invent the futures of advertising of course!

WTF? Well, let's start with seemingly absurd futures ideas. Here's what the Chicago Mercantile Exchange has to say about weather futures:

http://www.cme.com/trading/prd/env/cmeweather14270.html

"It is estimated that nearly 20 percent of the U.S. economy is directly affected by the weather. As a result, the earnings of businesses can be adversely impacted by summers that are hotter than normal or winters that are much colder than anticipated. Conversely, revenues of power providers and utilities can suffer from either balmy summers with less need for air conditioning or mild winters with less heating demand from consumers.

CME created a weather derivative market which enables those businesses that could be adversely affected by unanticipated temperature swings, to transfer this risk. Just as professionals regularly use futures and options to hedge their risk in interest rates, equities and foreign exchange, now there are tools available for the management of risk from extreme movements of temperature. This sector of hedging and risk management products represents today’s fastest growing derivative market. "

So, using this as a model, one could replace certain of the precepts with the word 'attention'. What are people paying attention to? When? Where? And how much of it can be predicted? Each day every individual has 24 hours...that's fixed. So subtracting out all the statistical averages for time sleeping and other 'unattentive' moments, you get a market of potential attention. MOst of that attention will be given over to the routine daily habits of life: flipping on the radio, firing up the laptop, browsing your favorite chat room...all the usual suspected places to capture or engage someone's attention...the places where advertising (in it's most general sense) already tries to make headway. But what about the unanticipated events that capture collective attention...HurricaneKatrina, Acts of Terror, Alien Landings ?

The unanticipated presents risk to the advertisers who bank on the relative proportion of attention they can gather in the normal course of a mass audience's day via the accepted and emerging vehicles available to them. So why not a future's market for attention...to be used by advertisers? You could literally buy and sell the future value of blocks of attention through various vehicles...maybe the massive vehicles (e.g., cnn.com, FoxNews, the NYTimes) get priced at a premium for these futures...maybe they get priced down as people race to their favorite small-time chat room to discuss what's going on with those who are there...no intermediary necessary. That's not my call, let the future's market decide. The benefit to advertisers would be a more uniform pricing model for units of attention...no more of the BS impressions...they also get a way to hedge the risk of consumer attention being diverted by unforeseen events...again, putting a more consistent, long term view on the value of attention in the marketplace.

But that's just the beginning...at some point, it changes the mechanism of advertising from a need to get attention, to the need to sustain attention...and there is no way advertising will ever compete with real life for that...30 seconds out of my 24 hours doesn;t register, the awards winners notwithstanding.

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