Romancing the Net

It was as luminous as L.A. gets at eight in the morning. Studio chiefs. Production company heads. Bernard Weinraub, entertainment reporter for The New York Times. Peter Bart, editor-in-chief of Variety. Burt Manning, chairman of the J. Walter Thompson advertising agency, had flown his bearded self in from the CÙte Droite. The only person missing, it seemed, was Merv Griffin. But his picture was everywhere. He owned the hotel where hundreds of mediarati were juicing and schmoozing.

The most formidable of their number — Michael Ovitz of Creative Artists Agency; former CBS head Howard Stringer; and Ray Smith, Ivan Seidenberg, and Phil Quigley of Bell Atlantic, NYNEX, and Pacific Telesis, respectively — had come this May morning in 1995 to announce the formation of a $300 million joint venture in interactive television, which they dubbed Tele-TV. Stringer — beloved for his hard-times stewardship of the greatest of broadcast networks, and the highest-profile deserter to new media — was exultant. Media, marketing, and interactivity were about to unite, he proclaimed. “You are no longer restrained by the constraints of time!” he said, his accent a refreshing mix of Wales, Oxford, and New York. “Time as you know it is gone.”

Today, Stringer is gone — as are most of his partners. Having succeeded in their various real goals (a large finder’s fee, a desperately needed new job, scaring competitors away), they’ve found better things to do. And you don’t have to be a genius to detect the self-interest that has lurked beneath the development of new media. From the day Stolichnaya put an URL on a NoHo billboard to signal its hipness to New York’s downtowners, advertisers and their agencies have been feeding the hype and then exploiting the buzz of the Web.

Were it not for the fact that the media world knows no shame, the shamelessness of it all would be astonishing. Playing on advertisers’ valid fear that conventional print and electronic media have exhausted their ability to attract consumers, ad agencies, research firms, trade publications, and the digital dominion have been willing new media into existence, building them on a foundation of swagger and fabrication.

But here’s the beauty of it: They are stitching together a monster that will inevitably destroy its creators.

To understand the coming disintegration of Big Media, you’ve got to grasp the Knowability Paradox.

The massive edifice of Big Media has always been undergirded by a contradiction: No one understands how, or even if, advertising works. Because the system of production, distribution, sales, and communications is so large and complex, attempting to isolate the effectiveness of a single element — advertising content, for example — is all but impossible.

Historically, advertising agencies have exploited this confusion by urging clients to buy more pages, more spots, more billboards. The agencies became more profitable, which in turn led to the creation of more media. But to forestall uncomfortable scrutiny by a business culture addicted to scientism and certitude, agencies were always on the lookout for new gimmicks designed to draw attention away from advertising’s inscrutability and toward the unverifiable but desperate need for more.

Hence the Knowability Paradox: The less we have known about how advertising and the media work, the more advertising and media have been produced. And the more advertising and media have been produced, the more they have shaped the culture they saturate. Sitcoms, docudramas, advertorials, celebrity covers, radio, shock jocks, drive time — the forms and conventions that are as familiar as the air we breathe owe their existence to the fact that we don’t know what works to attract consumers, or why it works. Hence the continual hammer of innovation against the hard shell of tradition.

But evidence abounds that people just aren’t paying attention. The phenomenal growth of a few megabrands like Nike can’t disguise the fact that, despite a 70 percent increase in U.S. advertising spending between 1986 and 1996 — from $102 billion to $175 billion — more people than ever believe that most products in most categories are exactly alike.

 By the dawn of the 1990s, it was clear that new gimmicks were needed, equal in their subversive power to marketing’s earlier gimmicks. So advertisers and their media supplicants have tried ever more ham-handed ways of blurring the line between advertising and content. BMW tied the launch of a new car to its paid placement in a James Bond flick. The Los Angeles Times last year reorganized its news division around Procter & Gamble’s brand-management model, putting marketing executives on an equal footing with editors. Media giants set up or acquired new narrowcast cable networks, the better to reach consumers with identified interests, all primed for the targeted sell: Chop TV for martial-arts enthusiasts, the Recovery Network for 12-step aficionados, and so on.

Great ideas, but all subject to external tension. Newspaper readership continues to drop, by 10 percent in the past four years. Sports sponsorships by tobacco companies invite government scrutiny. Even heavily promoted new networks like MSNBC and Fox News top out with an average daily viewership of between 20,000 and 100,000 households, probably not much more than the circulation of your local weekly newspaper. By the time the recession began to lift in 1992, a much better gimmick was needed if advertising as we know it was to survive.

The Internet happened at exactly the right time.

The Net, though, is different. Different from the 30-second spot, the classified ad, and the four-color double-truck. Different from product placement, NASCAR logos, and rock-tour sponsorship. Different from Leo Burnett’s Middle American corn, David Ogilvy’s sophisticated imagery, and Phil Dusenberry’s boffo productions.

The Net is accountable. It is knowable. It is the highway leading marketers to their Holy Grail: single-sourcing technology that can definitively tie the information consumers perceive to the purchases they make. No less an institution than Procter & Gamble, perhaps the most influential force in advertising in this century, recognized this when it announced a little over a year ago that P&G would compensate its online media outlets on the basis of clickthroughs — the number of people who push the button and choose to read an ad.

The old guard of advertising and media reacted to the proposal with a mixture of indignation and fear. After all, if P&G’s practice were to be adopted industrywide, it would destroy the very basis of advertising and the media it supports: imperfect research (like broadcasting’s Nielsen and publishing’s Simmons, which project total audiences from small and often flawed samples); pass-along readership, out-of-home viewers, and similar numbers-game chimeras; and ad-agency creative “geniuses” and their fulminations about unique selling propositions, power copy, and like hokum. With accountability they all must wither and die.

Accountability, of course, has existed for generations. It’s called direct marketing, and responses to it can be tabulated and, to a large degree, controlled. But direct marketing is enormously expensive, the lag time between call and response is too long, and it’s still too damned inefficient, a 2 percent response being akin to nirvana. And you can never build a brand through direct marketing; there’ll always be a difference between image advertising and (ughh!) retail advertising.

The new media technologies, by drastically reducing production and distribution costs and making possible almost continual and instantaneous refinements in message, promise to increase the efficiency of accountable advertising so that widespread adoption of it, not as an ancillary medium but as the primary communications choice, becomes inescapable. That powerful brands will be built by such means is as certain as the fact that primitive junk mail created L.L. Bean and antediluvian infomercials spawned the Psychic Friends Network. The spurious distinction between image advertising and retail advertising will erode, then disappear, as each advertisement, every product placement, and all editorial can be tied to transactions.

In other words, just as the billion-channel universe descends upon us, knowability will wipe away marketing and media as we know them. Communications conglomerates will lose their oligopolistic control of limited media shelf space. The conventional media forms they produce and dominate will diminish in influence as audiences are drawn to thousands of new variations whose ability to entertain, inform, and induce transactions will be knowable and known. Marketers will marshal their resources, spending only as much on a given venue as their returns can justify. If quality information and entertainment are to survive, the consumer will have to make up the difference.

In early 1995, after 18 months abroad, I returned to a city, a country, a culture ablaze with Internet fever and called an acquaintance with a plaintive request for help. He was one of Silicon Alley’s rising stars, an expert on the fortunes and presumptions of this fresh medium, and I just couldn’t understand all the zine start-ups, the friends transferring from “old” to “new” media jobs, and the gallant affirmations of an advertising inflow that would surely topple the structure of New York’s Communications Corridor. As we hunched over beers and cheeseburgers at one of Greenwich Village’s more venerable literary pubs, I asked him where all the rosy projections were coming from. “We make them up,” he said. “Everyone does.”

I had dinner again last fall with the same friend. We talked about Net Hoopla, the shakeout in the zine market, and the failure of some recent interactive media IPOs. I couldn’t help but wave a self-righteous finger at him. “All these things went down,” I said, with inquisitorial satisfaction, “because you and your pals inflated the figures.”

“Oh, we don’t do that anymore,” he responded. “Now we know this thing can’t be stopped.

Randall Rothenberg is a former editor, media reporter, and columnist for The New York Times and Esquire and the author of Where the Suckers Moon: An Advertising Story. Reprinted from Wired (Jan. 1998). Subscriptions: $39.95/yr. (12 issues) from Box 55689, Boulder, CO 80322-5689.

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