Audience Buying: The biggest news to happen in media since the postal service by Barry Lowenthal

The dirty little secret that was never talked about, but always understood, is waste tolerance. A client with a hard to reach target (e.g. CEO’s who hated golf) or really high margin products (e.g. automobiles and yachts) often had a high tolerance for waste. These clients were willing to buy media with low target compositions because they had a hard time finding their product audience efficiently.

For these kinds of clients, buying a magazine that delivered 500,000 readers was still a ‘good’ buy even if only 10,000 readers were likely to be customers.

It’s no wonder John Wannamaker famously said ‘I know half the money I spend on advertising is wasted, but I can never find out which half.’ When you’re buying media with low audience compositions you’re probably wasting a lot more than half your media budget.

For years direct mail was the media channel with the lowest waste. DM was the best media channel to deliver one-to-one communication. Marketers around the world owe a great debt to the United States Postal Service and our neighborhood mail carriers. But there were still deficiencies with DM. We were not reaching customers close to purchase (we were reaching them in their homes), audience segmentation was limited and purchase behaviors were still not easily assigned to individual household residents. But it was still a lot more precise than a primetime TV buy.

But the Internet is fully disrupting yet another industry and this time it’s media buying.

Now, using the latest cookie technology media buyers can separate a digital media impression into two parts: the media placement (e.g. a banner on Forbes.com) and the audience. For instance I can now easily capture the cookies of people who visit my Client #1’s website, use those cookies to find prospects and customers when they request a web page while surfing, and serve them an ad. I can do all of this in near real time. I can also use those same cookies to find people who look my customers or who are part of their social network. I can even buy data and append those cookies to learn more about the folks that have visited my Client #1’s website.

I can now serve an ad to just the people I want based on actions they’ve taken that indicate where they are in the purchase funnel. This is a major development and will revolutionize the way media is bought.

Now when we buy display we no longer have to worry about waste. 100% of our media investment is working hard. Instead of buying media placements we will buy audiences. And just the audiences we want.

Once all media is digitized there will be no waste. While I hope that budgets remain intact, I can easily imagine that client’s budgets will shrink as the wasted investments are used to fund other business needs. Clearly this will wreck even more havoc in the agency business since billings are directly tied to revenue.

In the meantime, more and more money should and will flow to media that are entirely addressable and precisely targetable, i.e. search and display. No longer will we have to buy media as a proxy for a particular audience. Now we’ll know exactly whom we’re reaching and where we can find them.

We are finally moving to a world of audience buying. We will no longer need to use a media vehicle like Elle to reach the fashionista. Now I can find the fashionista wherever he or she appears online. And probably pay a lot less for her.