The idea that “the media is dying” is so cliché that a Twitter account chronicling its alleged demise is now 10 years old. But this time is different, according to Aaron Shapiro, CEO and founder of Huge, a New York-based digital marketing and consulting firm.
Machine learning, big data, and consumer exhaustion with traditional ad formats are re-writing the rules of digital media, and Shapiro said during a chat at SXSW.
“There is a very big shift happening,” Shapiro said. For the last 20 years, digital media was based on capturing our attention. We got all this stuff for free in the exchange for service providers, selling our data to advertisers.
But now, “advertising is not working as well as it is used to,” according to Shapiro. “People see an average of 3,000 advertisements every day.” If you are a marketer, you are just one of those 3,000, [and] that is a difficult position to be in. “
The economics are not much better for publishers and service providers forced to do battle with Google and Facebook for digital scraps. “Like it or not, we are in a duopoly,” Shapiro said. “Over 80 percent of digital spending goes to one of those two companies.”
What about pivoting to video? That will not help either, as 90 percent of YouTube users click “skip ad” as soon as possible, while others flock to the ad-free confines of Netflix. “Advertisers are spending millions on a 30-second ad and users are only seeing four seconds of it,” Shapiro said. “That just is not sustainable.”
Going forward, Shapiro sees a digital world focused on efficiency. Uber replaced traditional taxis because it made it easier to hail a cab. The Dollar Shave Club took a commodity product directly to the consumer and now owns the entire value chain, upselling users on shave cream and aftershave. When the Unilever is bought, the Dollar Shave Club, it is bought in the efficiency economy.
“The way to be viable is the long-term is to be a direct-to-consumer and the whole value chain,” Shapiro said. “[It’s] how more and more companies are going to evolve.”
Check out our full interview with Shapiro in the video above.
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