I had a fascinating few hours of conversation with some folk from various parts of the media industry last week, and it got me thinking about how there is so much talk at the moment about the role of data in marketing, and particularly the use of data to be able to specifically target advertising messages to more responsive audiences (ie put your ads in front of the people most likely to purchase the things you are flogging).

From an advertisers perspective, this looks eminently sensible on the face of it: it’s surely going to be far more effective for your messaging to reach one hundred people who are likely to purchase, than one million where only 100 are likely to purchase? Of course this puts an overly scientific spin on our understanding of how advertising works, which is much harder to understand than the data wonks would lead us to believe.

From an advertising industry perspective, however, precise targeting and personalisation is a complete nightmare; the inefficiencies inherent in the mass media models that still dominate broadcast media are the profitability for media owners and ad agencies (there still aren’t that many people who can get you the million-plus audience).

Think about it: whilst, say, Sky can charge a reasonable whack for their airtime, how would their inventory pricing have to change if advertisers were paying for much smaller numbers of more precisely targeted ads through something like the Sky AdSmart? The psychology of pricing would seem to me to say that the cost per person to whom the ad has been delivered has to drop dramatically, and whilst there then becomes a lot more ad space to sell, diseconomies of scale would result.

This doesn’t even begin to touch then on the impact to the creative side of the ad industry. TV ads in particular are still often big spend items, the cost per minute vastly outstripping many Hollywood movies (again something of an unfair comparison, but worth thinking about). In a world of highly targeted advertising, creative spend is redundant. If I’m talking specifically to the person who will buy the product, I just need to tell them that: think Google ads, or Amazon recommended products (or, to an extent, Clubcard or Nectar card voucher offers). That this sort of advertising is now so popular is an indication of its efficacy.

But, of course, it’s not as simple as that. Running an advert a national newspaper, or on a TV channel in prime time, has a set of social and cultural meanings way above merely the base message of flogging widgets: it says you’re the sort of company that can afford to take out ad space and fill it with something beautiful and creative (or, in the case of people like DFS, at least take out the ad space). But it is perfectly possible these days to build up a brand at a global scale with an innovative business model and little or no traditional marketing spend – look, for example, at the Spanish fashion brand Zara.

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