Rick Ducey, EVP

John Wanamaker was an American entrepreneur and innovator in the mid 1800s who is credited with coining the phrase, "I know half my advertising is wasted, I just don't know which half." He brought us the first integrated shopping experience when he launched the first real department store. He also introduced us to the modern age of advertising when he bought space in newspapers to tell about his department store.

Wanamaker's philosophy included the values of respecting your customers, giving them a fair deal, providing accurate information and offering an environment that supports the buying process. His ideas are as fresh today as when he first politely unleashed them on the world. And, his challenge as an advertiser was to spend his money effectively. Sound familiar?

Like many of us, Wanamaker supposed that half of the money he spent on advertising brought customers in and drove business but the other half of his advertising had no effect. But why? Two major companies in the media business AOL and Nielsen are trying to answer Wanamaker in their own ways.

According to TNS Media, advertisers will place over $150 billion into the U.S. AD market this year across 19 traditional and digital media categories. That is up about 4.9% over 2005. That is a lot of money and whether you are an advertiser for a large enterprise or the owner of your own media company, everyone requires accountability for how and where their money is spent. As Wanamaker knew, the best kind of accountability is "hearing the cash register ring." The next best choice is to know that your advertising reached the targeted consumers.

The promise of traditional media such as broadcast and print media is that your advertisement will appear in the same place, at about the same time as the media exposure. Research firms like Nielsen, Arbitron and Scarborough provide statistical estimates and demographic descriptions of the audience-media exposure opportunity for advertisers. The genius of research firms is in leveraging the power of inferential statistics to develop relatively cost effective estimates of population parameters from small but representative sample surveys.

But digital media has entered the scene. Driven by technologies such as Web 2.0 applications and platforms (e.g., RSS feeds, database-driven dynamic web pages, personalization, collaboration, interaction, sharing, community building), mobile (bringing voice, music, video, data to the palmtop), broadband connections (DSL, fiber to the home, cable modems), home consumer networking, server and router innovations (e.g., WiFi, Tivo, Slingbox,), all forms of digital media have changed the underlying media ecosystem and the nature of the audience/exposure promise made by traditional media.

The new, digital media create different kinds of exposure opportunities and provide new metrics that seem more accountable in some ways than what the traditional media offer. This is changing advertising spending. Rather than offering statistical estimates of audience exposure to advertising messages, precise individual level data can be tracked with clickthroughs, downloads, cookies and other techniques.

The apparent precision of loads of individual level data versus sample survey estimates has some advertisers excited because they see digital media offering more accountability. Take a clear cut scenario: You buy an ad on a web site. A visitor clicks on your ad and comes to your web site. Once there, she clicks through several pages and then makes an e-purchase. You can track the site that delivered her, which ad she responded to and link that to a specific purchase. On the other hand, it's easy to identify the Ads that did not deliver such a response and, as such, can be stopped. Wanamaker is smiling in his grave.

We are living in the age where much of the money, historical consumption patterns, ownership and public policy are deeply rooted in the traditional media. However, the disruptive potential of the digital media is making an increasing impact by changing the assumptions and the rules of doing business. As traditional and digital media confront each other, the result is a reforming media ecosystem whose dimensions we are just beginning to understand.

And looking forward, here is the interesting news - both digital and traditional media will win because they have to! Why? Because they each serve specific functions.

To read the rest of this Perspective, BIA Financial Network invites you to download the full version.

The Perspective will explore:

• How traditional and digital media compete yet complement each other
• Audience measurement in both media
• Case studies from both traditional and digital industries
• New age of accountability
  • Nielsons new rating of commercials audiences
    • The affect on media placement decisions
    • The good or bad news for television?
  • Arbitrons electronic personal radio listening measurement
• The future direction of advertising dollars
• AOLs decision to stop charging for dial-up
  • Behavioral versus contextual advertising
  • The impact to traditional advertising
• And, how the hybrid car you (may) drive reveals the future

Click here to request a copy of the report.