If you want the math done right, ask a creative director: Traditional media is overpriced by 58%

According to Kathy Durham, VP of Marketing at HP, 40% of the media people consume today is online, yet advertisers spend only 5% of their money in the online space. Allow me to do a little math for you. This means 95% of media budgets are directed at 60% of media consumption. This means that advertisers are overpaying for traditional media by 58%. On the other side of that coin, it means they are underpaying for interactive media by 87%. 

Now, the mossbacks will immediately come that advertisers know what they’re going to get for their investments in traditional media, whereas they’re unsure what they’ll get for their investments in the interactive space. Set aside for the moment that we know with some certainty that 21st-century consumers are more likely to believe a recommendation for a product they receive from a friend or independent third party online than they are to believe pitch that comes uninvited through their TV set. Just because something is easy to measure doesn’t make it the right thing to do. Advertisers and agencies alike have been slow to take the steps that are necessary to build compelling mathematical models capable of breaking out ROI by individual media. Make no mistake, not only is this possible, some of the better brands in America already do it and do it well. The math required is complex, but very doable.

The math about how much advertisers are overpaying for traditional media, however, isn’t complex at all. A child could do it. Why do the numbers seem not to bother anyone?

Do marketers overestimate the value of the iPhone?

The Wall Street Journal reports that Apple and RIM (i.e., the Blackberry guys) “accounted for only 3% of all cellphones sold in the world last year but 35% of operating profits, according to Deutsche Bank analyst Brian Modoff. The disparity will become even starker this year when, he estimates, the two will take 5% of the market in unit terms but 58% of total operating profits.” Obviously, this is jolly good news for Apple and RIM, but is it good news for marketers?

iPhones are undoubtedly one of the coolest technology products ever, and they sold 5.2 million units in the last quarter (up a staggering 626% from the same period last year), yet they still hold a very small percentage of the mobile phone market. How many brands are rushing headlong into the development of an iPhone app even when the market share numbers may not justify it? Of course, there’s something to be said for the caché of having a brand presence on the latest gadget, but I suspect the allure of that approach is fleeting in this challenging economy (at least for the clients who are paying the bills).

Will Baby Boomers kill Facebook? Will Facebook kill them back?

Deborah Rogers, professor of English at the University of Maine, shares some provocative thoughts about Facebook in “I poke dead people: The paradox of Facebook”  on The Times (i.e., of London) Higher Education website. One of the things she wonders about is the likelihood that the arrival of droves of overweight bleached blondes in mom jeans and dorky forty-something white guys will devalue the digital real estate. When they start showing up on Facebook, the cool kids say “there goes the neighborhood,” and look for a new place to hang. Even if that doesn’t happen, Rogers is fairly confident that the curious form of interaction on social networks will make us somehow less human. She sees evidence of this in how Facebook deals with, among other things, death. Below are a  few choice quotations to whet your appetite:

Even as it facilitates our ability to connect, the collective social-networking culture changes our way of thinking about everything from friendship to death. And not in a good way. As a technological medium that fetishises individualism, Facebook invites disaster.

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Facebook redefines what it means to connect to each other and provides a huge audience for self-absorption. Nothing is insignificant. Everyone wants to know everything about us, all the time. In the minutiae that mark the triteness of an inherently boring everyday life, we may recognise our own situation. Facebook’s fixation on individualism makes ordinary people feel important enough to warrant such attention – or inconsequential enough to need to document every aspect of their existence. The trope for this exhibitionism may be outing ourselves – and everyone we know.

*      *     *     *     *

…the medium fails to allay our sense of despair and loneliness. For example, several months ago, Paul Zolezzi, an aspiring actor and model, hanged himself on the monkey bars in a Brooklyn playground. He had posted his suicide note on Facebook, where he said that he was “born in San Francisco, became a shooting star over everywhere, and ended his life in Brooklyn … And couldn’t have asked for more.” On Facebook, even suicide notes sound flippant. In fact, apparently assuming Zolezzi was joking, a friend commented on his Facebook page: “Are you dying? Or just staying in Brooklyn?”

Is conspicuous consumption being replaced by conspicuous expression?

I’m not sure I’m buying their argument in its entirety, but Stephen Linaweaver, Brad Bate and Michael Keating have written a provocative post on GOOD, “Conspicuous, but not Consuming,” that certainly merits discussion. Their theory is that social networks are filling the hole left in our lives by our inability to buy as much stuff as we used to. The lads write:

…”conspicuous consumption’ is being replaced by “conspicuous expression” as the driver of identity. This new paradigm emphasizes the conspicuousness of ideas, interests, and opinions rather than accumulating more stuff than your neighbor. This is not insignificant. How billions choose to distinguish themselves from one another will be just as important to global sustainability as how they power their homes, what they eat, and how they commute to work, making online social networking a critical “leapfrog” technology in the developing world and a surprisingly powerful source of behavioral change in the developed world.

Are Facebook and Twitter the medicine that will cure our addiction to acquiring things? Let’s wait a bit before we draw that as a final conclusion. An enormous preponderance of the self-expression on social networks winds up like the proverbial tree that falls in the forest. Not a sound is made. Nor am I certain that 65-inch HD TVs will lose their allure because people will choose instead to forsake them and turn to the fleeting rewards of digital egotism. Nevertheless, in the short term at least, it does seem as if many are amusing themselves in a down economy by taking refuge in the social networks and doing what Ken Kesey used to refer to as “starring in their own movies.”

Paris Hilton, Pauly Shore, Jimmy Fallon? Solving the mystery of the persistence of fame without talent.

Looking to save a little dough on your next celebrity endorsement, or at least feel better about paying someonewho has absolutely nothing going for him to endorse your client’s product? Check out “How Celebrities Stay Famous Regardless of Talent” by Ewen Callaway on newscientist.com. Pretty interesting stuff for advertising professionals as well as for anyone who must live in a world where Michael Jackson’s funeral is considered an important global event.

How to recognize the end of the recession, depending on where you’re standing.

As we all wait for the strangely reassuring sound of our economy hitting bottom, it’s worth spending a few minutes reading “What Does The End of the Recession Look Like?” by Annie Lowery in Foreign Policy. The recovery, when it comes, will almost certainly not be neat and clean. There will be winners, losers and massive shifts in economic clout. This article is a pretty good estimation of what the world might look like when the bounce begins.