March 12, 2018
The Media Industry: Deja Vu All Over Again?
By James G. Brooks

If you’ve seen or read The Big Short, you will most likely remember how blue-collar folks in Florida suddenly had multiple mortgages that the banks were giving out indiscriminately.

That was as good an example as any to mark the moment when the U.S. banking industry had lost touch with the value that mortgages were supposed to represent. We all know what happened next. The 2008 housing crash took down much of the world economy. 

I worked on Wall Street during the early years of the recovery. A decade later, I’m now working in the video advertising industry and I can see some eerie parallels. The media equivalent of mortgage-backed securities are people paying six figures to get tweets from a Kardashian. Advertisers are getting caught up in this bubble the same way. They need to return to the fundamentals of media brands that create loyal audiences by providing quality content. Here are three indications that the media bubble is exploding:

Fake followers

Influencer marketing has been all the rage over the last few years. But there are two types of influencers. The first is an expert, whose recommendations are likely to carry more weight than the average fan. The other type of influencer is a celebrity who may or may not know anything about the product that they’re endorsing. 

Celebrity endorsements are nothing new, of course. But research shows that online recommendations from friends or non-celebrity bloggers work better than celebrity recommendations. That makes sense since we all know that celebs are getting paid for their endorsements, while your friends aren’t (you hope).  

Marketers have attempted to short-circuit this process by conflating celebrities’ “influence” with follower counts. Unfortunately, that’s not a reliable metric, since many top celebrities pad their follower base with bots, according to a recent New York Times exposé

Fake news

The other signal that the center is no longer holding is the ongoing fake news dilemma. Facebook has had a flattening effect in which stories from legitimate news sources look the same as fake stories generated to produce cash.

Facebook, of course, has recently cracked down on this by tweaking its news feed. But the damage has been done as consumers have turned their back on clickbait-y news sources and are once again valuing legitimate news sources like The New York Times, which has seen a  jump in paid subscribers

Fake placements

Fraud has been an ongoing issue in digital media and caused an estimated $6.5 billion in losses in the industry in 2017, per the ANA. Such fraud is based on fake traffic in which botnets simulate the activity of human readers with fake clicks. 

This situation came to a head in 2017 as Procter and Gamble, Unilever and JPMorganChase, among others, denounced such techniques and began once again gravitating towards known media brands. 

2008 all over again? 

What we’re seeing in media is a market correction. But unlike the housing market crisis, instead of causing widespread economic havoc, this correction is a net positive. Advertisers are gravitating back to fundamentals of the media business and investing once again in trusted media brands that serve up content with integrity to real consumers. That’s a correction in the best sense of the word.

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