“The observation made in 1965 by Gordon Moore, co-founder of Intel, that the number of transistors per square inch on integrated circuits had doubled every year since the integrated circuit was invented. Moore predicted that this trend would continue for the foreseeable future. In subsequent years, the pace slowed down a bit, but data density has doubled approximately every 18 months, and this is the current definition of Moore’s Law…”
–Moore’s Law, defined in Webopedia
Essentially, Moore’s Law describes a technological landscape that doubles processing power every 12 to 18 months. This keen insight has held true for over 50 years. It is now time to apply Moore’s Law to a new landscape; the digital media landscape. I call this, “Moore’s Law of Media“.
It is now axiomatic that data and information is exploding. We are doubling information every 12 months. This also means that we are doubling our data collection even faster. Data collection has become the number one online activity for media owners. The reason? Data now equates with advertising or media. This is where the money is.
It may not be immediately apparent how data and media have become equivalent in the 21st Century. We will leave this explanation for another time, but it should surprise no one that digital media is doubling every 12 months, hence the moniker, Moore’s Law of Media. This includes hundreds of billions app impressions created from millions of free apps.
You will not read a lot about the overwhelming media supply in the digital landscape. Why? It is not good for media owners’ businesses to let the cat out of the bag that scarcity is not an issue. Scarcity drives up prices. This leads to creating a fiction surrounding the supply that industry trade publications gladly propagate. The lack of discussion about digital media supply is in contrast to digital ink devoted to the need for targeting.
So if media supply is doubling every year, what is the growth rate in media demand? Here we have many folks weighing in. The range of growth in demand is usually cited between 12%-20% annually. Are you beginning to see a problem or opportunity here?
What does Moore’s Law of Media mean for the online industry?
I cannot be more emphatic. It has never been a better time to be a marketer in the history of the world. I am going as far back to when cave dwellers chiseled marketing messages on cave walls. With media impressions doubling every year and demand at best increasing 20% annually, there is a tremendous opportunity for marketers to collaborate with media owners and share revenues. This means that unsold advertising creates real opportunity for savvy marketers.
However, for publishers Moore’s Law of Media describes a landscape of falling CPMs and trying to rely on extreme targeting to counter falling CPMs. This strategy cannot work for publishers in the long run. To understand this last statement, one only needs to contemplate a thought experiment. If I told you that you could have your marketing message seen by 7 billion people on the planet free or you could get your marketing message seen by your ideal target audience for $100,000, which option would you choose.
Only a fool would choose to pay money. The subset of the target would be in the 7 billion anyway. Understanding Moore’s Law of Media leads any thinking person to the conclusion that as supply increases, prices fall and as prices fall to near zero, targeting becomes an exercise in stupidity.
Publishers should cast their lot with good quality marketers rather than holding on to a model that will soon come crashing all around them. For marketers, understand Moore’s Law of Media before all your competitors do.