First Draft by Tim Porter

Know Thy Customer

I'm at a conference for a few days in San Francisco in connection with the Institute for Justice and Journalism. At a kick-off reception last night, we watched the documentary "No Place to Hide," based on the book of the same name written by Washington Post reporter Robert O'Harrow Jr.

While the piece, originally broadcast on ABC and narrated by Peter Jennings, was a bit squishy around the edges -- made so by Jennings being struck with an acute case of on-the-one-hand-on-the-other-hand-itis -- it showed both the power of data collection and the potential for abuse.

I thought of Nowhere to Hide this morning when I was reading this Alan Mutter's post on Newsosaur about the waning power of newspaper advertising and the medium's subsequent loss of appeal to advertisers like Home Depot.

Alan quotes Deutsche Bank analyst Paul Ginocchio:

"Due to retailers capturing more customer data via in-house credit cards, loyalty programs and online sales, retailers now have much more information about their customers. As direct mail and online ad results are much more auditable and tangible, they are going to capture ever-larger allocations of ad budgets.

"If newspapers are not able to segment more precisely, make themselves more measurable and help retailers reach their overlapping customers (via comparing databases and by household-by-household targeting), then newspapers will continue to lose retailers' ad dollars."

In other words, just as the journalists who work at newspapers have fallen out of touch with their communities, so have the advertising teams not mined the market for the data advertisers demand these days.

The result, says Gnocchi: Newspapers provide one of the worst returns on investment for advertisers of all media.

Mass media is fast disappearing in the rear-view mirror. Ahead is the age of massless media, an environment that requires variable business models and flexible content that can support them. Unfortunately for newspapers, "variable" and "flexible" are not two of their better qualities.

Posted by Tim Porter at February 1, 2005 07:50 AM