Tobaccowala: Digital Media Costs Rising High

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Fragmentation and consumer control will drive the cost of digital media upwards by 20 to 30 percent annually over the next several years, predicts Rishad Tobaccowala, chief innovation officer at Publicis Groupe Media and president of SMG Next.

"At some stage it becomes more expensive to buy Google than to buy network television," said Tobaccowala, citing the pay-per-click auction environment and the costs of re-aggregating audiences once reached via a single network TV buy.

Tobaccowala spoke about the challenges facing media buyers at an online advertising conference in San Francisco this week.

"Less and less are you going to have products that are very broad-based," he said. "We have a different economic model for our television-based plans, and a different one for the re-aggregated plans, and the second one costs 10 times as much."

Tobaccowala also predicts media buyers will simply have to pay more to capture people's attention in an increasingly consumer-controlled culture.

"The cost of getting someone's attention is going to go up much, much more," he warned.

Some of those costs will be driven by targeting and measurement technologies necessary to reach increasingly fragmented audiences, while others will stem from the need to make creative more attention-getting, Tobaccowala said. Combining rich data with outstanding creative ideas is what's needed in the future media environment, he opines.

"We believe the future is left brain and right brain. We believe it's both," he said. "It's not going to be the tyranny of numbers, nor is it going to be the petulance of artists. You can program and numericalize as much as you want, but sooner or later you're going to need the people and the ideas."

While the media honcho was very positive about the future of digital media, he cautioned against the return of 1999-era arrogance, saying it could hinder attempts to forge important partnerships.

"People say, 'media will take over everything; data will take over everything; digital will take over everything; search will take over everything,'" he warned. "And the truth of the matter is nothing will take over everything."

Tobaccowala gave the keynote address and spoke on a panel at the OMMA West Conference and Expo on Monday.