TV Commercials, print ads, billboards, Google Ad words, RSS ads--all kinds of advertisements--are ways for brands to reach customers. Each media has particular attributes, pros, and cons for their use as an advertising medium. The variety of places to advertise is overwhelming.
The people in an ad agency who make the decision on what ads to place where are media planners. They decide the best mix of media, how much of each, and the proper rotation to meet each client's particular objectives. Media planning is a discipline based upon objectives, budgets, reach, frequency, and meetings/lunches with media reps trying to convince the planners to use their media.
The end result is a schedule of all media that will be purchased for a campaign with the resulting audience delivered. Hopefully, the audience actually buys something from the company so that the investment in media dollars ends up making good business sense.
But of all the media choices, how do planners and clients know that the final media plan will actually deliver the best results for the dollars spent? Planners will tell you that's what their expertise does for their clients.
But is there another way?
Surowiecki's thesis is that given the proper conditions, crowds can make excellent decisions. Examples of prediction markets include the Iowa Electronic Markets, which have predicted the outcomes of US presidential elections more accurately than polling since 1988; the Hollywood Stock Exchange, which correctly predicted 35 of 2005's 40 big-category Oscar nominees and 7 out of 8 top category winners--and sells their data to movie studios; and newcomer Hedge Street, which seeks to predict future economic events.
In these markets, anyone can buy and sell shares of actors, directors, movies, and film-related options, in the case of the Hollywood Stock Exchange, and presidential nominees, in the case of the Iowa Electronic Markets. The idea is that a diverse crowd of people can make better decisions than one or two experts.
According to Surowiecki, there are three conditions needed to harness the Wisdom of Crowds:
1) The audience is diverse.
2) Everyone makes decisions independently of each other. In other words, there's no peeking.
3) There's a mechanism for aggregating everyone's decision.
Violate any of these conditions and the Wisdom of Crowds turns into the Madness of Crowds. Crowds that are homogenous tend to make similar decisions; crowds that can see what decisions other people are making tend to act like a herd of sheep, following the leader; and crowds that can not communicate their decision do not end up making one.
So, why can't we harness the Wisdom of Crowds in media planning?
The idea would be to develop a predictions market for media plans. Say, medium sized brand like Bianchi Bicycles, for example, needs a media plan. They post their requirements on the Media Planning Prediction Market (MPPM) website. Then, anyone can create a plan that they feel would meet their objectives and anyone can vote on everyone's plans. To maximize the quality of plans submitted, planners pay a modest amount for each plan they submit; a pay to play fee. Votes cost a modest sum, too. This provides incentive to choose wisely.
At the end of a predetermined amount of time, the plan with the most votes wins and Bianchi pays the planner for the plan. Winners receive a cut as well.
Note that anyone can create a plan and anyone can vote on a plan. To work best, the market need not be limited to people in the media industry, which satisfies Surowiecki's rule #1.
How will the media planning industry react? I predict most will think the idea won't fly. It minimizes individual's expertise in favor of a crowd. They'll concentrate on the Madness of Crowds, rather than the Wisdom of Crowds, ignoring Surowiecki's criteria for wisdom. But a few brave, smaller brands will take the plunge. Maybe they'll be Web 2.0 companies, who understand this Wisdom of Crowds thing in their bones. Maybe it's smaller brands that feel they have nothing to lose; maybe it's a band, or other entertainment property, that sees the PR value in being the first. I don't think it'll be a traditional business. But aside from the newness of the experience, I think the biggest objection will be from companies not wanting to put their objectives on the web for all to see. But doing so will be critical if they are to benefit from media plans that actually meet their objectives.
After a few successes, I believe the Media Planning Prediction Market will make room for itself in the marketplace and become a viable business. It won't take over the industry, but it may be a nice alternative, especially for smaller brands. The media planning industry is ripe for a prediction market; planning has many variables because of all the advertising choices, so complexity is part of its DNA. A Media Planning Prediction Market would roll up all the complexity into the decision of which is the best media plan out of the choices available. Crowds would help make the best decision.
Who 's with me on this?