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According to the most current US Census Bureau (2004), the US median household income is about $44,400, with a mean of about $60,500. Brian Wieser (of Magna Global) wrote in his July 2006 edition of Madison and Wall that “in 2005, only 27% of households earned more than $75K, while 39% of households earned between $30K and $75K, and 34% of households earned less than $30K.” He also wrote about income distribution inequality caused by economic growth even as average household income rises.

I think this impacts the business models for media consumption by the masses. DVR subscription services and pay-per-download online video have revenue streams. However, their adoption is encroaching on saturation levels of early adopters. Paying a monthly DVR subscription fee (on top of regular, already-rising, cable/satellite tv fees) and/or $1.99 per episode of a tv show on iTunes, may turn off those not in the top 27% percentile of household income. The majority of media consumers would rather not pay, preferring to consume free content on tv and/or radio in return for viewing ads. Nowadays, consumers are savvy enough to make that trade-off themselves. And giving them that option allows for self-selection, leading to win-win for both sets of consumers.

Research has shown that consumers are willing to view advertising in return for free content, regardless of distribution methods (old fashion over-the-air television, online streaming video, etc…) Of course, relevancy and entertaining are important factors to an ad’s effectiveness. That is exactly what Joseph Jaffe emphasized in his book “Life After The 30-second Spot”. When it comes to new media (online video and the like), original ad content is more effective than repurposing an existing ad from television. Moreover, there isn’t any rigid time constraint anymore. And repetitive ads are annoying the consumers.

A company called Spot Runner may help ads be more relevant (by location anyway) and less repetitive. By making it easier and cheaper for businesses to advertise on tv within their local area, those ads become more relevant (location-wise) to their audiences. Moreover, households who don’t subscribe to DVRs services (and skip ads) tend to be households that frequent local businesses more-so than higher-income households who skipped ads with their DVRs. So, Spot Runner is targeting to the right self-selecting audiences, whether by design or serendipitously. The more local businesses advertise on tv, the more variety of ads will be available and repetition is reduced. Well, one can only hope.

Note: email me directly (kwlowwg01 (at) g mail) if anyone wants a copy of Brian’s paper. It’s not available for download online but I can forward the pdf.