by Diane Mermigas
http://blogs.mediapost.com/on_media/?p=46
It sounds dramatic to declare "The End of Advertising As We Know It," but the title of a new report from IBM Global Business Services is hardly an overstatement. It's more like a documented warning of what should be heeded (and isn't) without the specific guides and models for change that are so desperately needed.
The report provides a laser-like focus on radical change in advertising and all aspects of media already underway that has prompted more discussion than action. Based on the findings of a global survey of 2,400 customers and 80 advertising executives, in connection with Bonn University's Center for Evaluation and Methods, the report identifies four advertising scenarios that will likely prevail within five years.
With Google's ad auction-based ad sales and placement already a model, the report predicts advertising inventory will increasingly be bought and sold through more efficient open exchanges. More marketing will be matched specifically with consumers who are more receptive to and in need of the pitched products and services to maximize ROI. Precise measurement of consumer response to specific ads and companies will determine effective pricing as users monitor and respond to the full spectrum of technologies. Those three scenarios are givens.
The report's fourth scenario is debatable: the one-to-many model continues to dominate, but the industry evolves in response to widespread use of DVRs and the popularity of user-generated and peer-distributed content.
More likely, time-shifted recycling of content will be built into all media devices and players that will make the DVR obsolete. The one-to-many model will likely dissipate faster than anyone expects for purely statistical reasons. Advertisers will not be able to justify throwing the majority of their dollars into mass-market impression-based media when they can quantify and qualify consumer connections they can continue to mine.
As is often the case with sweeping survey-based summaries, the latest IBM report is sprinkled with too many gee-whiz statements about media realities. Things like: as users migrate to new screens for content and information, advertisers will have to shift as well. Survey respondents overwhelmingly confirm they expect radical changes in advertising over the next five years. However, the report's lack of feedback on particulars-such as the design, direction, pricing, placement, measurement of and consumer interaction with advertising-underscores a de facto thesis. Media executives, advertisers, agencies, measurement firms and even consumers are not prepared to capitalize on the transformation underway.
At the same time, the report and survey results smack of a reluctance to let go of the traditional ways of doing things. For instance, two-thirds of the executives surveyed expect 20% of advertiser spending to shift from impression-based to impact-based formats in three years. Economic imperatives could make for a faster, bigger shift that will sap the revenue base of incumbent, traditional content distributors and aggregators, the report states.
In other instances, the survey reflects that respondents expect short-term dramatic change, but are not prepared for dealing with it. More than half of the ad executives interviewed said they expect new open ad platforms over the next five years to take 30% of the revenues currently flowing to broadcasters. That will likely bring an end to the broadcast networks' advertising upfront sales. Considering broadcasters' dependence on advertising revenues, which also are threatened by declining television ratings and media fragmentation, that is an alarming development.
Also within five years, a majority of advertising executives expect 15% of television viewing time and 25% of PC time to be devoted to user-generated content-dictating an entirely new approach to direct, interactive marketing and commerce. Details about the survey responses in an accompanying discussion document are interesting, and confirm what media players know or suspect. TV is increasingly becoming a secondary background medium, compared to Internet activities and playing online games.
The more important questions the report raises are about the future role of ad agencies and consumer response to new forms of marketing that interrupts or accompanies their online information and communications.
In some cases, the report's questions are misguided. It asks: "Do advertising industry players have the customer analytics needed to better understand and reach target customers?" Instead, the more pointed question is what specific analytics and metrics should be provided to help advertisers connect with and measure their interaction with targeted consumers. Where should they be sourced? Accurate, appropriate measurement is the most urgent issue confronting advertisers, media companies and even consumers seeking to redefine the value of marketing.
Simply referring to the fact that set-top boxes, portable devices and other head end-based hardware-as well as software technology and companies such as Nielsen Media and TiVo-are enabling improved targeting, tracking and response capabilities across all media formats just doesn't cut it anymore. A short list of companies dabbling in change would be more meaningful if the report examined their news business models and modified old ways.
The report identifies the need for content owners and broadcasters, distributors, ad agencies and advertisers to innovate creative, interactive connections with consumers; new business models and redesign company infrastructures. These are necessary tasks we have been mindful of for years, and we're still lacking concrete ideas on how they can be accomplished. Now that everyone has bought into digital interactivity, we need templates for change.
And that's where the best intended research and surveys fall short. Media players and advertisers are desperate for concrete ideas, business models, creative formats. They need a road map on how to alter their existing infrastructures, operations and processes to accommodate the new digital ways. They need particulars to help them construct personalized solutions. Too many pricey consultants are still dealing in generalities, not specifics.
The IBM report offers a fine summary and point of discussion of what we know. But it's also a stark reminder of what we don't know-and what we need to do in order to become participants in digital change rather than mere observers.
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