Wednesday, January 09, 2008

The Boomers Get Attention and the Weak Get Culled in 2008

The Boomers Get Attention and the Weak Get Culled in 2008
And It Won't Be Any Easier for the CMO
By Jonah Bloom
Here's a look at what's coming in 2008.
Even the quadrennial kick of Olympics and election won't be enough to hide the fact that advertisers are spending more time and money speaking directly to consumers or trying to insert themselves into word-of-mouth networks. Along with marketers' ever-increasing frustration about the opaque returns on their media investments, this shift already has caused a drop in media's share of the marketing pie and a slowdown in revenue growth. Factor in the rising cost of raw materials, particularly paper prices -- which are expected to climb 25% this year -- and the shift in major media companies' investments to the digital space, and you've got something akin to a perfect storm. Smart media owners will make the tough decision to kill off the weaklings this year -- especially as they'll know that 2009, without the prexy circus, could look even worse.

Oh, that this would be the year marketers got away from lumping us together in laughably broad age and gender groups. It won't. Sure, advertisers will get better at responding to individuals' online behavior and tackling us in our self-identified, interest-based communities, but they still want and need broader targets, which is why we'll see even more media launches in the boomer space, along with hundreds of millions more marketing dollars allocated to the demographic. A good year to be the AARP; a bad year if you don't like ads depicting handsome old folk surfing, skydiving and generally having more hair/a better time than you.

Facebook and MySpace will have the longest lines of advertisers looking to get into their clubs in 2008. Of course, as those advertisers pay their admission fees and filter in, there'll be more Beacon-backlash-type tales and plenty of grumbling from the natives. Gated communities, with subscription or premium-service business models, will pop up offering better online living without the nasty ad riff-raff. Still, the leading social networks already have the scale to record rapid ad revenue growth this year. The question is whether they'll grow fast enough to persuade all the VCs to stand by the thousands of Web 2.0 businesses that are also seeking ads as their major source of income. They can't all be winners -- marketing money moves more slowly than venture capital, if it moves at all -- and there'll be a host of implosions. Still, as any web watcher will tell you, this ain't 2000. There are a handful of VCs and evangelists whose pride will smart a little, but no battalion of shareholders left carrying the can. If a Web 2.0 company falls down in the woods and only the VC gets hurt ...

The McKinsey Quarterly said recently: "The biggest shift in today's marketing world isn't the much-discussed declining effectiveness of TV advertising, but the changes in how consumers research and buy products." That's why today's marketing chiefs are becoming multimedia information providers, community creators, conversation facilitators, and monitors of the thousands of ways their companies interact with consumers. Today's CMOs still need instant scale in their armories -- that's why they get so excited about MySpace or Facebook and still pony up billions for broadcast -- but they need to operate simultaneously on a niche, local or even person-by-person level that recognizes that any video-phone toting Tom, Dick or Jeff Jarvis can make or break their products today.