IBM released an interesting new report earlier this week that predicts the end of advertising as we know it within 5 years.
To quote IBM
Traditional advertising players risk major revenue declines as budgets shift rapidly to new, interactive formats, which are expected to grow at nearly five times that of traditional advertising. To survive in this new reality, broadcasters must change their mass audience mind-set to cater to niche consumer segments, and distributors need to deliver targeted, interactive advertising for a range of multimedia devices. Advertising agencies must experiment creatively, become brokers of consumer insights, and guide allocation of advertising dollars amid exploding choices. All players must adapt to a world where advertising inventory is increasingly bought and sold in open exchanges vs. traditional channels…
The report observes four change drivers tipping the advertising industry balance of power:” control of attention, creativity, measurement, and advertising inventories.” Consumers’ attention has shifted, with personal Internet time rivaling TV time. Consumers have tired of interruption advertising, and are increasingly in control of how they interact, filter, distribute, and consume their content, and associated advertising messages. IBM’s survey findings demonstrated that half of DVR owners watch 50 percent or more of programming on re-play, and that traditional video advertising doesn’t translate online: 40 percent of respondents found ads during an online video segment more annoying than any other format. Amateurs and semi-professionals are increasingly creating low cost advertising content that threatens to bypass creative agencies, while publishers and broadcasters are broadening their own creative roles. Advertisers are demanding accountability and more specific individual consumer measurements across advertising platforms. Self-service advertising exchanges are attracting revenues that were once exclusively sold through proprietary channels or transactions.
The Full report here (pdf) makes for interesting reading, particularly for anyone working in an advertising related business. A lot of it states what many of us already know, but it doesn’t hurt to have this validated in writing.
(via Slashdot)
Far reaching statemets..forward looking statements..I wonder why people make them.
Blazing fast video search:
http://www.meet...earchVideo.aspx
Alrighty then!
Its nice to have all your hunches fleshed out into so much detail!
Of course, if IBM has published a report on it, its common knowledge. Reality will play out somewhat differently. Sort of like how the theory of relativity says that the act of observation changes the observed.
What blows my mind is how the big media and advertising players are still acting like they have their heads in the sand.
craig @3 … i sometimes think the big guys are the last to know… it is certainly true in politics, why not business or tech… and that is why, to me, they are not really big guys, except to those who don’t know
Product Placement will be the only traditional marketing tool that will keep pace with the growth of new media, enjoying a CAGR of 20 percent, says the report.
This is why all forms of future advertising will be typically found in content. Self service niche ad marketplaces like our own will enable advertisers and content producers to DIY.
BULL!
The reason the advertising agency is losing their credibility is there seems lack of creativity, the user generated media appears much stronger where any individual have an opportunity to innovate things and add value to the content.
IBM does a good job from time to time summarizing Conventional Wisdom in ways that are favorable to its own business interests, in this case providing the consulting services and IT infrastructure to handle a distributed multi-platform DiY-wth-IBM’s-help advertising/marketing campaigns for Big CPGs. However the almost universally negative reaction to Facebook’s attempt last week to justify its $15 B valuation with social marketing indicates that it will be difficult and maybe impossible to fully replace the broadcast model with a distributed one. That the large advertising agencies will be challenged in this brave new world is a given. What happens to the advertisers (e.g. Ford, P&G,Pfizer) who won’t be able to efficiently reach their audience? They have the budgets but no good place to put them.
Drew@9… why does media distribution and delivery fragmentation have to result in “fully replacing” a broadcast (legacy mass-media) model? Can’t they co-exist? — granted, while broadcast shrinks every year until the market stabilizes.
The example of television co-existing with radio comes to mind. IMHO, the major brands will likely adapt to micro-marketing, but I’m less sure of the future role of traditional advertising and PR firms.
The leap-of-faith investment model — with huge production budgets — simply doesn’t translate well to the online realm, where frugal folks measure everything relative to meaningful ROI performance.
It isn’t that big media doesn’t totally understand this, they just jump directly to the wrong response which is: how can we protect our existing business by stopping people from having choice. How can we force unskippable ads onto DVR’s and into internet streams. and things like that.
Yes, just like in 1997 there were all kinds of ’serious’ predictions in the media that ‘within 5 years’, all local bank branches in the US would close, being replaced by online banking.
So many of these predictions are generated by nervous-nelly corporations, scared of their own shadows and dreading the next technological advances. They fail to see the big picture, though, that ingrained ways of doing things tend to persist a lot longer than these histrionic Nostradamuses would guess…
It is sometimes difficult to stand alone, when the largest company in the world, Google, makes 95% of their revenue from advertising. Here is what I think I know, Tivo changed TV and the Net already has that level of technology, so advertising is going away as we know it. Go ask 10 people, do you prefer stuff with ads or without? 10 for 10….no ads. I’ll go on the record, ads are going away in
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I’ll go on the record, ads are going away in less than 2 years, it’ll all be permission based content…btw MA, I made this comment at the FOWA conference in Sept 2006 and you put me down, saying “you have to run a business”.
Our obsession with impressions has given way to identifying the highest quality destination(s) for campaigns. The better targeting = ROI algorithm makes complete sense from media planning and business perspectives, however correctly identifying your audience is no assurance content is effective once it arrives. Media planning decisions based on marketing forensics and web analytics cannot deliver predictable outcomes on content. Ads continue to roll in multiple flavors to see what sticks. Moreover, the days of “any press is good press” are long gone. The speed and pervasiveness of the Web enables the wrong message to damage Brand equity faster than Paparazzi on motorcycles.
The flip side is the power of visibility to trends as they begin. Remember when Mr. Gore’s son was ticketed going 100mph+ in a Prius? Overnight, as young Mr. Gore pondered his driving skills, that single event dramatically changed perceptions about Hybrids. No longer are they viewed unable to compete on performance. In this case, positive buzz about an entire category of products was kick started across Brands. Honda gained as much as Toyota. Smart Marketers interact with Consumers on an ongoing basis and roll campaigns taking advantage of events as they happen. Consumers create trends- Not Brands. Brands attempt to shape trends through advertising in the hope Consumers validate them at the cash register.
As a guitar player, I admit I’m interested in Fender and Gibson ads. Once my brand / product affinity is revealed, Marketers need answers to important questions: In what formats do I want my content served? Which versions of their Ads? What intervals? What is the tipping point between amusing and annoying? To know me and what I want, Brands must interact and challenge my thinking by posing the right questions. Most importantly, what will prompt me to pop for that $2500 Sunburst Reverse Firebird VII?
Given the opportunity, Consumers are more than happy to provide insights into what content they like, particularly as it relates to their interests and Brands. Consumer-influenced campaigns targeted at “communities of interest” will consistently deliver the highest returns on media spend.
About the Author: Michael Campbell is CEO of Mukti Inc., a start up developing BuzzCurve.com, the Media Intelligence Platform for Marketers.
This report is great and all, but can anyone explain to me what “microversioning” is? And how about “pod management” and “campaign bleeds”?