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Research Dig ital ad ve rtising
On the brink of ad revolutionThe nextfiveyears will hold more
changefor theadvertising industry than thepast50, according to a
study from IBM.It reveals that in the words of the man-aging
director of a European advertiser;"We will see neutral evaluation
of allmedia formats. There is no primary rolefor linear TV any
more."The research surveyed more than2,400 consumers and 80
advertising exec-utives from around the world. SaulBerman. one of
the report's authors andglobal lead pa rtne r for strategy,
change,media and entertainment at IBM GlobalBusiness Services,
spoke exclusively toBrand Strategy about the insights gath-ered by
his team and what extra infor-mation they've gathered since the
reportwas puhlished."We try to look at areas where wethink there is
a need for change in theway business is traditionally done."
heexplains. "We wrote about TV a few yearsago because we believed
that like themusic industri it was going to be threat-ened and
challenged by new businessmodels. We have seen that come true
withvideo websites such as YouTube. Webelieve the same disruption
is now occui'-ring in the advertising space."Change driversBerman's
research suggests there arefour change drivers shifting
controlwithin the industryAttention Consumers are
increasinglyexercising control over how they view,interact w ith
and filter advertising . In amultichannel world, they are
shiftingtheir attention away from linear TV andadopting
ad-skipping, ad-sharing and ad-rating tools.
"We're not going to tell consumerswhat advertising the y're
going to watch,where or on what platform. They willhave control
over that. They will choosewhether or not to engage,
participate,ignore everything, walk out of the roomand how they
want to pay for productsin different ways," says Berman.
Time horizon for sh ift fromimpression-based toimpact-based ad
vertising
3VS 5Vfs Already Never l y rstartedSource: IBM 2007 advertising
industryexecutive interviews and panel discussions.
the internet for personal use for morethan two hours a day.
compared with 48%watching TV for that time. Among theheaviest
users, 19% spend six hours ormore on the PC per day, compared
withnine per cent who watch the sameamount of TVCreativity The
rising popularity of user-generated content (UGC) and new ad
rev-enue-sharing models, amateurs andsemi-professionals are
creating lower-cost advertising content that is arguablyas
appealing to consumers as the mate-rial created by agencies. Tbis
trend looksset to continue: UGC sites are the top des-tination for
viewing content online.attracting 39!) of
respondents."Increasingly, creativity will comefrom multiple
places," says Berman."You'll see consumers creating theirown ads
for products and then being com-pensated for th at. The content
owner inthe professional sense will also be moreinvolved in the
creative as ads hecomemore embedded in stories.
"For example, we'll see characters inprogrammes representing
advertisers ortheir m essages."M e a s u r e m e n t Advertisers
are de-manding more Involvement-based meas-ures. Simply clicking on
a banner ad is
Two-thirds of the ad executives polledbelieve 20 % of ad revenue
will shift fromimpression-based to impact-based for-mats within
three years.Berman says: "Five years ago, you gotpaid for
'attention', whereas now you'llbe paid for people's involvement in
thead message. In the future, you'll knowwho is watching the TV and
who is skip-ping the ads. We'll he able to change theembedded adv
ertising to suit people andconsumers will be able to opt in to
choosewhich types of ads they want."People may get difTerent
rewards forwatching content they're not so keen tosee. For example,
you m ight get fewer'credits' for watching an ad about a newcar
than for something that's less attrac-tive to you."Advertising
inventories New entrantsto the ad market are making ad spacethat
was once proprietary availablethrough efficient, open exchanges.
Morethan half the ad executives surveyedhelieve open platforms will
take 30% ofthe revenueflowing o incumbent media(such as
broadcasters) w ithin five years."It's transparency," explains
Berman."This is about the ability to know what'sbeing sold at what
prices, to hid on tha tand he engaged in buying that
inventory,rather than it being a closed process withlimited access.
That may go as far as theconsumer engaging with what adsthey're
going to take and being involvedin this process too."Future
modelsThere it])pear lo be two key concerns formark eters h ere tha
t will probably co-exist for the foreseeable ftiture: the wayin
which co nsumers choose to watch,block or participate in marketing
cam-paigns; and the openness of ad vertisinginventories. The report
sets out four pos-sible industry models for the future:Continued
evolution in this model,the one-to-many form of mass market-ing
(the brand p ushing out the messageto lots of consumers) still
dominates. Butthe ind ustry will develop in response to
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Digital advertising Rpqparrh
user-generated content and new meas-urement capabilities.
Advertisers willallocate a greater portion of their bud-gets to
channels typically used to buildbrands, rather than direct
marketing.Open exchange The industry morphsbehind the scenes with
little or no con-sumer influence. Ad formats remainlargely the same
but advertising inven-tory is bought and sold through
openexchanges, bypassing traditional inter-mediaries.Consumer
choice Tired of intrusionsinto their time, consumers exert
morecontrol over the advertising theysee andfilter out. Formats are
forced to evolve tocontextual, interactive, permission-based and
targeted messages to try toretain their attention.Ad marketplace
Consumers choosetheir preferred ad types as they self-programme
their media choices and getmore involved with the development
anddistribution of marketing campaigns.Ads are primarily sold
through open,dynamic exchanges so any advertisercan reach any
consumer As new con-sumer-monitoring technologies will bein place,
consumer action drives prod-uct pricing.Areas for innovationLTuian
suggests that for brand adver-tisers to survive in any of these
futures,they will need to significantly adapt theirattitudes. He
sets out three core areaswhere companies need to
innovate,regardless of which future scenariocomes to pass.Consumer
innovation Brands w illneed to drive greater creativity in
trad-itional ads while pursuing new ad for-mats across diTerent
media devices.
For example, companies should con-sider tactics such as campaign
bleeds(combining programme content with adsto make the advertising
more relevantto the programme) and micro-version-ing (developing
multiple versions of anad to make it more personalised and
tar-geted depending on consumer prefer-ences, demographics and
location).They should also think about videoad nickers (speedy ads
displayed for avery short time) and pod management(having the right
number of ads appear
Percentage ofglobal respondents who visit and/or contribute to
socialnetworking or UGC sites.50 %40 %30 %2 0 %1 0 %0 % 1II.I
.nil
VisilContributeSocial networking
US Australia Germany Japan
UGC si t *Source: IBM 200 7 DigitalConsumer StudyUK
Adopting this approach means adver-tisers will need to make
segmentationand personalisation paramount in theirmarketing.
Everyone involved will needto collect and analyse data better to
pro-duce the relevant insights to carry outthis scenario
effectively."They need to give consumers morecontrol and make this
a two-way com-munication process," says Berman.
Business model innovation Com-panies will need to pioneer
changes inhow ads are sold, the structure and formsof partnerships,
revenue models andreporting metrics.
For example, broadcasters, agenciesand distributors could gain
from impact-based pricing models, UGC ad revenue-sharing models and
cross-channel salesmethods.Berman identifies three types of
busi-ness-model innovation. The first is 'enter-prise", where firms
can become morespecialised around their core compet-encies and look
for other organisations
to provide services and scale in areasthat don't precisely fit
their agenda.The second is 'industry', wherebrands seek to change
the whole indus-try's model, following the example ofApple, which
has completely changed theway the music and entertainment indus-try
operates.Finally, Berman suggests brands canchange their revenue
models and howthey get paid. Again, Apple is an exam-ple: rather
than making most of its mon-ey on the music it sells, it makes its
cashthrough selling expensive music players."1 think we're goingto
see many more
Four scenarios of industry's futureO IOpenexchange
Continuedevolution
AdmarketplaceConsumerchoice
Providers ConsumersMedl consumption control
Source: IBM institute forBusiness Value
Business design and Infrastruc-ture innovation Brands w ill need
tosupport the consumer and businessmodel innovation by creating
redesignedorganisations and operating capabilitiesover the
advertising lifecycle.
Berman says: "We think you need amore flexible, agile
architecture. Also,you need to be able to use data. We thinkthat's
the golden goose: there's a lot ofdata out there. If we can start
to analysethat on a cross-channel, cross-market-ing-vehicle basis
and applyanalytics, wecan get more bang for our buck."
But Berman warns that putting allthese criteria in place and
adopting amore open attitude will be useless with-out companies
making sure new ideascome to form the root of their strategy,rather
than just an add-on.He sums up: "You need to embed thesethings
deeply so they really make a dif-ference to your marketing." RM
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