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Jonathan Shapiro

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The Future of Advertising

Posted: 09/15/10 01:43 PM ET

In 1996 I was part of the team at United Media that launched the DilbertZone.com. Scott Adams' witty insights coupled with the early adopter Internet audience made the site a Top 50 web destination, according to Yahoo Internet Life. We were a five-person team that created a profitable online business with nothing more than a few servers and HTML. Yes, it was possible to make money online in 1996. By building a successful online destination, from comics widely available in newspapers, it was clear that the times they were a changing. Since then I've have been working in "New Media". Being on the inside looking out has offered a wonderful vantage point from which to watch the rising Internet tide release a flood of change within the media and advertising worlds.

Some of the most conspicuous, and to some wrenching, changes have been:

  • The Democratization of Voice - YouTube videos, blog posts and tweets can reach the one million user mark as easily as CBS, CNN or any other traditional media giant. New Media's near zero cost for access is a far cry from the days when necessary print and broadcast capital determined whose voice would be heard.

  • The "Always On" Availability of Current Information - Even before Google started "organizing the world's information", Yahoo headlines, ESPN.com scores and weather.com forecasts demonstrated that the web afforded much greater accessibility and timelier information than the daily paper, weekly magazine, local library or nightly newscast.

  • Audience Fragmentation - Just 25 years ago, most individuals spent close to seven hours a day watching the three major TV networks. Today, hundreds of TV channels are competing with millions of websites for the majority of a fragmented audience. For advertisers, reaching ones target market is a lot tougher.

  • The Real Ability to Target, Customize, Measure and Optimize Marketing - Old Media targeted large demographic segments, tailoring messages to geographic regions in the hope that half of their advertising would be effective. New Media, with a host of support technologies, allows us to deliver a customized message to an individual. More importantly, we can measure with statistical precision the value of that message. Such accuracy enables us to optimize virtually in real- time helping us get the right message to the right user at the right time for the right price.

  • Increased Complexity - New technological capabilities and media opportunities make today's marketing world much more complex. Perfecting your strategy means synchronizing traditional, digital, social, mobile, affiliate and direct mail efforts while leveraging the right data, media exchanges, and Demand Side Platforms (DSPs) to target and optimize your marketing and ensuring the sales process can track sales activity back to the appropriate media, user and message. Simple, right?

The past fifteen years have resulted in a tidal wave of change in the media and advertising worlds. The rising New Media tide does not seem to be ebbing. In 2010, Foursquare has made local mobile, the iPad is quickly becoming the omni-viewer for all content and Google has positioned itself into TV. Since this evolutionary pace shows no sign of slowing down, I have polished off my crystal ball to conjure up a few predictions for what media and advertising insiders can expect over the next fifteen years.

  • There will be 300 million "channels" and the viewer won't matter. When we speak of channels like TV, the Internet and Mobile, we equate the media with the medium. When all content is digitized, the medium will not matter. There will only be different types of digitized content. More significantly digital content, as is done on the iPad, will be pulled from servers to individual users on demand. Eventually, we will each act as our exclusive network programmer. On a given evening the kids could play a multiplayer game, do Wikipedia research and later watch a special on sharks. Dad could watch an Old Yankee Workshop episode, catch up on the latest headlines, read a chapter of his new e-book and wrap the night up with football highlights. Unfortunately for advertisers, this means that the already fragmented audience will fragment further.

  • Advertising goes direct. With over 300 million channels, media buying will have to change. Rather than purchasing audience-specific content, advertisers will have to buy the audience directly. The good news is we have the technology, including DSP's, ad Exchanges, data co-ops and retargeting tools. However, we are short on the expertise to manage these systems effectively. Media buyers must develop the necessary technical acumen to efficiently utilize audience targeting technologies.

  • Art gives way to science. Direct audience buying makes great creative a necessary but insufficient condition for success. Each impression will be bid for. Like Search Marketing, winners will have to out-bid the competition for the privilege of delivering a message to a specific audience member. As audience targeting methods are deployed and mastered, the associated tracking and optimization technologies will enable advertisers to tie sales to the specific message, media and user combination that drove the revenue. Managing and optimizing these marketing systems will require scientific expertise that current creative agencies often lack. Great creative will always have value as long as media buyers and planners place it in front of the right potential customer.

  • Media buying becomes media trading. As the science of marketing emerges and audience targeting technologies mature, media buyers will act more like traders. They will understand the value of delivering an impression to each individual audience member and bid for media at prices that generate positive ROI. Media "traders" will buy as much media as they can, provided they have statistical confidence the price they are paying for a given viewer; product or message will yield a profit. Great agencies will have media trading desks that can optimize marketing programs and deliver positive reliable, repeatable returns to advertisers for their advertising investments.

  • Marketing budgets will cease to exist. Marketers that accurately and continually deliver demonstrable positive returns on the advertising dollars they spend will get the green light to spend more. This makes sense. If I were to sell you 10 bills for 5 each you would have a consistent return that would repeat until I ran out of "ten spots." Similarly, a reliable formula for positive ROI will give CMOs the green light to spend as much as possible until the return on marketing investments declines below their agreed upon targets. When advertisers understand the value of each view and have the technologies to bid appropriately for each impression, the marketing budget as we know it will die.

The bottom line is the next fifteen years are likely to see as much change in the media and advertising worlds as we have seen in the preceding fifteen. This will increase complexity and competition. But riding the wave of Internet innovation will create change for the better. Those that can adapt and say with confidence their marketing efforts are earning a positive return will be able to invest in growth and win the competition for the most valuable business asset, the customer.