Long live performance marketing – IBM predicts the end of advertising as we know it!

An industry is in revolt, the unrest is festering and the small waves are being made. Rupert Murdoch is saying it.   Newspaper revenue is drying up (not for their web sites). The same week that IBM came out with a VERY interesting study titled The end of advertising as we know it.

While starting with the fluffy metric of “greater disruption for the advertising industry in the next   5 years than in the previous 50.” They back it up.   Many of you that read this blog spend money on marketing or performing   marketing in some way, shape, or form.   Most of you also use the web for marketing (or what are you doing HERE?).

A little history lesson to start, - pioneered successful pay per action advertising on the internet for search (which is where the big boom is coming from) this could be debated, but humor me, ok?

I think what has attracted such a QUICK influx of marketing dollars to the search industry (projected to be in the $8 Billion dollar range), which hardly existed 10 years ago, is simple…accountability and ease.   I think you all know that tracking clicks, impressions, conversions, down to such granular levels as geography, keyword, etc helps remove some of the guesswork / fuzzy math of so many marketing channels, which leads to spend where you don't know what 50% is wasted. now you do know what 50% is wasted, down to the keyword level if you so chose.

While a recent article on SEER in the Business Journal  renewed my belief in PR a bit (even though we don't have a PR firm), I still feel like a lot of that stuff is hard to place real value on.   What is the value of a media mention?   A billboard?  Heck, out of my window I am looking up at a Heineken draught keg ad on a billboard as I write this…I see it 5-10 times a day, what is the value of it? It just seems somewhat harder to track.

Some interesting facts coming from the IBM study: To survive in this new reality, broadcasters must change their mass audience mindset to cater to niche consumer segments, and distributors need to deliver targeted, interactive advertising for a range of multimedia devices.

Change YOUR MINDSET!!!   The scattergun approach to marketing has value, but you know what?   When large brands don't rank well for what they do when people are typing in their exact terms in search engines, you can only imagine how much further we have to go as an industry.

Finding communities of people with like interests through blogs, forums, social networking, etc is going to be the hard work.

The billboard on the side of the road just doesn't have the targeting or reporting that the web does, which means less accountability to REAL metrics. Putting a billboard up is easy, finding 100 small niche communities to get the word out is much harder especially when people are so fickle.   Identifying enthusiastic bloggers, facebookers, etc that can become brand advocates and spread the word is also NOT easy, some tools are helping to make this easier though.   The tool can identify the sites, but the value is in finding a way to approach these outlets in a way that doesn't result in mass revolt. See how a PR effort backfired   for Microsoft?

All players must adapt to a world where advertising inventory is increasingly bought and sold in open exchanges vs. traditional channels.

This is very hard for some people to grasp, but letting the advertiser decide the price they find worth it for advertising is NOT how this industry works, if you are thinking…ebay or Google for advertising you got it!   Sure you can fight it...but how long will your clients wait?   For those of us on the web, buying paid search ads for years, we're just used to it, but now this marketplace for advertising is creeping into online display advertising and TV as I showed above.   Will it be successful? I doubt it will be the first time.   But lets remember peapod and webvan those online grocers...while they didn't succeed, ACME, Krogers, and many others are doing online.   It just took some years to work out the system, but accountable marketing is coming.

Advertisers are DEMANDING higher levels of accountability from their marketing partners, eyeballs are great, but what about conversions, new customers, web site engagement, etc?  

Advertisers and marketers are demanding more and more accountability, and while they don't know HOW to get the numbers all the time, they know that SOMEONE can get them the data they need to make good decisions about advertising when on the web.   They want to make more data-driven decisions, with hard numbers to determine effect, and the Internet delivers that VERY well so far.   Are there gaps?   SURE there are, but there are a lot less revenue gaps between banners / search engines / online video than many other traditional mediums. Impressions and eyeballs are bull when compared to impact metrics. Let me ask you this… If you gave someone $1,000 dollars to advertise for you, would you want a bunch of people to SEE an ad, possibly take NO ACTION and deplete your budget?   Or would you want to at least make sure that someone took SOME ACTION with the ad to deplete the budget? Not every buy can be done like this, but when possible, you better believe that companies are moving in this direction with at least a PART of their budget.

If you still judge the success of your campaigns, by how many people SEE and AD, or just watch a video without tying that into some level of an ACCOUNTABLE metric, be VERY afraid, times are a changin'! and Thank GOD!! According to the study “Two-thirds of advertising experts surveyed by IBM expect 20% of advertising revenue to move from impression-based to impact-based formats within three years:”

This one is simple, the market will be shifting more dollars to efforts that can be tracked easily and are based on action and impact, not just eyeballs. The last thing I read in the study which was huge: 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.

Have you heard of   If not go there.   Big ideas, don't need to come from big agencies anymore.   Companies are putting the development of big ideas and big creative into a marketplace.   While we all thought that free-agents would change the world, and that e-lance and the like would change the world as we know it, it has NOT, but it has made a dent.   Openads has a shot to make a dent too, even big agencies could use openads to help develop additional pitches to clients for low cost. So as marketers, do you feel the squeeze around you daily?   The accountability crunch?   If you are going to be held accountable to more and more real numbers, do you expect to shift your dollars to more channels where impact can be tracked? What is your percentage of highly accountable marketing vs. Eyeballs marketing?   Have you been shifting more budget to the channels that provide more accountable metrics? Would love to hear…

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Wil Reynolds
Wil Reynolds
CEO & Vice President