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5 Trends that will Shape the Future of Advertising

2010 January 14

Many people doubt the future of the advertising model.  However, while new strategies for supporting content financially such  freemium and e-commerce partnerships are exciting, predictions of the demise of a half trillion dollar global industry are foolish, juvenile and utterly unsupported by the data.

Advertising continues to prosper and it’s share of the global economy is stable, if not growing slightly (mostly due to emerging markets).  In fact, it is much more likely that we are entering an advertising renaissance.

Here are 5 trends that will drive the future of the industry:

1. Big Seed Marketing Network Theory pioneer Duncan Watts is championing a new approach to advertising.  While many marketers subscribe to Malcolm Gladwell’s view that advocates targeting so-called “Influentials,” Watts has done a wealth of research that shows this type of marketing might be counterproductive in many, if not most cases.

Even if influential people can be accurately identified (which is a big “if”), there isn’t much evidence that targeting them directly is a good idea.  It may be cheaper and more effective to influence people around so called “Influentials.” (For more on this see How Ideas Spread)

The basic idea of Big Seed Marketing is to use mass media broadcast a message widely and to utilize social media to encourage consumers to pass it on.  It’s an interesting idea that’s gaining traction.

2. Enhanced Consumer Targeting: In the future, we will talk more about targeting methodology than target groups.  This makes a lot of sense because different advertising tasks require different approaches.  A campaign that is trying to build brand preference has different needs than one that is trying to spur sales directly, for example.

One exciting technology that is currently being used to create more effective organizations is Social Network Analysis (SNA).  Through analyzing organizations, it has been found that influence shows up in surprising places.

Many senior managers are cut off from the rest of the organization and therefore often have much less influence than one would expect.  On the other hand, smokers who spend a portion of each day with a cross section of departments can be enormously influential, regardless of where they are in the organization chart.

By applying similar analyses to consumer markets, enormous insights can be won.   Good salespeople have known for years that prospects are influenced by those around them as much as by a good pitch. Through identifying how information flows to consumers we can make brand building can become more effective.

Another technique is the use of Neural Networks to adapt targeting in real time across a variety of variables.  It’s possible that in a decade we won’t choose target groups at all, rather we will choose whether we want the algorithm to be based on response, relevance, social factors, or something else entirely.

Banks currently use neural networks to identify fraud and as the technology becomes more affordable, it will surely play a bigger role in marketing.

Current investment in counter-terrorism is driving investment in both of these technologies.  For fuller explanation of how it will all work, see The Future of Consumer Targeting.

Semantics:  While Tim Berners-Lee is out to transform the world through the Semantic Web, many smaller scale efforts are under way to improve advertising through semantic applications that help computers understand meaning more like a human would.

One obvious technique is to improve the relevance of ads to the content which they appear next to.  This area is already quite advanced with respect to text, but still has a ways to go with pictures and video.

Another, less obvious use of the technology would be to allow analysis across research databases, so that audience, economic, expenditure and brand tracking data could be combines much more efficiently.  Much like TV optimizers revolutionized buying over a decade ago, semantic technology will likely transform planning over the next decade.

Augmented Reality: One of the fastest moving technologies is Augmented Reality (AR).  Hundreds of AR initiatives will be rolled out this year raging from iPhone applications to 3D print ads.  It remains to be seen how successful these will be, many believe that AR is just a modern version of 3D glasses.

However, the best is certainly yet to come.  Proximity advertising is already becoming a reality.  Faster processors and wider bandwidth will do a lot to make the basic technology work better and nanotechnology promises to create new technologies that will further enhance capability.

The end of coverage optimization: For most of the last 50 years, the advertising industry has been obsessed with coverage.  The concept makes a lot of sense; in order to get your message out you want to reach the maximum amount of people.

For the most part, we have done this through controlling frequency.   The problem hasn’t been figuring out how to reach people.  Rather it has been how to stop reaching them once they have already seen the ad enough.  Some people consume media so much more than others (TV especially) an enormous amount of money is wasted through “frequency tails.“

The ease with which it is possible to control frequency in Digital Media will free up an enormous amount of energy and resource to build more effective targeting and strategy. (See Digital Media’s Secret Weapon).

What to Expect

When I started in media in the mid-90’s advertising was decidedly low-tech.  Personal computers weren’t yet on every desk and the ones we had in the office were far less powerful than the ones we had today.  It was difficult to use expenditure databases or even break down ratings effectively.  Analysis was something that was almost exclusively in the domain of the research department.

As markets continue to segment and new media and consumer data come online, analytical skills will become even more important than they are today.  As consumer activity becomes more complex, the advertising industry will need to either build stronger mathematical skills or forfeit communications planning to specialized consultants.

Creativity, on the other hand, has a bright future.  The possibilities coming online now can only be compared to the post-war era when “Madmen” were at the forefront.  Moreover, with more media, more products and more clutter, branding will only become more crucial in the digital age.

The trends discussed above are by no means an exhaustive list.  I’m sure others can point out important ones that I left out.  I’d love to hear them!

-          Greg

18 Responses leave one →
  1. January 15, 2010

    Good post Greg. Thanks for the useful info. I think reaching the mobile user, and the expanded use of video are additional opportunities in advertising.

    [Reply]

    Greg Reply:

    Alan,

    That’s undoubtedly true. They are both great opportunities.

    However, I don’t think either will actually change very much. They don’t require us to think differently or even really do anything differently, So as helpful as they will both be I don’t think either will be transformative.

    - Greg

    [Reply]

  2. Varsha Peshavaria permalink
    January 15, 2010

    Hi Greg

    Social media have give a huge amount of access to influencers but the question is whether these are also decision makers, whose decision at the end of the day should define the ROI for advertisers.

    Great post and insightful as always. Thanks!

    Varsha
    @vpeshavaria

    [Reply]

    Greg Reply:

    Varsha,

    Thanks for your comment. See here for more about this issue.

    - Greg

    [Reply]

  3. diigvijay singh permalink
    January 15, 2010

    very refreshing and innovative indeed

    [Reply]

    Greg Reply:

    Diigvijay,

    Thanks. I’m glad you liked it.

    - Greg

    [Reply]

  4. January 18, 2010

    Great article, Greg!

    Thank you for sharing.

    Tatiana

    [Reply]

    Greg Reply:

    That’s very nice of you to say Tatiana:-))

    I hope to see you here again.

    - Greg

    [Reply]

  5. February 24, 2010

    Great information. Contextual advertising is much like what you define as semantic advertising. Contextual in the sense of placing an on line ad on a portal on a finance page next to stories on Wall Street or a sporting goods store ad being placed on the sports page.

    With all the various forms of targeting, how do you determine, as an advertiser , what is the best placement for the best ROI. Is it SEMANTIC , AUGMENTED REALTY, or perhaps BIG SEED MARKETING that you recommend , or is it entirely dependent on the company placing the advertising?
    As more time is spent by the consumer on line it becomes more critical to define your target.

    [Reply]

    Greg Reply:

    Stephen,

    Thanks for your comment

    Contextual advertising is indeed dependent of semantic applications. Machines need to be able to talk to each other if context is to be understood. Or, more technically (and more accurately), systems need to share syntax if they are to share semantics.

    As for ROI, it’s a mixture of goal setting and trial and error. For any ROI program to be successful you first need to have clear objectives through which to evaluate results and the process of objective setting should also give some clear direction as to implementational strategy.

    However, the world is a messy place and there is no way to know beforehand what will work best. That’s why tracking is so important. You have to build knowledge along the way.

    - Greg

    [Reply]

  6. Smriti permalink
    March 8, 2010

    Great insights!!!

    [Reply]

    Greg Reply:

    Thx.

    [Reply]

  7. June 9, 2010

    Greg;
    As usual, a great post.

    While I agree with the sentiments, I do think the mobile space and its Augmented Reality ads are in fact quite different from what we have seen in the past. I’m no traditional media man and hence I could be entirely wrong in what I am about to say next, but…

    Seems to me that advertisers have never before known precisely where a person is when they read, see or hear our ad. I don’t fully understand the implications of this, but surely it changes the way one advertises to this segment, and, especially, what you say and how you promote it. Knowing that a person is standing near your store front, allows you to offer a special promotion which may just persuade him or her to step inside. As I said, I’m no marketer of these things, but it does seem to offer a completely different approach.
    Eric Goldman´s last blog post ..Google’s “search volume” estimates are not what you think

    [Reply]

    Greg Reply:

    Eric,

    Clearly you’re right. Proximity advertising is truly the next Big Thing (certainly bigger than social media). However, I think it will affect mostly Newspapers and other traditional direct response media, (possibly radio as well, but that will most likely be geotargeted to).

    - Greg

    [Reply]

  8. libin chacko permalink
    January 27, 2011

    Good interpretation about the future , good for those who think about careers in advertising.
    thank u so much……

    [Reply]

    Greg Reply:

    Libin,

    Glad you liked it. Good luck with your career!

    - Greg

    [Reply]

  9. Tyrone Tellis permalink
    November 19, 2012

    Hi Greg,

    seems you have changed from a digital skeptic to a person who sees the value of digital in an integrated marketing communications.

    I was wondering what’s your view on the creation of a Marketing technology officer and the use of statistical analysis and multi-variate analysis for marketing prediction models and decision support systems?

    One weakness in the tech dependent future we are heading to is the reliance or dependence on a few companies and few structures like the server network etc to support the whole digital world.

    An example can be the loss of GPS Ssytems when the US military who runs them goes into a crisis mode. Could summin similar effect the digital marketing consumer world?

    Tyrone

    [Reply]

    Greg Reply:

    Tyrone,

    I’ve been involved with the web since 2000 and have run major digital businesses, so I don’t think I’ve ever been a digital skeptic. I have in the past voiced skepticism of some poorly thought out ideas concerning digital (i.e. social media replacing mass media, myths about influentials, etc.) that have no basis in fact.

    As for “marketing technology officers,” I think it can be a good idea for some organizations. In the end, however, it is how you integrate technology that’s important not what your org chart looks like. Appointing a “chief marketing technology officer” in itself does nothing if the behavior of the organization doesn’t change.

    As for systems, much like in any other era, redundancies are critical. The “server network” for the system is the internet itself, which can easily work around any local failure. It is the individual entities that need to ensure that there own systems have proper safeguards.

    - Greg

    [Reply]

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