IBM Study: The end of advertising as we know it

The next 5 years will hold more change for the advertising industry than the previous 50 did.

The information for this post is from an IBM global surveys of more than 2,400 consumers and 80 advertising experts … the report is titled, “The end of advertising as we know it.”

Imagine an advertising world where ... spending on interactive, one-to-one advertising formats surpasses traditional, one-to-many advertising vehicles, and a significant share of ad space is sold through auctions and exchanges. Advertisers know who viewed and acted on an ad, and pay based on real impact rather than estimated “impressions.” Consumers self-select which ads they watch and share preferred ads with peers. User-generated advertising is as prevalent (and appealing) as agency-created spots.

Based on IBM global surveys there are four change drivers shifting control within the ad industry:

  1. Attention – Consumers are increasingly in control of how they view, interact with and filter advertising in a multichannel world.
  2. Creativity – Thanks to technology, the rising popularity of user-generated and peer-delivered content, and new ad revenue-sharing models (e.g., YouTube, Crackle, Current TV), amateurs and semi- professionals are now creating lower-cost advertising content.
  3. Measurement – Advertisers are demanding more individual-specific and involvement- based measurements, putting pressure on the traditional mass-market model.
  4. Advertising inventories – Will be bought and sold through efficient exchanges, bypassing traditional intermediaries.

There is no question that the future of advertising will look radically different from its past. The push for control of attention, creativity, measurements and inventory will reshape the advertising value chain and shift the balance of power.

Change has been a part of our industry but the changes we are seeing now are coming more rapidly than ever before. These changes in communications technology also greatly impacts agency new business practices. So far agencies have been slow to adjust.

About Michael Gass

Consultant | Trainer | Author | Speaker

Since 2007, he has been pioneering the use of social media, inbound and content marketing strategies specifically for agency new business.

He is the founder of Fuel Lines Business Development, LLC, a firm which provides business development training and consulting services to advertising, digital, media and PR agencies.

Comments

  1. businesssprouts says:

    I really enjoyed reading this post, and thank you for the great resources.

    Best Regards,

    May

    businesssprouts.wordpress.com

  2. Thank you May. Very much appreciated.

  3. I agree on all fronts – especially on the measurement aspect 😉

    it’s quite unbelievable that so little advertising is trackedwith all of today’s technology…

  4. Thanks Ben.

  5. Michael Gass is one of my top resources for great information these days. He is to advertising what Guy Kawasaki is to entrepreneurs

  6. Chuck, that’s very kind of you.

  7. This is what all the so called experts were saying 5 years ago too and it hasn’t happened. ROI and billing and fees for service along with ROI based commisions were all the talk 5 years ago……Guess they still are….I doubt very much things will change as they say………..

  8. Kline, I agree that its been the talk for awhile but I think we’re seeing some definite changes. On the client side you have companies such as P&G, McDonalds that are forcing agencies to change their business models, fee structures. They are demanding accountability and more skin in the game. Agencies are also being forced to specialize, they can no longer be everything to everybody and survive. Talking with dozens of agencies a week over the past two years, there’s a dramatic change in our industry.

  9. Social Media interest is where Internet interest was twenty years ago. It’s a huge test market and ad agencies are obliged to conform. Silly investment is creating another dot com bubble. All social media does is further dilute credibility control, making it even more difficult for small businesses to succeed and for news outlets to form opinion. The Power of monopolized media research is even changing history. Traditional print and broadcast media will always be needed to maintain any credibility for advertising or politics.

  10. It seems to me that the rush of change in our industry via social networking has many of us wondering:how will we generate the kind of profits it will take to sustain our companies during this period? Is anyone making any real moneynow?
    Haden Edwards

  11. Haden, that is definitely the question that must be answered. Most agencies can’t wait even 6 months to figure out how to make monetize it, they need to be generating leads ASAP and figure out how to charge for new media. A good example of an agency that is generating income during this time is The Russo Group, Layfayette, LA. Jaci Russo says their profits are up over 104% over last year and the last I heard they’ve added their 13th account since the first of the year.

  12. Changes don’t take place as fast as most studies usually project. Regardless, this was a great quick and interesting read. I would love to see more on the topic!

  13. It is interesting to see how rapidly the Social Media fire spread, and how much it is impacting all kinds of businesses in such a short span. But it is important to know how many of them actually know how to implement it. Today there is so much junk on the internet in the name of social media that the actual information is getting lost. I agree social media is very beneficial and is here to last, provided we use it the right way. I would be wrong to say that conventional marketing will vanish, in fact it will be stronger with the help of social media. These two channels are symbiotic in nature.

  14. you mean like google adwords already does?

  15. When I read articles like this one I think about the futuristic-revolutionary film, Minority Report. When you walk through a mall, ads recognize YOU, and react personally, tailored to your attributes.

    I think Facebook is working on leading the frontier in this new world of advertising. And I think privacy will remain a heated discussion and an uphill battle throughout. Advertisers want to know their audience, and target them more directly. Both advertisers and consumers stand to benefit from that.

    But at what cost? I see a lot of complacency and apathy around privacy, many too indifferent or careless to bother protesting when Facebook controls their content. This works to the advertisers advantage. We will see how it continues, but I certainly do not see it stopping.

    I think trust and authority will become the most valuable assets of any brand or advertiser. It is a two way street. If we are to share the personal information advertisers want from us, they must return the favor with value.

  16. Michael a fantastic post. It is nice to see that the IBM global survey endorses the Advertising Exchange Model my company, As Seen EVERYWHERE, is currently offering to the Advertising and Media world. We are revolutionizing how advertising is placed in all mediums TV,Radio, Print, Online, Out-of-Home, plus many other alternative mediums through the medias ability to view; pick and choose which ads they want to publish / air and how they want to be paid, to include real time reporting.

    Everything the IBM survey mentions we offer plus additional services that the media and advertiser hasn’t even realized they need yet.

    The 5 year model is here today – thank you all your insights.
    Trygve Duryea
    AsSeenEVERYWHERE.com

  17. I always have got some thing to express on these issues, but i’d better not on this occasion.

  18. Dave Wilkie says:

    Very interesting and likely bang-on, except for one of IBM’s assertions. I don’t think that Creativity will pass over to amateurs or the masses for the advertiser. Having the tools and the time doesn’t make an ad or message penetrating. Yes, many amateurs have been wildly successful with viral videos and messaging, but how does the corporation harness that? Their staff will suffer from corporate blinders and navel-gazing which is where advertising agencies thrive.

    I’m worried about the ad agency’s future as well, but the message still has to capture the attention or target within his or her 9 second attention span (BBC News).

    I also think that there will still be a battlefield for brands to reach new consumers. There has to be, even if we gain greater control over what we decide to view and interact with. The advertiser will have to find ways around our filtering or they will die. My 2 cents.

%d bloggers like this: