Major changes for Advertising

According to a report from IBM GLOBAL Business services there is a major change taking place with Advertising. This study talks about how the power has shifted from the companies to individuals. This will have a major affect on advertising and how they get their message to their target audience.

Article by IBM Global Business Services
IBM Institute for Business Value
The end of advertising as we know it

The end of advertising as we know it

Traditional advertising players – broadcasters, distributors and advertising agencies – will need innovative new approaches to respond to major industry shifts underway.

i

Summary
The next 5 years will hold more change for the advertising industry than the previous 50 did. Increasingly empowered consumers, more self-reliant advertisers and ever-evolving technologies are redefining how advertising is sold, created, consumed and tracked. Our research points to four evolving future scenarios – and the catalysts that will be driving them. Traditional advertising players – broadcasters, distributors and advertising agencies – may get squeezed unless they can successfully implement consumer, business model and business design innovation.

i

Abstract
Based on IBM global surveys of more than 2,400 consumers and 80 advertising experts, we see four change drivers shifting control within the industry:

Attention – Consumers are increasingly in control of how they view, interact with and filter advertising in a multichannel world, as they continue to shift their attention away from linear TV and adopt ad-skipping, sharing and rating tools. Our survey suggests personal PC time now rivals TV time.

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. Our survey suggests this trend will continue. Further, established players, like publishers and broadcasters, are taking on traditional agency functions and broadening creative roles.

Measurement – Advertisers are demanding more individual-specific and involvement-based measurements, putting pressure on the traditional mass-market model. Two-thirds of the advertising experts IBM polled expect 20 percent of advertising revenue to shift from impression-based to impact-based formats within three years.

Advertising inventories – New entrants are making ad space that once was proprietary available through open, efficient exchanges. As a result, more than half of the ad professionals polled expect that open platforms will, within the next five years, take 30 percent of the revenue currently flowing to proprietary incumbents such as broadcasters.

To envision four possible scenarios for the industry in 2012, we juxtaposed two of the most uncertain change drivers – the propensity for consumers to control marketing; and the openness of advertising inventories (see Figure). Because industry players will progress at differing rates, these scenarios will likely coexist for the foreseeable future.

Continued evolution: In this scenario, the one-to-many model still dominates, but the industry evolves in response to DVR penetration, the popularity of user-generated content and new measurement capabilities (albeit for “old” formats). Advertisers therefore allocate a greater portion of dollars traditionally spent on direct marketing to channels typically used for brand-oriented advertising.

Open exchange: Here, the industry morphs behind the scenes, with little to no additional consumer influence. Advertising formats largely remain the same, but advertising inventory is bought and sold through efficient exchanges, bypassing traditional intermediaries.

Consumer choice: Tired of intrusions, consumers exert more control over the advertising they view and filter. Formats evolve to contextual, interactive, permission-based and targeted messaging to retain attention.

Ad marketplace: Consumers choose preferred ad types as part of self-programming their media choices and are more involved in ad development and distribution. Advertising is sold predominantly through open, dynamic exchanges, allowing virtually any advertiser (large or small) to reach any consumer. With new consumer monitoring technologies in place, consumer action drives bids on inventory up or down.

Figure

As the advertising value chain reconfigures, broadcasters, advertising agencies and media distributors will need to innovate in three key areas:

  1. Consumer: Drive greater creativity around traditional ads, while also pursuing new ad formats across media devices to attract and retain customers.
  2. Business model: Pioneer changes in how advertising is sold, the structure and forms of partnerships, revenue models, advertising formats and reporting metrics. F
  3. Business design: Support consumer and business model innovation through redesigned organizational and operating capabilities across the advertising lifecycle – consumer analytics, channel planning, buying/selling, creation, delivery, and impact reporting.

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. For both incumbent and new players, it is imperative to plan for multiple consumer futures, craft agile strategies and build new capabilities before advertising as we know it disappears.

12 replies
  1. Seth Bruce says:

    Consumer Trust will be the key in the future. Currently, design seems to be the driving factor to the success of a product regardless of it’s actual use and function.

    The increase in data and research reveal astonishing trends that can predict human behavior targeting and manipulating the consumer buying process.

    The continued abused and manipulation of consumers to sell mediocre products with abusive and manipulative design methods will force emphasis Trust.

    Trust can be defined as the emphasis (“or to better put lack there of”) in research and measure of value to cost. An real world example is someone like Opera who has earned trust for giving quality information consistently.

    Ask yourself which is more valuable, 300 movie reviews and 50 critic awards and quotes, or one personal friend who shares the same taste saying the movie was not worth the time it took to watch.

    To close, consumer opinion will evolve and a void will grow where value will be weighted more then design and society trends.

    Reply
  2. Jasa Desain Grafis says:

    I believe what you said made a lot of sense. But, what about
    this? suppose you added a little content? I am not suggesting
    your information is not solid, but suppose you added a title that makes people desire
    more? I mean Advertising is changing | Huddle Productions
    is kinda plain. You should glance at Yahoo’s front page and note how they
    write article headlines to grab viewers to open the links.
    You might try adding a video or a pic or two to
    grab people excited about what you’ve got to say. In my opinion, it would make your posts a little livelier.

    Reply

Trackbacks & Pingbacks

  1. […] Advertising is changing | Huddle Productions Based on IBM global surveys of more than 2,400 consumers and 80 advertising experts, we see four change drivers shifting control within t… 00Share […]

  2. […] know more? Here are some articles I read on interrupted marketing and evolution of advertising.  Share this:TwitterFacebookLike this:LikeBe the first to like […]

  3. […] changes that have taken place over the past 5 years will only continue to progress. We live in an ever changing world which causes advertising to change along with it. […]

  4. […] by TwitterFools on February 24, 2011 According to a report from IBM GLOBAL Business services there is a major change taking place with Advertising. This study talks about how the power has shifted from the companies to individuals. This will have a major affect on advertising and how they get their message to their target audience. Article by IBM Global Business Services IBM […] Alltop RSS […]

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *