After a few meetings today & rereading this Techcrunch musing about local advertising and newspapers, I had a moment of clarity regarding the advertising industry… where it's been… and where it's headed. Random thoughts in no particular order:
- People consume media and ads from thousands of sources today. Consumption is ridiculously fragmented, perhaps permanently, although for all the fragmentation there are a lot of efforts to centralize as well.
- There are so many media outlets, it's arguable that people have media/advertising fatigue. Hence, they perhaps trust friends/colleagues and a "personal touch" more than ever before.
- Small, local businesses that achieved success in the "Age of Retail" (i.e. until the mid-80s or so) either became chains or went out of business in the succeeding generation.
- Despite the relative lack of local businesses, there is still a need for advertising at the local level… and that need bridges online and offline methods. Sophistication in online models is largely non-existent even in 2009 while it's extreme in offline advertising. This will change but only after a lot of experiments take place.
- Web entrepreneurs smell blood in the water when large, successful offline advertising companies fail to move quickly enough to play the game with the "new rules". Most Web entrepreneurs underestimate the power of existing brands, but managers of most large, successful offline advertising companies also aren't empowered to be bold enough to compete as well as they perhaps should.
- Chains, large and small, spent the better part of the last 10 years optimizing operations, data mining activities, etc. but they have not yet undergone the same optimization of advertising spend. I suspect this is an anomaly and large agencies will struggle with the realities of deflation sooner or later.
- Consumer behavior, overnight delivery services, and the efficiency of the Internet combine to make ads from other parts of the country or perhaps the World more relevant than an ad for a store right around the corner.
I don't know what this all means just yet… I'm rolling around on a few ideas that I'll share in more detail over coming weeks.
Chris-
Regarding fragmentation: This is a natural and interim activity to new models. Models break and are re-assembled. This takes a shorter time now than it has in the past. The experimentation might be hard to see as multiple experiments because their is so much experimentation going on. As sources proliferate, people make more choices to find what’s relevant for them. Slowly, eventually, marketers (and advertisers..these are different groups, you know) will realize how to re-centralize media consumption in forms that aren’t clear to anyone yet. People are getting what they need and want more so ever than before, but because marketers have been overly focused on delivering messages and dialogue through channels they understand, they have been slow to adapt. This too is starting to change as everyone begins to understand the true opportunity of this fragmentation.
The final form of the next big iteration of centralization won’t be one channel, medium, time or message, it will be the meeting of the consumer and the company, enabled by the marketer, in a method that addresses consumer needs in the most ‘human’ and complete fashion possible. The ‘human’ aspect is currently being addressed by blogs, for instance, because it seems to provide the most natural voice for a company to talk to and with its fans, detractors and consumers. The idea of complete revolves around on and offline channels, engagement length based on customer demand, and experiential activities that let consumers engage or re-engage with the brand, online and offline.
On the whole, I think we see a lot of this the same way, but my main point was that I don’t see the fragmentation as indefinite. It’s a way point. Once its reached, businesses and consumers will settle in for a while to explore efficiencies, much as businesses focused on non-marketing operational efficiencies for a long time.
Great points, Todd.
In conversations with companies of all sizes, I’m seeing exactly the phenomenon you mention. Companies see that the game is changing and they are rushing to get there before their competition.
The world has changed a lot in the last year. I’m glad to be in the trenches while folks in the corporate world figure it out.