15

Could advertising just die someday as an industry?

Posted on by Ted Bauer

Could advertising just die someday?

I’ve wondered this for a couple of months now, so I decided to try and sit down and make some sense of the idea with a post.

Here’s the thing: advertising is oftentimes everything to media pursuits (television, magazines, newspapers, etc.) It’s essentially how they make money. (Not always: see Netflix, which I’ll address again in a few paragraphs.) The Super Bowl became an event in part because of the advertisements, and people start throwing celebrities and cool concepts all over their ads — and paying $4.5 million for 30 seconds or whatever — because of the expected audience (100 million, give or take). Basically: you have an end product with X-amount of expected users with Y-characteristics (demographics, income, etc.) and based off that, you have advertisers and you hit solid margins on it.

Now here’s the problem. It’s two-fold:

Here’s what I mean by the “junk science” part: the No. 1 show on TV besides the NFL is usually something like NCIS. So the ratings are great (yay!) but the average age of a viewer there is around 60 (oh!) and that’s not the demographic marketers and advertisers want to target (right!). So they’re paying out the wazoo to reach a big audience, but the audience doesn’t contain people who they want? That’s odd.

Here’s what I mean about the ignore ads part: people skip ads when they can. They want the content, the story, the music, the TV show, whatever it. Ads can be beautiful and glossy and all that, but … I’d reckon most people know how to ignore them. This is only going to get more pervasive as the millennial generation and company become the big earners in the first world.

So, what happens next?

Here’s what I would think, and admittedly this doesn’t make sense for every business model out in the world:

  • You need to start by thinking about how companies can make money if advertising dies out.
  • It would seem the most logical place would be a subscription model.
  • There, you tell a story, you explain your brand, you explain its value, and people need to subscribe monthly/annually to get it.
  • This could work for CBS (“buy our dedicated channel outside the cable bundle”) and/or some widget company in Iowa (“subscribe and you’ll get access to new information about widgets, customer service 24-7, etc.”)
  • That way, people are opting in — subscribing — to the things they want and see the value of, as opposed to being fed ads about anything/everything under the sun.

This seems logical, but obviously there a bunch of flaws:

  • It doesn’t work for every industry/vertical.
  • If you remove advertising from the equation, a lot of marketing departments wouldn’t really know how to do marketing anymore.
  • People love to talk about “impressions” because it’s a big number. “Ad impressions” is one of the biggest. Strip that and you’ll make people nervous.
  • Subscriptions (depending on price point) may not yield as much revenue/growth as ads.

There are probably a handful of other flaws I’m missing out on above, yes.

Digiday argued in September ’14 that advertising was doing well, but traditional advertising was dying. Their argument was mostly around the idea that advertising, as we conventionally understand it, is a one-way transaction: company pays money, and gets in front of the consumer. Done.

Here’s the problem:

This blog makes the same point about advertising and why it might die — namely, we haven’t shifted to new ways of thinking. If you have a Twitter account and someone tweets a question at it, and you don’t answer that question … that’s the same thing, in reality, as someone walking into one of your stores and asking a question of an employee and the employee turns around and walks away. It’s bad. Consumers expect the relationship to be “omni-channel” (buzzword hell), and not all organizations actually deliver on that.

I guess this is my big underscore here, too: the promise of the digital age and Big Data and analytics was supposed to be things like targeting, and understanding who watches what shows/reads what magazines and then delivering them content and ads that resonate with them. That doesn’t happen. I watch Hulu and other ROKU apps and get fed ads all the time for things I’d never buy. So clearly the “grand promise” of “We know who’s watching your stuff!” or “We know who reads your content!” or “We know who buys your wares!” isn’t quite there yet. (That’s not surprising if you think about how we approach “Big Data.”)

I doubt advertising will ever truly die — B2B marketing should probably die out sometime too, and I doubt that will happen — largely because organizational/business change can often take decades to actually play out. Killing off a whole industry, especially one that’s baked into the fabric of how we think about America’s growth (see: Mad Men), will be pretty hard.

Ted Bauer

More Posts

15 Comments

  2. Interesting concept…I actually think it will get much worse before it gets better. I think eventually, brands will begin sponsoring everyday ordinary people who “opt in” as “brand ambassadors.” I’m guessing brands will allow consumers who “opt in” to receive merchandise discounts and other incentives so that the brands can create more average Joe/Jane evangelists/proselytizers for them.

    As far as targeting, I’ve seen evidence of inching ever closer to the marketing “big brother” scenarios we’ve all heard/read about. Data brokers have been around for years, and here is a recent example of connecting the dots: http://fivethirtyeight.com/datalab/data-scientists-can-link-your-instagrams-to-your-credit-card-purchases/

    Granted, in the example linked above, there is a need for consumers to divulge more than average info about themselves. Obviously, the more info you give, the more data points can be used to “model” and track your behavior. It does seem, though, that consumers’ privacy hinges on the extent to which data brokers/marketers use their data. I would wager that many companies know much more about consumers than most people think. All it takes is a small incentive, say 5% off as a “rewards” card, to persuade most consumers to “opt in.”

    • You are probably right about “it will get worse before it gets better.” People love to chase down a bunch of stupid, ill-conceived, BS ways to potentially make a buck or find new consumers as opposed to logically considering their value and brand.

  3. Good direction of thinking in the article but with two fundamental fails (in understanding of what is happening):
    I’ll start with the conclusion “the promise of the digital age and Big Data and analytics was supposed to be things like targeting, and understanding who watches what shows/reads what magazines and then delivering them content and ads that resonate with them. That doesn’t happen. I watch Hulu and other ROKU apps and get fed ads all the time for things I’d never buy. So clearly the “grand promise” of “We know who’s watching your stuff!” or “We know who reads your content!” or “We know who buys your wares!” isn’t quite there yet.” – because here is the point where the lie is sold to the public, not to ad-companies. Targeting is NOT there to deliver ads to customers that resonate with them. That would be pointless for what ads are. Targeting is there to manipulate the target for the benefit of ad -placer and ad-server. Not for the good of the customer, for the good of ad company. Grand promise to companies placing ads IS there, advanced pushing of stuff on unwilling. Grand promise to customers, that all this is for their good, is a lie from the get-go.
    Now to a more subtle point: yes, ad business as we know it is on a way out (it will survive on the margins, supporting spammy websites and such), to be replaced by tracking alone. Look at the current ad-systems leader (Google), what do they do with their business? Trying to infiltrate every aspect of our physical and net lives (why does the company expecting to earn from ads develop a self-driving car, maps, WiFi routers, purchases smart-thermostats Co.,…?). Direction is clear for anyone willing to look deeper: future business model is not in ads but in direct sales of customer intelligence to businesses. Why bother with fickle ad sales that no one wants to watch vs. direct income from businesses for what you know about their customers? So, no ads for Ford for example. No. But, Ford will buy data about everyone from Google, knowing what they like and what they can pay. Ford will earn money paid double over when you come in and you get “personalized price just for you”. Maximized one. As much as data sez’ you can and are willing to pay. Another dealer?-It is in their interest to be on this system, all will give you the same price, good for them , bad for you. That is the end game we are drifting to.

    • These are interesting points, and thank you for calling out some of my flaws in thinking. I always appreciate that. Honestly, because I mean … I know nothing half the time. I just try to throw interesting things at the wall where I can.

Comments are closed.