Commentary

Is It Really The End?

According to a new Analyst review and report by James L. McQuivey and Keith Johnston for Forrester, top-spending CMOs complain that display ads don’t do what they’re paying for them to do. Meanwhile, as consumers embrace interruption free experiences, marketers will move billions of display ad dollars to build customer relationships.

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The report “The End of Advertising As We Know It,” says that advertising has shaped culture, delivered product information, and powered the economy. But digital tools have arisen that do what advertising does, often better. The ad model has begun to fray, and, the report suggests that maybe “Key Takeaways” advertising would be the best way to replace traditional models.

Advertising has been essential to modern life, says the report. It achieved this critical role because of its ability to reach customers, acting as a fast-moving, responsive system through which thousands of companies and millions of consumers could negotiate shared commercial interests in as close to real time as each era’s technology permitted.

Advertising did more than help sell products, notes the report; it also played crucial economic and societal roles for both companies and consumers. Over time, advertising’s power spawned an entrenched system that interconnects marketers, media agencies, publishers, and technology companies, which all depend on each other’s trust in advertising, to thrive.

The report encourages firms to join the switch from ad interruptions to intelligent, conversational relationships. Consumers are ready for deeper relationships with the companies that matter to them, says the report. There are clear steps to take today, according to the analysis, including embedding personality in your brand’s current conversation.

  • Product information Ads deliver valuable information regarding product features, availability, and pricing. This information is fundamental to an efficient marketplace
  • Marketers Capital movement Advertising accounts for less than 2% of the US economy, but it has leverage because it directs the flow of capital through all other industries
  • Access to markets Advertising gives firms access to markets they want to enter, facilitating entry and in-market innovation. It also stimulates competition among firms
  • CMOs Will Shift Billions From Bad Ads To Better Relationships

The analysis admits that it’s reporting to CMOs things they already know, things whispered, because thanks to the rising devices and consumer behaviors described, advertising of all flavors is fundamentally insufficient for building the deeper, more meaningful customer relationship that digital now beckons you to try to build.

The authors of the report do not expect a complete vote of no confidence in all of advertising or even in digital advertising, on which you will still spend billions. But if this analysis can persuade the top 10 US advertisers to shift just 10% of their ad budgets to branded relationships, it will cut $2.9 billion from the current ad business, a decline of 1.6% for this year in a display market that’s growing faster than that overall.

This will be painful for advertising services companies and technology platforms that rely on misspent ad dollars, admits the authors, but it’s a necessary and inevitable shift. Pull dollars away from the waste; invest it in future customer relationships; and, by 2020, you will trigger major, welcome changes in the ad world, says the report. The complet analysis, addressed for reader review at the end of this synopsis, goes on to describe in detail many of the actions and reactions in pursuit of changes to be considered, including:

  • Google and Facebook will lose the most, most quickly. By some reports, these two companies are absorbing all the growth in the US digital ad market
  • Premium pricing will soar for the remaining interruption-based ad experiences. Not all interruption opportunities will disappear
  • Distributors and aggregators will take over the contextual ad model
  • Multibranded product categories will consolidate
  • Consumers will pay for more. Gone is the argument that content wants to be free
  • Marketers will invest in fulfilling the brand promise, not just making it. CMOs focused on relationships will not just move dollars to high-tech customer connections like agents
  • Matchmakers will emerge to broker introductions to new brands. Reaching new customers in this environment will be tricky since their connection to preferred brands will be so deep
  • Mom-and-pop retail will resurge with an Uber-like model. Although big-box retail locations are closing down left and right, Amazon is building small stores across the country because the warehouse approach to convenience can’t compete

For the complete Forrester report, “The End of Advertising as We Know It,” please visit Wayin here 

 

 

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