To Continue To Grow, Ad Industry Needs Innovation

According to a report I saw published last week, the advertising industry is forecast to grow more than 5% next year.  That’s a lot of growth for an already enormous business, but what I find most interesting is that the growth is happening despite us not listening to our most important customers.  It’s all happening without reading the signals and the data from the audience.

The audience doesn’t really like how we do things.  Look at the data.  Click-through rates are at an all-time low.  Social media ad engagement is down.  People skip video ads by as much as +90% when given the chance.

 It even costs more to make an impact with search than it ever did before because people click less and there’s more competition, driving up prices.

All this info provides a clear signal that consumers don’t appreciate the way we deliver messages in their current format. And yet the industry dramatically over-indexes on talking about itself and how much we rely on data and insights to prove performance.



My suggestion to the ad industry is to follow our own advice.  Let’s stop navel-gazing and talking about ourselves long enough to hear what the audience is saying, so we can come up with some new ways to reach the audience in a more likeable format.

When I was an agency guy, the first rule was, never lead with your credentials or start a conversation by talking about yourself or your company.  You always listen first, ask good questions, and formulate a hypothesis that meets the needs of your customer.

The same should go for our industry.  Our primary consumers are clear they will do anything to avoid or ignore our ad formats, and yet we ignore that feedback.  Why are we not pursuing ways to be more effective with the money we spend rather than simply throwing more money at the problem?

Brands and agencies should be looking to innovate on new ways to deliver a message in a format that is less interruptive and more relevant -- and has the potential to be appreciated by the audience we are trying to speak to.

Interruption is the easy way to speak to them, but we can’t lean in on interruption forever, and also give them control over the experience in a way that allows them to skip or ignore it.  

Search is one of the biggest formats that needs a change, because of generative search.  Results will be spoon-fed to the audience in a more easily consumable format with no need to click to see numerous pages.  That creates an opportunity for new real estate alongside the generative results where a message can be delivered, and that message is highly targetable.

In video, pre-roll and post-roll are probably going to survive, but product placement and in-screen advertising or overlays are a fast-growing area (in full disclosure, this is where I focus my time).  These can’t be skipped or ignored, and in-game has proven its value.

Shoppable video is a hugely innovative area as well, turning video into a commerce engine that can generate activity immediately, whether in social media or beyond.

AI-customized display ads can be created and delivered in real time and baked into a campaign, working off IP address and not cookies, enabling display to be more effective in the coming years.

I also think we could see a return for things like interstitials as more sites simply become knowledge bases to be scraped by AI.  Experience in apps and video could become more reliant on an interstitial experience, and although interruptive, it could be used sparingly and with high a CPM to command engagement.

Innovation is where these additional ad dollars should be going -- innovation in creative delivery rather than simply data and efficiency.  The question should be, how do you make a splash -- versus, how do we continue to refine the target to a narrow point?

This is something we should be focusing on, don’t you think?

2 comments about "To Continue To Grow, Ad Industry Needs Innovation".
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  1. Tim Messier from Mile Marker 1 Advisors, March 29, 2024 at 7:05 a.m.

    This is spot on. While it was often challenging for the sell-side to juggle a few dozen rich media vendors back that same number of years ago, that period of innovation in the display world pulled everyone forward. What often felt like chaos made us all grow up a little, and the chaos was eventually tamed by the need for measurement, standardization and newfound respect for the user experience. We didn't get everything right, but luckily, we also didn't get ... everything. Attrition and consolidation happened, and the industry emerged a little smarter.

    It's time for a renaissance. It’s not wishful thinking to believe there’s a little less greed and more thoughtful innovation available this time around. The players are both fewer and smarter, and collaboration feels a little less feared. The leaders are experienced, some growing up in the factories of the display revolution of the early 2000s, others growing up steeped in critical, adjacent forms of media. New leaders will emerge. More importantly, the foundation has already been poured, and our industry’s version of “government” is better prepared.

    The revolution will be broadcast.

  2. Ed Papazian from Media Dynamics Inc, March 29, 2024 at 10:44 a.m.

    Dave, I didn't say that it was just a local problem--though that's part of it.

    W at Media Dynamics Ince track the  upfront national T V time buying dollar flow and it's evident that the traditional national TV advertisers---P&G and company---will constitute a major share of CTV ad spend as it moves forward. Last year's upfront demonstrates this as they moved $8 billion dollars to CTV. Add another $2 billion for scatter buys and we're already talking about 40-45% of the total ad dollars. Delete local, and the percentage rises.

    As linear viewing continues to decline, these advertisers will have no alternative but to shift still more heavily into CTV and I  firmly believe that they will not accept the "Alice In Wonderland" mertics or time buying approaches that we now see---and complain about--- in CTV. Moreover, much of the CTV ad time will be sold by people who come from the same mold--who understand the needs of P&G and its type of advertiser.

    As for Amazon, Wallmart, etc. they control only a small, part of the total CTV viewing pie and their business plan is quite different from  a TV network AVOD or FAST. They are offering "data" on actual customer shopping as an inducement and writing off much of their program costs against their shopping  stimulation efforts. This is fine for direct response advertisers as well as search campaigns and sales promotional efforts by traditional marketers---but it doesn't fit in with the current upfront , corporate, low CMP buying model which remains strongly entrenched with most national TV advertisers. Nor does it affect the huge amount of ad dollars that are devoted to "must buys"---like TV sports, news, specials and first run prime time entertainment shows. Those will be bought no matter what the CPMs or the demos say. All of which leaves only so many TV ad dollars available for truely selective but high CPM targeting. As a guess, probbaly less than 20% for national adverttisers.

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