The End Of Advertising As We Know It

The next five years will hold more change for the advertising industry than the previous 50 did. Traditional advertising players - broadcasters, distributors and advertising agencies – will need innovative new approaches to respond to major industry shifts underway, according to “The end of advertising as we know it”, IBM global surveys of more than 2,400 consumers and 80 advertising experts. Imagine an advertising world where spending on interactive, one-to-one advertising formats surpasses traditional, one-to-many advertising vehicles, and a significant share of ad space is sold through auctions and exchanges. Advertisers know who viewed and acted on an ad, and pay based on real impact rather than estimated “impressions.” Consumers self-select which ads they watch and share preferred ads with peers. User-generated advertising is as prevalent (and appealing) as agency-created spots. The surveys point to four change drivers shifting control within the ad industry: 1. Attention – Consumers are increasingly in control of how they view, interact with and filter advertising in a multichannel world. 2. 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. 3. Measurement – Advertisers are demanding more individual-specific and involvement- based measurements, putting pressure on the traditional mass-market model. 4. Advertising inventories – Will be bought and sold through efficient exchanges, bypassing traditional intermediaries. 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. 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.