WSJ reported today that the Web's emergence is now forcing ad executives to succumb to marketers' demands that agencies reinvent how ads are created, and forgo their TV-centric approach. This is a really good piece that reflects exactly the big challenges. They reported that clients are even calling for changes in the way ad firms are structured. But until now, few advertisers have spent more than 5% to 10% of their marketing budgets online. With the growth of online video and social networking, ad experts expect that percentage to jump significantly this year. Many senior marketing executives are looking at anything from 10% to as much as 35% or total ad spend. As I’ve written here a few years earlier any softness in the economy also will likely drive more money to the Internet, which can be cheaper than other media and has a more measurable reach and results, which is attractive to advertisers in slower times. Merrill Lynch predicts overall ad spending in the U.S. for 2008 will grow 2.3%, while the portion of that spending on the web will increase 18%. Publicis’ Zenith Optimedia even expecting the total spent on Internet will surpass magazines in 2010 and that’s two years away.
Yes, the next 12 months we will see an acceleration of the transformation of the ad industry, partly due to the softness of the market and the impact from the whole social media thing. The article highlights the following:
New Structure: The Web has fueled marketers' frustration with the lack of collaboration inside the ad holding companies that dominate the industry. Many advertisers complain that ad executives too often push agendas that will most help their own bottom lines and tend to favor certain types of media, such as TV. Advertisers want a "media-agnostic" approach, one that picks whatever medium is best for the ad campaign.
Some bigger marketers have taken matters into their own hands during the past year. Procter & Gamble, Dell and Johnson & Johnson each have tried -- working with ad holding companies -- to create new types of ad groups that blend different functions. In 2008, pressure from marketers on this issue is likely to intensify, forcing even more change in the way ad firms are structured.
Screen Wars: As advertisers find it harder to reach consumers in a fragmented media world, some are turning more often to the outdoors. Television screens are increasingly popping up in grocery and department-store aisles, elevators and even gas pumps -- all blaring clips of TV programs, accompanied by ads. Walt Disney's ESPN and CBS Corp. each have programming running on 20-inch liquid-crystal displays at pumps at gas stations around the country. Gas Station TV, which operates about 5,000 such screens in 300 cities, offers ads from marketers such as General Motors' Chevrolet and Sony. Last year, CBS inked a deal to have its programming also air in the waiting rooms of doctors' offices.
House Guest: Over the years, ad makers have tried various methods to learn about consumers, from focus groups to online polls. But many on Madison Avenue are skeptical of these methods, believing consumers don't always share their true feelings in those types of traditional settings. So a growing number of ad agencies are expected to try a different approach: having researchers spend long periods of time with consumers to find out more about how they live.
Some have already tried this. When devising a new ad for J.C. Penney last year, Saatchi & Saatchi sent staffers to hang out with more than 50 women for several days. They helped the women clean their houses, carpool, cook dinner and shop. Rather than pepper them with questions, the agency employees simply observed the women's behavior and emotions. Their research became the basis of a new ad campaign; the commercials have won praise from Madison Avenue's creative community.
Green Backlash: Corporate America latched onto environmental marketing last year, as big companies spent millions of ad dollars promoting their products and services as eco-friendly. Some people in the ad business are predicting a backlash this year from consumers who question whether companies are living up to their promises. "Marketers will be more intensely scrutinized for their green efforts -- those that don't hold up will be called out via blogs and elsewhere online, ultimately leading to consumer skepticism," said Greg Stern, chief executive of the ad firm Butler, Shine, Stern & Partners.
I repost this old presentation of mine which many ideas are echoed by this WSJ article.