IKEA has outfitted a train in Kobe (Japan) with sofas and curtains—probably with names like Oompa-loompa, Frida, and Bucarest. Unfortunately, this is only temporary, to mark the opening of a new shop in the city. No reason why we cannot have Starbucks train cars or Muji train cars. This is the future of advertising.
IBM has published a new industry study apocalyptically titled "The End of Advertising as We Know It".. It is based on a survey of more than 2,400 consumers spiced with feedback from eighty senior advertising executives. The study predicts that over the next 5 years some 30% of global ad revenues currently accruing to traditional media companies - amounting to billions of dollars - will migrate to online ad exchanges such as Google and Yahoo. This is overly simplistic verdict and an unlikely scenario.
Here are some predictions from the report:
- As the advertising value chain reconfigures, broadcasters, advertising agencies and media distributors in particular will need to make a number of 'no regret' moves.
- The new technology and rising popularity of user-generated and peer-delivered content, and new ad revenue-sharing models (e.g., YouTube, Crackle, Current TV), now enables amateurs and semiprofessionals to create lower-cost advertising content.
- Advertisers are demanding more individual-specific and involvement-based measurements, putting pressure on the traditional mass-market model. Two-thirds of the advertising experts IBM polled expect 20% of advertising revenue to shift from impression-based to impact-based formats within three years.
- New entrants are making ad space that once was proprietary available through open, efficient exchanges. As a result, more than half of the ad professionals polled expect that open platforms will, within the next five years, take 30% of the revenue currently flowing to proprietary incumbents such as broadcasters.
There is no question that the future of advertising will look radically different from the past. The push for control of attention, creativity, measurements and inventory will reshape the advertising value chain and shift the balance of power. Disruptive start-ups will bring more chaos to this already vulnerable business model which is more than 50 years old. Let's face it...no body even look at banner ads, press releases are nearly useless, TV commercial are entertaining at most but don't engage viewers, direct mail is a i the business of killing trees...what's left?
I wrote a lot about this on this blog, spoke at international conferences and frequently exchange my views with top agency executives, they are most curious of what I think the different models of agency and what likely scenarios will emerge?
Currently there is multiple capability gaps exist in agencies, they are lacking management consultant’s type of business rigor, then the deep insight of product designers and the digital know-now of interactive specialist.
In this world of cross-capability mastery, what does the agency of the future look like? Agencies also have tremendous egos and cultural issue to deal, too much emphasis on “the creative idea”, it is such a thing of the 70s. The quest for scale has reduced many great firms to either a creative factory or procurement shop. There is no room for walls and egos in a digital world. Future agency success won't be measured in unit’s displayed or gross impressions, but the level of customer engagement.
From the end of advertising agency as we know it to the future of advertising, this week in Montreal I met with Jean-Francois, ceo and co-founder of Sid Lee (picture of their cafeteria above serving lunch for 200 plus) A creative powerhouse founded in six years ago by two students that never worked in an agency. They didn't really reject the traditional agency model, just don't give a damn about it (or know enough about it). The agency has a close relationship with Cirque du Soleil and came to flame with their work with them. I was very impressed with them when he explained to me their dream to build a new form of creative organization: a Commercial Creativity group. He told me his business is about “creativity”. I told him Idea Couture’s business is about “innovation”. That was the beginning of an interesting conversation.
He gave Scott and I a tour of their offices, there so much creative energy in the place. In the Sid Lee mantra, advertising should be seen as a tool, as opposed to a toolbox. Rather, what Sid Lee calls "commercial creativity" is the toolbox? And it can include a lot more than just advertising, which explains why Sid Lee is now involved in such things as retail architecture, experiential marketing and industrial design. The idea is to be able to develop rich brand experiences in stores.
I think this company is on a mission. There’s a lot in common between our firms, while their core is in “creativity and design” and our core is “strategy and creativity” manifested in innovation. Our focus is more towards digital. There’s something about the French and Japanese and creativity, although they are very different. I’ve spent a lot of time in Tokyo and Paris for both business and play. And some of my most creative times and business ideas come around my visits to these places. The French publish utterly different magazines and books from the kind I find anywhere else in the world, and there is something about their perspectives. For Japan, I love to fusion of modernism with the spiritually ancient that expressed in design ethos focus on transience and the constant dynamism of change. There are agencies (for the lack of a better word) like them in London, Amsterdam and Barcelona all with a mission to change the world of marketing communications. London's Monther is a good example. See picture of their workspace below.
Here's an old presentation which I posted here four months ago. Now is a good time to revisit it. If you know a company who is also on a mission to change the ad world, please share with us. Let's hope it will all happen fast. Advertising needs a revolution, not repackaging.
