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 / Summer 2006 / Issue 43(originally published by Booz & Company)


The Future of Advertising Is Now

That desire not only is prompting marketers to shift funds from traditional measured media to the Internet; it also underlies the unabated, two-decade-long transfer of marketing budgets from mainstream media advertising to promotions. Media companies and ad agencies used to dismiss the rise in below-the-line spending as a phenomenon driven largely by retailer demand for trade promotions. But the spending shift from major broadcast and print media to below-the-line marketing expenditures owes more to the fact that marketers can more easily measure and prove the value of most below-the-line spend.

Online media technology reinforces the trend toward integration. Although the dichotomy between “brand building” (advertising) and “moving the goods” (promotions) that characterized spending decisions in the old days was always relatively false (L.L. Bean is one of scores of companies that have built enduring brands on the back of promotions efforts without traditional advertising), any distinction disappears in interactive environments, where all communications can be designed to prompt an action. Whether in heavy consideration categories (automotive, travel, personal finance) or impulse-buy categories (specialty foods, packaged goods), marketers can now deliver contextually relevant messages and product information to only those consumers who are interested in choosing a Lexus, planning a trip to France, or searching for organic cotton diapers, and they can measure the actual results, instead of survey-extrapolated estimates.

New outcome-focused metrics are emerging on both the buy-side and sell-side of the marketing gulch. They include:

  • Session quality (for example, brand retention, number of ads viewed per session, and type of advertising content viewed)
  • Degree of consumer cross-platform activity (TV to online and print to online)
  • “Opt-in” activity (online registrations, toll-free calls, and requests for information)
  • Sales impact (leads generated, store traffic, and volume lift at retail stores)

Such is the proliferation of new measurements, new measurement techniques, and new measurement suppliers that the industry may be on the verge of a near-term glut in metrics that transfers precious capacity away from productive activities and creates a cult of accountability. That overindulgence will probably be short-lived, and most companies will settle on the set of metrics that are right for them. At the front end of marketing planning, these new metrics mean greater accuracy in judging impact, more finely tuned objectives, and less waste in budgeting. At the back end, the new metrics allow marketers to better estimate the degree to which objectives have been met. They can develop improvement measures, scale up R&D endeavors, and work with consumers more effectively than they have in the past. For their part, media companies can more effectively price their offerings on the basis of a range of objectives and results.

Postbroadcast Identities
Much as in the early days of television, when Procter & Gamble produced its own soap operas to showcase its products in situ, marketers today are appealing to consumers directly by creating their own programming venues and assets. Although we’re not likely to see many marketers and media companies converge (the ill-fated merger of Columbia Pictures and Coca-Cola in the 1980s remains a cautionary tale), there is no question that more marketers will inform and entertain their consumers directly. Blue-chip brand marketers such as Coca-Cola and Mercedes-Benz are already major players in the digital music arena with and

But the focus is not just on music. Marketers such as P&G have developed their own magazine-like capabilities. With 4 million opt-in e-mail newsletter subscribers, P&G’s ranks in reach and influence with the leading women’s service periodicals — the magazines in which P&G has for decades been among the top advertisers. A destination environment focused on Procter & Gamble’s home-care portfolio, is chock-full of contextually relevant product information, community stories, household ideas (recipes, tips for storing antiques, etc.), and related promotions — even music by Diana Krall and Harry Connick Jr. It generates a treasure trove of consumer insight for P&G that is entirely proprietary.

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  1. Des Dearlove, editor, Results-Driven Marketing: A Guide to Growth and Profits (strategy+business Books, 2005): On creating an ROI-savvy marketing department. Click here.
  2. Evan Hirsh and Mark Schweizer, “The Advertising Saturation Point,” s+b, Fall 2005: Discerning the overspend in conventional advertising budgets. Click here.
  3. Paul Hyde, Edward Landry, and Andrew Tipping, “Making the Perfect Marketer,” s+b, Winter 2004: Study from the Association of National Advertisers and Booz Allen Hamilton explores the challenges and opportunities that the media shift creates for marketing departments. Click here. 
  4. Maarten Jager and Steven Wheeler, “Building a Better Matchmaker,” s+b, Winter 2005: The future of automotive advertising starts with the dealer’s interactive “customer-sensing capability.” Click here.
  5. Paul Keegan, “The Man Who Can Save Advertising,” Business 2.0, November 1, 2004: Profiles Seth Haberman, inventor of the Visible World technology for targeting TV neighborhood by neighborhood. Click here.
  6. Nielsen//Net Ratings, “Working Women Online: Media Usage and Purchasing Habits of Online Working Women,” Washington Post/ Newsweek Interactive, 2004: The Internet as the window to the world for busy working women. Click here.
  7. Yuki Noguchi, “TV When — and Where — You Want It: New Video Technologies Free Viewers from the Couch,” Washington Post, February 12, 2006: Mark Burnett and other pundits on the “new prime times” of video-on-demand. Click here.
  8. Randall Rothenberg, “Bye-Bye,” Wired, January 1998: Looks ahead to the death of “big media.” Click here.
  9. Veronis Suhler Stevenson, “Communications Industry Forecast 2005–2009,”: Predicts growth in home video, Internet media, wireless content, and interactive TV. Click here.
  10. Mark Wallace, “The Game Is Virtual. The Profit Is Real,” New York Times, May 29, 2005: Unveils the remarkable global growth of World of Warcraft and other role-playing games.
  11. Nick Wreden, ProfitBrand: How to Increase the Profitability, Accountability, and Sustainability of Brands (Kogan Page, 2005): Cogent guide to sustaining brands in the new-media-driven “demand economy,” where customers expect their desires to be satisfied instantly.
  12. Yankelovich Partners, “2005 Marketing Receptivity Survey,”: Finds that consumers hate advertising, except the personalized kind. Click here.
  13. The Apprentice Web site, Season 2, Episode 4: Recap of the Unilever tie-in episode, in which contestants created a Dove TV commercial, after which Dove Web site traffic increased 1,500 percent. Click here.
  14. Jack Myers Media Village, Former CBS-TV sales executive’s Web site reports on declining TV ad sales (in May 23, 2005, archive) and other new media harbingers.
  15. For more articles on marketing, sign up for s+b’s RSS feed. Click here.
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