In my opinion piece In Defense Of Free earlier this week I made a sidepoint about the impact of free on the advertising and publishing sectors. Here is the point I was making:
Commentators have been arguing for a few years now that we will see a shift of marketing budgets from offline to online, that the massive spending on TV and billboards will be transplanted into the digital medium where messages can be micro-targeted in a hyper-dynamic, real-time manner. I agree that digital media will drive a dramatic drop in offline spending but I don’t know if I agree that the money will flip online.
Through the internet you can do so much ‘marketing’ for so little and even more for free. Why would a client need to shift budgets from offline to on? Why not keep the cash for something more interesting instead?
This has serious implications. As the number of free ways to market a product and service increases, we could speculate that the amount of advertising spent online today is at its all time peak and even that will gradually decline.
So… if the value of ad traditional dollars spent plummets and online dwindles that could only mean that the advertising industry will therefore suffer a rather large shrinkage. Because of free, brands won’t need as much of the services provided from ad agencies and their production companies. Will we consider advertising as a peculiarity to help businesses shout in many widespread places at the same time until the internet came along and helped businesses talk to many people as individuals at the same time?
And just to take this a little further… if brands won’t be spending as much on advertising because of free – what is going to happen to the publishing industry that relies on it? Most of the traditional newspapers and magazines that have responded to declining ad revenues offline by moving their publishing focus online aren’t going to see the uplift of online ad revenue they need to support the current size of their businesses. I know it’s not nice news to hear but I argue again that the ad spend flip from offline to online is not going to happen. Both the ad and publishing industries are going to have to quickly evolve their business models to find new ways to make revenue.
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I think the money spent on traditional ad needs to stay in the company and pay people who really have the competence to handle new media and online conversations – this is not free. To be successful online is not easy and takes a lot of time and qualifications.
August 7th, 2009 at 5:29 am
I agree with Caroline. Simply because the cost or need to buy large add spaces go down – doesn’t mean that the time and expertise to communicate goes away.
Therefore I see advertising surviving in some degree between even tighter knit relations with companies – innovating and leading the companies online presence. Or perhaps some of the advertising agents completely switching over to the companies themselves.
Furthermore – the main attraction of online advertising, is the ability to connect with strong niche parts of the public. Having creatives who are completely in touch with these niches becomes paramount.
Also I believe a lot of the future is described in this NYT interview http://www.nytimes.com/2008/11/23/magazine/23roundtable-t.html?pagewanted=2 . I especially find the idea of a convergence between advertising and product innovation and development compelling.
August 7th, 2009 at 6:46 am
Caroline and Joshua make good points, but don’t take into account how huge, bloated and interconnected the advertising, media and entertainment businesses are. They all feed one another, all are built from mass eyeball markets, big ticket productions and placements, distribution deals and specialty staff and expertise areas that they can monetize. Technology has made all of the above either irrelevant or at the very least scaled back.
Money may indeed shift to digital product, three screen distro and production and augmented experience (digital in real world environments), but it won’t be recouped to the mass media level.
I predict Piers to be right.. and the publishers, broadcasters and ad holding companies have pretty far to fall in the coming months and years.
August 7th, 2009 at 9:48 am
Andy, I don’t think that either josh or caroline are talking about mass media at all…
Piers I agree that shift won’t be from offline to online; I’ve decried “tra-digital” approaches in the past. Rather, as folks above had said… the shift will be in going from mass to niche. This change is a difficult one both for brands as well advertisers. Indeed… the casualties will be many.
August 7th, 2009 at 1:22 pm
Andy – My main focus was on the actual creatives when talking about downscaling. And I think there is real potential for a lot of talent to transfer into niche markets.
We agree that the bloated mass media approach is dying and large portions of the production apparatus and bureaucracy will be in trouble.
August 7th, 2009 at 1:49 pm
Online media investments account for 20% of total ad dollars, yet we focus 80% of our intellectual capital on it. What’s wrong with this picture?
More commentary on my industry blog: http://www.MyOpenKimono.com
Paul Benjou
August 11th, 2009 at 3:35 pm
I think it’s true that you can get a wide distribution online for a cheap (or even free) “media buy”, but there’s still an expense – and it’s the price of a great idea. The strategy behind digital distribution, and the way to tell brand stories across those mediums becomes ever more complicated, both in time, labor and specialist knowledge. While we’ll never see the huge media buys currently associated with TV, we’ll see an increasing shift from paid media to earned media – moving those dollars away from purchasing pixelspace to supporting strategic and production talent that creates marketing initiatives that travel across the online networks. So while this may not be great news for those large media-buying companies, it’s both a challenging and exciting time to be a creative.
August 11th, 2009 at 4:57 pm
Hi, since we’re talking about the future, maybe it’s time to ask the question, “what is offline?” Increasingly, TV comes in on the same “line” that brings “Online”. Print is going to be replaced be digital readers, and even Outdoor is making in-roads into interactive. So, the ad/marketing world isn’t shifting; the world is simply going online.
In short, the issue for marketing professionals isn’t offline/online, but surviving by abandoning the commoditized business models that define modern media, and for those who adapt and survive, a return to the service based models that made marketing agencies useful to begin with.
The Brokers will have to go somewhere else, and let the marketers get back to doing what they’ve always done best: finding new and innovative ways to persuade the general public into thinking they …
August 13th, 2009 at 12:11 pm