Digital Matters - Issue 30

At the Ryder Cup golf match, held at the Country Club in Brookline, Massachusetts, the PGA sold $12 radios that enabled spectators to listen to the audio portion of USA Network and NBC telecasts of the event. The radios were great: They allowed you to keep up with breaking developments all over the course. But what was really great was that during commercial breaks, there were no ads. Instead, the radio played music.

Today, you can buy high-tech radios, digital television-recording systems, and software diskettes that replicate the experience of that $12 PGA radio -- except that you don't have to be on a golf course to enjoy it. You can block out advertising in your home, in your car, and on your laptop.

Soon enough, these relatively unsophisticated devices and technologies will be enhanced by sophisticated speech-recognition technology. Three or four years from now, individual consumers will quite possibly be able to use simple voice commands to banish all advertising that they choose not to see or hear. And when that happens, we will have arrived at the beginning of the end of the broadcast-advertising era.

That is one reason why Viacom's acquisition of CBS is known in some circles as "Sumner's Folly" (after Viacom CEO Sumner Redstone). The broadcast-television model is almost entirely dependent on advertising revenues. If ever-larger numbers of people have the ability to block out advertising, the traditional model will become simply one more victim of digital technology, and Broadcast Row and Madison Avenue will come crashing down with it.

So what takes its place? How do marketers and advertisers get their messages out? Some will continue to rely on the old model, which will remain functional for a time -- because the majority of consumers will be late adapters to the new technology. But at the high end of the market, where you find the "best customers" (those with the most money), the old model won't work at all. These best customers will be armed to the teeth with the new speech-activated technologies, and they'll make sure that the only advertising that gets through is advertising that they really want to hear. That sound -- the sound of advertising being allowed in -- is the sound of the future being born.

Of course, that future involves the application of the next batch of technology to solve the challenge posed by the first batch of technology. To reach best customers, marketers and advertisers will have to use what Forrester Research calls IRMs -- "interactive relationship managers." IRMs are "infomediaries," devices that collect user data based on the surfing habits of ISP customers and then make appropriate suggestions as to what else those customers might like or need.

Amazon.com is one example of an IRM. If you bought Joseph Kanon's novel "Los Alamos," Amazon would email you the names of other books about the Manhattan Project (some fiction, some nonfiction). If you bought Faith Hill's latest CD, Amazon would prompt you to check out Shania Twain and the Dixie Chicks.

But a true IRM looks at the bigger picture, one that encompasses the entire range of consumer needs and wants. For the moment, no one is doing that -- which is why there is suddenly a great deal of interest in a small Boston-based firm called Predictive Networks Inc.

Predictive Networks offers technology that is capable of doing three things. First, it enables profiling of individual ISP customers, as well as users of large-area networks (LAN/WAN), according to individual surfing habits. Second, it enables intelligent content delivery to those same individuals. Third, it enables virtually any company to create an ISP for its customers.

Take them one at a time. Don Peppers, Martha Rogers, and others have written reams of copy on the coming of one-to-one marketing. Truly direct marketing has been elusive, however, because companies have been unable to track customers from one place to the next. The "New York Times" knows what you're doing inside its site, but it doesn't know what you're doing inside the "Wall Street Journal" site. The Gap knows what you're buying for your kids in its stores, but not what you're buying at Sneaker Depot.

Predictive Networks allows marketers to see how individual consumers behave in every site by tracking their behavior via their ISP or LAN/WAN. That makes possible a much more complete profile of the individual user (who is privacy-protected because his or her name is irrelevant; only his or her data and browsing patterns are of use). All of which allows more effective one-to-one marketing.

Once you know what a MindSpring customer is interested in or looking for, the next step is to offer that customer some choices. If she's interested in antiques in upstate New York, give her advertisements for the six or eight best antique shops or venues. These ads need to be downloaded as she stalks (on the Web) that perfect armoire. Predictive Networks's technology offers this capability, even over copper wires.