Cliff Kurtzman is CEO — and Chief Soothsayer — for Adastro Inc. Tim Smith is an independent investor and entrepreneur. Their session, the first in the FutureThink track, was a quick run through some of the trends and developments that will affect online advertising in the future. What follows is a partial transcript of their Ad:Tech presentations:
Cliff Kurtzman: Let’s talk about the future of advertising. And you can’t talk about the future without talking about the past. The diversity of species dropped precipitously during a great dying off. But the important thing is that after that, things took off. We’re seeing a little bit of that in our industry. In the 1630s, we had the great tulip craze in the Netherlands. Then the market crashed. In the 1720s, we had the South Sea bubble.
Coming a little closer, in the 1900s, we had a situation in which one-way media allowed the establishment of global brands through positioning. Identity advertising and public relations were key. Now we have to take into account not only where the world is, but where the world is going to be. The pace of change is only going to accelerate.
Let’s look at six key areas: Demographics, globalization, the workplace, interactivity, accessibility and interconnectivity, and a shift in responsibility.
Demographics I’ll speak least of because it’s most understood. Ad agencies understand the people they’re trying to reach. But the greatest opportunities lie beyond the native U.S. English audience. It’s less mature and less well developed, but we’ll see the expansion of Latin markets and the explosion of Indonesia and China.
Technology is changing how people work and what they do. And we’re seeing new ways to interact and collaborate. Tonight I’ll go back to my hotel, put my cam on my computer and talk to my daughter. That’s pretty powerful. Imagine a day where we have a trillion interconnected devices. We each inhabit a world of our own. We are individuals. But marketing that makes a brand particular for an individual will go far. Take a look at the social network software. It’s a tremendous opportunity for me as a marketer to learn what people are interested in. What are people interested in? One, music. Two, sex.
HP commissioned a study that found that 30% of the value of a public company was the value of the brand. We’re seeing a shift in responsibility. Advertising and PR departments can no longer establish a brand. It’s got to be delivered by service over time. Things like awareness and positioning no longer do the trick. There’s been a shift in the economy, and you need to shift your brand everywhere along the supply chain.
In the past, people could use one-way mass media. That’s becoming less important. TV is less of a killer now because there are so many channels. Now it’s accessibility and visibility. Will people be able to access you? Based on real attributes of your brand and product, differentiation remains extremely important. Advertising needs to change. As does public relations. We used to send out press releases, but the strength of our relationships are more important.
A client just got me a book called Scientific Advertising. Even in 1923, people talked about telling stories. To build a successful brand, you need a great deal of creativity. And you need a detailed plan for how you’re going to get the message out. That’s necessary in a space exploration project, and it’s important in building a brand.
There are six critical areas to consider. Look at the political situation. Consider the economic environment. What are the social trends? How will technology change the environment you do business in? What are the legal repercussions? And in some businesses, the environment plays a role. How do you interact with your environment?
Like Steve Jobs said, we’re here to make a dent in the universe. Your business is going to shape the future. You can’t survive floating on the tide. What do you want? The power to shape the future really is in our hands.
Tim Smith: Clifford and I did not collaborate, but we talk about a lot of the same themes. About six or seven years ago, I realized that my research was going all over the place. I needed to stay within a box. I put this chart together, and I’ve stayed there. The trends I was looking at were games, entertainment, time shifting, consumer production, and true use.
The impacts of these blur the lines of work and play. We’ve also seen a lot of power shifts. The true survivors are getting true traction. But message discontinuity is still a real problem. There’s a difference between what’s going on online and offline. They’re silo’d.
We’re looking at the Third Place. There’s work. There’s home. There’s the third place. Typically, it’s walking down the street with a mobile, online, or at a Starbucks or a Hear Caf鮠Advertising has to change in these environments. How? Through story systems.
Where are we now? Consumers rule. In the old days, we had a monolithic brand and a one-way conduit to people. The result of this is “sheeple.” We’ve been doing what we’re told for 50 years now. The Internet reached 50 million people in 2.5 years. This is rapid change, not just for advertisers but for consumers. When you look at these media, those that are interactive rise. It’s a shift of control and an acknowledgment of control in the hands of consumers. It’s eating away at the other time out there.
Consumers are going through an evolution from control, collaboration, and creation. We now have massive mechanisms of control, filter, and choice. 2003 was the inflection point and year of consumer control. What is the impact? TiVo doesn’t really have a business model because it’s become commoditized so fast. But now people can time shift. The challenge for advertisers is to figure out what to do beyond getting in the way of content.
I go to Epinions to do basic research. 85% of TiVo homes skip most ads. Regular TV is dead. This is the truth. If you have these mechanisms of peer-to-peer communication, you can’t mass broadcast any more. There’s bandwidth between consumers. We all know about IM, a great example of Metcalfe’s Law. This is getting even more sophisticated. If you look at things like LinkedIn, I wonder when they’re going to start asking me to pay for it.
When you put tools in the hands of people to create and share things, what’s going on here? There’s a deep-seated need to share and communicate with each other. Howard Rheingold called these common pooled resources. People create stuff, but then there’s a separate aggregate value. We will see broadcast from people to the world.
Consumer production is being helped along by Apple and HP. Check this out. There’s a guy in New Jersey who can juggle insane numbers of balls. What he doesn’t know is that I’d pay money for his site. But I’m like one of three people in the world. And have you seen this? The Bush-Blair video? Interestingly, that got a better, more active response than the HP videos did an hour ago. The creative was a little different, the budget a little different. And a $200 family movie edited in iMovie was a festival hit.
This past year I bought a grill. That’s a pretty mundane purchase. But the reason I bought the grill I bought was because of Epinions and a 10-page love letter some guy wrote about his Weber. When I go see clients who have this perception that they’re connecting with their clients, I’ll print out some pages from Epinions. They’re usually unaware of it. Things like this and Planet Feedback will become even more important.
Where are we going? The ambient Internet is a really big idea. We need to start thinking about Internet Protocol like we think about electricity. 27% of U.S. households will have home networks in 2008. It’s all going to be about data. How many people of you run VoIP at home? I do. It’s tough. But it’s astounding that I don’t have to deal with the phone companies any more.
We’re going to be walking around in nested networks. We’re going to live in a wireless world and float between these cells. There will be electricity in the ether. Look at urban areas. How do you find a cold spot — not just a hot spot? I found a place I can freeload off someone’s network in their house while dropping my kids off at school.
Blockbuster has locations within 1 mile of 95% of the population. They also have electricity. That’s the way this is going to go. Look at this. This is information ambience. It’s an orb that changes color with changes in the stock market.
The cognitive shifts we’re going through are session-based to always on, batch to real time, local to remote, stationary to mobile, broadcast to peer, and monolithic to distributed. The final part of the rant here today is about what I call story systems. It’s really about working the grid of the electrical system, not one bulb.
We like to consider nonlinear interactive as a new thing. No. The highest bandwidth interactivity we have is with other people in other places. This is nothing new. We’re not reinventing anything. If you look at a holistic marketing strategy, you need to think of all the pieces of the pie. Where do people go? Who do they talk to? What is the systemic issue here? How can we catch people where they are, get them interested in something, and get them to go from media to media.
This is classic stuff. Look at consider, select, buy, use as parts of a story. The traditional media work great up front but fall off when you get to buy and use. Nonlinear and interactive pick up where they leave off. Understand the “techology” of your consumers. Where are they going? Why? Who are they talking to? Story systems involve consumers in a story that a company tells them — about them. Craft a preconceived script largely in the control of the user.
The best brands in the future will be those whose consumers tell the best stories.