5 Trends that will Shape the Future of Advertising

Many people doubt the future of the advertising model.  However, while new strategies for supporting content financially such  freemium and e-commerce partnerships are exciting, predictions of the demise of a half trillion dollar global industry are foolish, juvenile and utterly unsupported by the data.

Advertising continues to prosper and it’s share of the global economy is stable, if not growing slightly (mostly due to emerging markets).  In fact, it is much more likely that we are entering an advertising renaissance.

Here are 5 trends that will drive the future of the industry:

1. Big Seed Marketing Network Theory pioneer Duncan Watts is championing a new approach to advertising.  While many marketers subscribe to Malcolm Gladwell’s view that advocates targeting so-called “Influentials,” Watts has done a wealth of research that shows this type of marketing might be counterproductive in many, if not most cases.

Even if influential people can be accurately identified (which is a big “if”), there isn’t much evidence that targeting them directly is a good idea.  It may be cheaper and more effective to influence people around so called “Influentials.” (For more on this see How Ideas Spread)

The basic idea of Big Seed Marketing is to use mass media broadcast a message widely and to utilize social media to encourage consumers to pass it on.  It’s an interesting idea that’s gaining traction.

2. Enhanced Consumer Targeting: In the future, we will talk more about targeting methodology than target groups.  This makes a lot of sense because different advertising tasks require different approaches.  A campaign that is trying to build brand preference has different needs than one that is trying to spur sales directly, for example.

One exciting technology that is currently being used to create more effective organizations is Social Network Analysis (SNA).  Through analyzing organizations, it has been found that influence shows up in surprising places.

Many senior managers are cut off from the rest of the organization and therefore often have much less influence than one would expect.  On the other hand, smokers who spend a portion of each day with a cross section of departments can be enormously influential, regardless of where they are in the organization chart.

By applying similar analyses to consumer markets, enormous insights can be won.   Good salespeople have known for years that prospects are influenced by those around them as much as by a good pitch. Through identifying how information flows to consumers we can make brand building can become more effective.

Another technique is the use of Neural Networks to adapt targeting in real time across a variety of variables.  It’s possible that in a decade we won’t choose target groups at all, rather we will choose whether we want the algorithm to be based on response, relevance, social factors, or something else entirely.

Banks currently use neural networks to identify fraud and as the technology becomes more affordable, it will surely play a bigger role in marketing.

Current investment in counter-terrorism is driving investment in both of these technologies.  For fuller explanation of how it will all work, see The Future of Consumer Targeting.

Semantics:  While Tim Berners-Lee is out to transform the world through the Semantic Web, many smaller scale efforts are under way to improve advertising through semantic applications that help computers understand meaning more like a human would.

One obvious technique is to improve the relevance of ads to the content which they appear next to.  This area is already quite advanced with respect to text, but still has a ways to go with pictures and video.

Another, less obvious use of the technology would be to allow analysis across research databases, so that audience, economic, expenditure and brand tracking data could be combines much more efficiently.  Much like TV optimizers revolutionized buying over a decade ago, semantic technology will likely transform planning over the next decade.

Augmented Reality: One of the fastest moving technologies is Augmented Reality (AR).  Hundreds of AR initiatives will be rolled out this year raging from iPhone applications to 3D print ads.  It remains to be seen how successful these will be, many believe that AR is just a modern version of 3D glasses.

However, the best is certainly yet to come.  Proximity advertising is already becoming a reality.  Faster processors and wider bandwidth will do a lot to make the basic technology work better and nanotechnology promises to create new technologies that will further enhance capability.

The end of coverage optimization: For most of the last 50 years, the advertising industry has been obsessed with coverage.  The concept makes a lot of sense; in order to get your message out you want to reach the maximum amount of people.

For the most part, we have done this through controlling frequency.   The problem hasn’t been figuring out how to reach people.  Rather it has been how to stop reaching them once they have already seen the ad enough.  Some people consume media so much more than others (TV especially) an enormous amount of money is wasted through “frequency tails.“

The ease with which it is possible to control frequency in Digital Media will free up an enormous amount of energy and resource to build more effective targeting and strategy. (See Digital Media’s Secret Weapon).

What to Expect

When I started in media in the mid-90’s advertising was decidedly low-tech.  Personal computers weren’t yet on every desk and the ones we had in the office were far less powerful than the ones we had today.  It was difficult to use expenditure databases or even break down ratings effectively.  Analysis was something that was almost exclusively in the domain of the research department.

As markets continue to segment and new media and consumer data come online, analytical skills will become even more important than they are today.  As consumer activity becomes more complex, the advertising industry will need to either build stronger mathematical skills or forfeit communications planning to specialized consultants.

Creativity, on the other hand, has a bright future.  The possibilities coming online now can only be compared to the post-war era when “Madmen” were at the forefront.  Moreover, with more media, more products and more clutter, branding will only become more crucial in the digital age.

The trends discussed above are by no means an exhaustive list.  I’m sure others can point out important ones that I left out.  I’d love to hear them!

–          Greg