November 8th, 2006

The Deep Structural Problem of Advertising 2.0

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In the standing-room-only Web 2.0 Summit workshop sessions on the future of marketing and Advertising 2.0, the belief that the revolution will be funded by advertising came face to face with the deep structural problems of advertising in the digital age. The poster child of both the promise and the existential angst of networked, digital advertising is the Dove Evolution video, produced for a mere $50,000 and distributed virally for free on YouTube.

Here’s a Coke commercial that played at Web 2.0 and, of course, on YouTube, but never ran on TV.

For the brand, these “viral videos” are perceived as a massive success. For media companies looking at the future of video, the elephant in the room is — why should anyone pay for video distribution if virality is the new metric of success? For agencies the elephant is — how do we charge for this value when it doesn’t fit within any of the established billing models? Metrics for value creation in this new mode of advertising are still in the stone age, and in most cases non-existent.

But wait, consolidators of attention will say, what about targeting? Viral is an uncontrollable force of nature. Google has shown that micro-targeting with hundreds of key words and dozens (or hundreds) of creative units can be a powerful force. Isn’t the value of media in delivering the right message to the right people at the right time?

That’s when you hit the other structural problem — WHO is going to create all of these creative messages? Who is going to manage them? Who is going to optimize them? The agencies – particularly the “creative” teams — are not structured or staffed or trained to translate the “big idea” into 1,000 customized messages for 1,000 different audiences. Optimization of rich media and video creative – creating and trying lots of different ideas to see what works best – is an expensive proposition. Oops, there goes the profit margin.

And then there’s “conversation” — the new marketing paradigm shift is supposed to take us away from “targeted messages” to engaging in meaningful conversation. But who is going to engage in these conversations on the brand side? If one-to-many is now one-to-one, there are A LOT of “ones” on the consumer side – there just aren’t enough “ones” on the brand side to create these individualized, personalized connections.

Turn LogoThe company that caught my attention at the Web 2.0 Launchpad was Turn, an automated platform for delivering graphical and text-based cost-per-action ads:

Here’s all Turn advertisers need to do:

1. Define one or more action goals, such as a site visit or purchase.
2. Set a Cost Per Action (CPA) bid price.
3. Load graphical or text ads into the network.

Now it’s our turn.

Turn automatically analyzes the advertiser, its web site, and each ad loaded into the network. And we apply the same process to the publishers and web pages that generate ad impressions. The result: we find the optimal placement for your ads based on the actions you’d like to achieve. But we don’t stop there. We use continuous learning to refine the process and improve performance over time as more impressions, clicks and actions are observed.

Intriguing, but here’s the problem: Garbage in, garbage out. Search marketing has created an entire ecosystem for managing the infinite variables of search marketing — add brand marketing and video, and suddenly the complexity grows geometrically.

Software can optimize, but it can’t be creative. It can’t carry on “conversations.” That still requires people. And that’s going to require the restructuring — or more like the reinvention — of the entire advertising industry.

  • Sometimes the worst thing about your posts are how much opportunity they show exists. Its so frustrating to see this growing mountain of opportuninty and not have hands yet big enough to grab it.

    Keep it coming anyway. I'll catch up.

  • I don't think that Coke was emulating GTA, rather they were PUNNING it and making a satire of the whole thing.

    On the restructuring of things; the viral market can be described as a very long "tail" with many little niches that will change over time. But what drives someone to a new niche (or an old one)? That takes the "tall" tail of traditional media to get the web addresses out and so on. So I don't think the traditional agency is dead, it only needs a little resurrection and redirection.

    (all this was explained at the 2006 National AAF convention in Frisco, excellent speaker but his name escapes me at the moment...)

  • TheEro

    Great article. Sorry if I'm offtopic, does anyone know which application is used for retouching in Dove Evolution video. Anyone Please. Thanx

  • As far as brands and marketers are concerned, it doesn't matter if agencies (in their current form) exist. Who cares? I think that we'll increasingly see brand communities function as the source for much new innovation, particularly as R+D participants and CGM brand message producers. Companies that maintain and/or manage brand communities are already moving into content creation with and for their members, the word (and video, and audio) spreads out. Just in the last few months a number of off-the-shelf community management/sharing tools have appeared (some of them with very sophisticated apps)...that's where the play is going to be. The whole one-to-one thing breaks down when the lines get blurred between producer and consumer.

  • Zack
    Predictive models are emerging that will ultimately allow advertisers to manage viral like any other direct response channel.

    Can you post some links?

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