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.

Comments (22 Responses so far)

  1. The Deep Structural Problem of Advertising 2.0 9 hours 56 min old The Absent Network 14 hours 46 min old The Upside and Downside of Google’s Newspaper Deal 2 days 19 hours old Publishing 2.0 at Web 2.0 3 days 6 hours old The Delicate Balance of Participatory Media

  2. kombiniert mit self-service bzw. automatischen Werbenetzwerke bilden das momentane Rückrat der Social-Media-Anwendungen. Das sind jedoch nur erste Schritte, deren Prinzipien man für die weitere Entwicklung im Hinterkopf behalten sollte, aber die Probleme liegen auf der Hand: 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

  3. and thousands of micro targeted ad messages — yeah, like AdWords and AdSense. Sure, it’s going to be much harder for Google to pull this off with video and brand advertising, but in order for Madison Avenue to compete it’s going to have to be completely dismantled and rebuilt. Of course, Yahoo and Microsoft (and let’s not forget WPP) are also competing with Madison Avenue — and with Google to become the ultimate vertically integrated media and advertising company.

  4. Kudos to Publicis Groupe and Digitas for imagining an all-digital advertising future, for planning to solve the deep structural problems of advertising 2.0, and for not sitting still while Google, Yahoo, and Microsoft take over the advertising industry. The most provocative idea to emerge from the New York Times profile of Publicis/Digitas’ digital advertising strategy is a plan for overcoming the

  5. [...] For the Scott Karp’s full article see The Deep Structural problem of Advertising 2.0 [...]

  6. It’s posts like these that remind me why I read this blog. Excellent.

    This sentence caught my eye-

    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.

    Individualized, personalized connections…its beginning to sounds as if you are describing someone’s own social circle…their friends, family…their network. Maybe we should stop thinking of marketing in terms of a two player system of advertisers and consumers. What we think of now as consumers will be their OWN advertisers, and their network of family and friends will be their emergent ad network through which viral brand messages will spread via recommendations and brand co-creation. They’ll make their own creative messages! What we need is a way to support these networks and make them more efficient.

    I don’t think viral is an uncontrollable force of nature at all…if you attempt an autocratic approach with it, you’ll fail but by supporting it and giving people the tools to create brand messages themselves you might find yourself in a nice place.

    As the network becomes more efficient, it will overshadow all other forms of marketing.

  7. Zack I think you are being a little naive about consumers filling in as creative directors. Did you ever play this game at camp — you tell a short story to the person next to you, he tells it to the next person, eventually it comes back to you in a totally distorted version. Look at the tags in the viral Coke commercial. grand! theft! auto! How many consumers now associate the two very different brands? Now look at the parodies of the Dove commercial. Both Coke and Dove have lost control of their messages. Not that big a deal but eventually no control = no brand.

  8. The problem for companies in this emerging landscape is that control of their message (their brand) is being slowly ripped from their white-knuckeled grasp. Branding is increasingly controlled by the crowd and that isn’t going to change. Like cattle, products will have their brands forced upon them… and it may sting just as badly. The only recourse these companies will have is to create products of exceptional quality, utility, or beauty. They will no longer be able to hide deficiencies behind clever marketing campaigns. As Scott says… garbage in – garbage out.

  9. Drew – If Coke didn’t want their brand associated with Grand Theft Auto, why did they make a commercial which had a Grand Theft Auto theme? I think that’s EXACTLY what they were going for…they’re piggy backing on another popular brand which they know people like and will seek out to interact with and redistribute virally.

    I also don’t think a game of telephone is a very good metaphor for viral communication. The game of telephone implies a linear, one way channel through which messages travel in secret, observed only by 2 of the participating parties (listener and speaker) at a time. This is not the nature of viral distribution and creation. When a brand message is sent out into the network, it can fork in a million different directions. You are correct to assume that in some of these forking paths, the original message may be diluted. But it is equally likely that the message will retain or even be amplified. However both of these cases are irrelevant…the overall effect is that your message has been disseminated and multiplied combinatorially.

  10. Excellent post. Both problems are solvable. The value of viral marketing is measurable. Predictive models are emerging that will ultimately allow advertisers to manage viral like any other direct response channel. The second problem may take more time, but once the value is measurable, it will be solved quickly. A revolution indeed.

  11. [...] Yesterday I saw this video on Mike’s blog Bikes in the fast lane. First I thought it was a hoax of some kind, but it turns out it’s a viral marketing campaign made for the Danish Road Safety Council code named “speedbandits“. Apparently it’s been on several “old school” news media (television, newspapers) across the world within the last 24 hours, after hitting the blogosphere several days ago. I guess they got the attention they where after, but will it get people to slow down? It’s going to have no effect on me, since the motorcycle season is over, and I wont be riding again until march 2007. By that time we have all forgotten about those sweet girls and their pretty little signs. But then again, I of course always stay within speed limits… sorta. [...]

  12. [...] The Deep Structural Problem of Advertising 2.0 Publishing 2.0 [...]

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

    Can you post some links?

  14. [...] Paradoxically, as Google’s influence over the advertising industry grows by the day, the number of advertising startups increase. It’s the way of the startup world that as the incumbents grow larger, so too does the opportunity for the nimble enterprise (Unless that nimble enterprise was trying to develop desktop applications from 1990 to 2004). [...]

  15. 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.

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

  17. [...] Came across this post about viral video, etc. on Publishing 2.0 titled “The Deep Structural Problem of Advertising 2.0″ Well, turns out it’s not a problem…it’s problems. Check it out. I left a comment. [...]

  18. [...] Scott Karp’s blog Publishing 2.0 and a post titled, The Deep Structural Problem with Advertising 2.0. It a Coca-Cola ad in Grand Theft Auto (I believe). Bookmarks These icons link to social [...]

  19. 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…)

  20. [...] Groupe and Digitas for imagining an all-digital advertising future, for planning to solve the deep structural problems of advertising 2.0, and for not sitting still while Google, Yahoo, and Microsoft take over the advertising [...]

  21. [...] billions of dollars still remain in traditional media because the advertising industry has to go through its own transition page views are a terrible currency for media buying — this buying model, a holdover from Web [...]

  22. 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.

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