Will Ad Agencies and Traditional Companies Ever Understand The Future of Product Marketing?
I am sure it is not a surprise to a lot of folks that the real growth in media spending is on the Internet. I ran across a post on Chris Anderson's blog that does a good job of summing up the trends in media spending. Here are his findings:
Media Trending Downward:
* Box Office - down by 7% this year (tickets sales per capita have fallen every year since 2001).
* Newspapers - circulation is declining faster than ever and is down another 2.6% so far this year.
* Music - sales are down another 5.7% this year; although digital downloads (still just 6% of the business) are building nicely.
* Radio - down 4% this year alone and is predictably continuing a multi-decade decline.
* Books - decreased by 7% in 2004
Mixed Trends:
* DVDs - sales growth slowing dramatically going from 29% last year to single digits this year.
* TV - total viewership is still rising, but as the numbers of channels increase, the audience fragments and the ratings of the average program continue to decline.
* Magazines - Ad revenues are up a bit but the number of ad pages is flat and the price per page is up. Circulation is flat and newsstand sales are at an all-time low.
* Videogames - keep in mind it is the final few months of the current generation of consoles, so better times are ahead with the launch of Xbox 360 (X-Mas). With that in mind, sales were down 20% in Sept.
Media Trending Upward:
* Internet advertising - Banners were up 10% this year and PPC continues to grow. Google's revenue was up 96%. Advertisers are still waiting for a thank you note.
I am interested to what it will take for many big advertisers and ad agencies to bite the bullet and really get involved with the online community. I definitely see some big advertisers buying their front page banner ads on Yahoo, but I am not sure if they are looking for ways to promote beyond that. I know for sure that ad agencies are still having issues monetizing online marketing, so until they figure that out they are going to pretend that online isn’t all that important to a company.
As the Internet becomes more and more accessible through mobile technology, wireless access other innovations, we will incorporate the information that is accessible on the Web with more and more of our purchasing decisions. When this happens, your product needs more than a Web site, it is going to need a web presence in the places where consumers will be going online to research products. Given simplified Internet access and product comparison tools, consumers will become smarter than ever before.
So how should big companies build their presence in the right places on the Web?
The bad news for them (and the good news for consumers) is that they will not be able to buy their way in. Oh, I am sure that many will try, and some will succeed for a short time. But once consumers start to figure out the difference between real information and what is cleverly disguised paid advertising, the paid stuff will be harder and harder to execute.
So the true path for successful online promotion in the future will have nothing to do with buying banners or being able to pay the most for clicks to your super fantastic Flash site. The companies that earn the informed consumer’s dollars will be the ones that are able to produce the best, most loved products that disrupt the market and get people talking.
I know this is not a new concept. I know that there are companies that are built on a foundation of producing products that people love. I think we all understand why these companies tend to be ultra-successful.
By realizing that smart consumers will be looking to other consumers for guidance when it comes to buying decisions, companies and ad execs can start planning now to produce the right product to fit into the consumer driven market. Those who do will be the ones who find the most success in the technology driven days to come.
(As I was writing this I was reminded of a recent story in Fast Company about Naked Communications, an ad agency that is setting itself apart by being a more than an ad agency. They may be one of the few ad agencies that are already stepping into the consumer satisfaction business.)
Comments
Your best post yet. Keep on...
Posted by: Fantast | November 13, 2005 05:52 PM
How should they? What about partnering with smaller companies/firms/websites who have lived and survived (on the web or not) via internet advertising? Maybe this cash flow to the experienced web advertisers will create an addtional growth spurt (i said spurt) in this youthful arena?
Posted by: Fantast | November 14, 2005 11:02 PM