Thursday, September 14, 2006

Advertising in The Age of Choice

I have been watching and talking a lot about the music industry recently. My interest is more business than musical – I see exciting news about the industry hitting the press everyday. I know this has now reached a Point of Inflection, a time when all the established rules of the industry change, and to survive all players must change the way they do business.

Incidentally, it is also ‘all change’ in another industry – Advertising! Advertising is dying, say experts. Maurice Saatchi gave this speech bemoaning the death of his old friend, advertising. Al Ries’ latest book is titled ‘The Fall of Advertising and the Rise of PR’. The industry is abuzz with debate, discussing quick fixes, back-to-basics solutions, and new age ideas.

At the first glance, again, it appears to be a technology-driven destruction. Yes, it certainly is – the media overload has diminished the return on advertising spend, and direct to heart ways of reaching an individual through search advertising has started delivering better results. However, the point I am trying to make is that it is not just a technology-driven restructuring, and I don’t believe that 50% of all advertising spend will suddenly move to online advertising in 10 years.

I have been ‘selling’ for more than 14 years now. I now see the selling function is undergoing a revolutionary change. And, I believe this is connected to the structural shifts in advertising, in fact, driving it. So, the way advertising industry will go over the next decade will not be just technology-determined, but customer-determined, where expanding technological possibilities will play an enabling role.

Let me explain. There is a lot of discussion on where selling and marketing are going [for example, refer to The Ending of War between Sales and Marketing, by Philip Kotler, Neil Rackham, and Suj Krishnaswamy, on HBR] and all commentators agree that [a] we are living in the age of explosion of choices; and [b] the customers love the choices and exercise it at every occasion they can. The fundamental shift in sales, then, is from broadcast messaging and revelling on Unique Selling Points towards knowing the customer and stretching the handshake – custom-building value proposition for each individual customer.

This is a key – the age of choice, driven by technology, helped to ‘individualise’ the customer at the same time as endowing them with a tremendous power of grapevine – the world of Blogs, chat and Wikis. The business models of this age of choice are different, as discussed succinctly by Chris Anderson in his now famous The Long Tail article. In my view, this ground shift in the sales/ marketing model is the key driver behind the changes in the advertising industry.

Building the advertising model for tomorrow is not just about building e-marketing capability and knowing how Google Adwords work, it is about adjusting to this whole new phenomenon of selling to individuals.

This shift, then, is about moving from the broadcast mode to one-on-one mode, a shift from output to input, from seeing customers as groups to customers as individuals, from presentations to conversations. This is a shift from Wal*Mart to eBay, and one needs a completely new pair of eyes to deal with it. And, as I mentioned earlier, Technology is just part of this shift, an enabler – not the shift itself.

I shall not be surprised if in 10 years time all advertising agencies routinely work on a profit share basis with clients, and newspapers and magazines [or whatever is left of them] dont have advertisements at all, but run sponsored company-customer dialogue [for example, how about a Ask Microsoft! column in The Times, of course sponsored by Microsoft].

While I agree that people need to be induced to buy, and more so in the age of choice and hyper-competition, this is an industry in the middle of a flux, and All change, please, all change!

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