Art Tauder – What could/should “advertising” look like in 2020?

Art Tauder, Founding Partner, Thunderhouse

What could/should “advertising” look like in 2020? 

For Advertising 2020 the most important drivers of change already exist top-of-mind for marketers and advertising professionals: Customer-Centricity, Accountability and Productivity.

Advertising 2020 Customer-Centricity: The Move from “Push” to “Pull” – The most significant change in the advertising landscape in 2020 will be a shift in the balance of outreach from “push” to “pull.” For a hundred years, advertising has been mostly a one way street dominated by a single mindset:  “pushing” messages to audiences. Great efforts and great strides have been made on inferring the target audiences for advertising delivery. The industry has achieved new heights in technology-driven sophistication for targeting push messages to the point where many believe that advertisers and media have the crossed the line in violating consumer privacy.

Today the customer audience is still considered a passive recipient of advertising – never asked directly to input on what products and what messages are of interest. One result: advertising is viewed as disruptive by many consumers and to be avoided when given the option. Time and again, the consumer has reacted positively to technology-driven empowerment. By 2020, customers will have a voice in both what advertising will be seen and in what medium.  The balance will swing to favor “pull” rather than “push.”

What do we do now to prepare for the future of Customer-Centricity?    The seeds of change are already evident in Search advertising:  potential customers can voice their product interests through search terms.    This empowerment has created a whole new industry of digital Search Advertising, the very foundation of Google’s business.   Despite Google’s success, there are very obvious deficiencies in Search:  1) the limitation posed by the sole use of verbal search terms, 2) text-only advertising with various limits on character count.     These very limitations point to the paths to prepare now for the future.    First, advertisers and search engines should cooperatively experiment with combined visual/verbal formats to enhance the present verbal search.   Second, the search engines can enhance the advertising value of Search by delivering display and video advertising.

Next, the advertising industry should look beyond Search and work cooperatively to give customers a voice in selecting product categories of interest and serving desired advertising content across multiple platforms  e.g. smart phones, tablets and advanced television.   The technologies of interactivity and addressability that can empower consumers are already extant; what’s missing is comprehensive market testing to generate advertiser enthusiasm in advance of national rollouts of these technologies.

Advertising 2020 Accountability:  Closing the Loop between Performance Goals & Marketing Communications  – A Jan-Feb 2012 survey of 243 CMOs conducted by the Columbia Business School & NY American Marketing Association reported 57% of CMOs do not establish their marketing budgets according to ROI measures.  The state of the art of Accountability remains surprisingly primitive.  As one respondent colorfully put it, his company’s marketing ROI measurement is like “pissing in the wind” (Ad Age 3/11/12).

Today, “new” digital media:  Search, on-line display, video, and mobile, are leading the way and opening minds to new possibilities in advertising accountability.    With a taste of these possibilities, the pressure for accountability will extend to all forms of advertising and to the entire spectrum of marketing communications.   Accountability 2020 will require an end-to-end technology solution:  starting with strategic goal setting by customer segments… leading to marketing communications programs … and closing the loop in measuring program performance against those strategic goals in virtually real time.   The pressure for accountability will require new levels of cooperation between the marketers and the distribution channels in which transactions occur.

An early casualty of the pressure for Accountability will be paper couponing.   Deep down, both marketers and retailers know that media-born paper couponing is indiscriminant, inefficient, and outdated.   The coupon vehicles rarely carry a persuasive message.  For the first half 2012 vs. year ago, NCH Marketing, the leading redemption clearinghouse, reported:   paper coupon distribution declined  -1.2%,  coupons redeemed fell -11.1% and face value savings declined -8.7%.   Despite all the press, digital couponing still accounts for >1% of total coupons redeemed; traditional media outreach over 98%.   By 2020, blanket paper couponing delivered en masse by print media and direct mail will be marginalized by disruptive technologies in distribution and redemption of targeted digital incentives.

What do we do now to prepare for the future of Accountability?    First, advertisers should insist that brand and company growth goals be built strategically from the bottom…up based stimulating demand from identifiable consumer segments.   To facilitate strategic goal setting, an engaging, almost game-like software application is needed on the frontend.   And on the backend, the loop must be closed with a virtually real time measurement of performance vs. goals based on actual shopper transactions both in the short term and going forward.

The wrestling match over who “owns” the customer should cease; the valuable transaction data resides in the omnipresent customer loyalty programs most often in the hands of the distribution channels.   The shopper transaction histories can identify individuals which can be anonymously aggregated into the valuable segments that match strategic targets selected in the goal setting process.   Further experimentation is required to determine customer preference in media vehicles so that advertisers can reach individuals by the digital means they prefer.   The loyalty programs will be instrumental in processing the redemption of digital incentives and in measuring the impact of advertising programs on customer transactions over time to determine ROI .

Advertising 2020 Productivity – Marketing Communications (MarCom) is a $900 billion industry worldwide and is the primary means of stimulating demand.   There are basic MarCom disciplines e.g. Advertising, Public Relations, Branding, Relationship Marketing etc. and hundreds of sub-practices within these disciplines.   In addition, there are thousands of specialized MarCom services when we factor in product types and a multiplicity of target audiences.    And yet, there is no authoritative taxonomy that classifies the professional disciplines, the sub practices and the very specific services related to product categories and target audiences.

Professional silos abound, and productivity in MarCom business intelligence, strategic planning, resourcing talent/suppliers, and archiving suffers greatly from a lack of an industry taxonomy and the common language and defined terms it can generate.   Without considering the totality of Marketing Communications and the inter-relationships between disciplines and practices, the industry perpetuates these unproductive silos of expertise.

By 2020, this problem will be rectified.   Advertising will be redefined to encompass the total MarCom spectrum, and this redefinition will help tear down the existing silos that inhibit productivity and integrated advertising programs.        

What do we do now to prepare for future Productivity?   The taxonomy should be visual as well as verbal.  As a starting point, the metaphor of a color spectrum might be used to differentiate the basic disciplines as illustrated below.   In this example, the more metaphysical Brand Equity activities undertaken at the outset of the MarCom process are at the purple end of the spectrum.   The disciplines that are closest to the transaction are at the red end of the spectrum.   The colors of the spectrum meld to indicate that there are inter-relationships and not distinct borders between disciplines and sub-practices.

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The spectrum metaphor can also work to define sub-practices within the basic disciplines as illustrated below for Brand Equity:

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The creation of a MarCom taxonomy requires facilitation by a lead academic institution which could bring together the leading industry associations, e.g. AAAA, ANA, ARF, AMA to work cooperatively on the task.

 

Advertising 2020

Arthur R. Tauder – 9/7/12