Tuesday, July 20, 2010

The New Era of Advertising

If we take a look at the global advertising market, we see companies investments heading more and more for online marketing and advertising. It is not about the general growth of the advertising market anymore but it is about the allocation between offline- and online advertising in the future and the way companies promote their products and services. That is going to be an interesting thing to talk about.

The online advertising market benefits from the enormous amount of mobile and social applications which allow advertisers to broaden and differentiate their possibilities and, of course, break new grounds of advertising.
Let us think about location based advertisements via Foursquare and Gowalla directly to the consumers smartphone. These services face a huge interest not only by end consumers but also by companies wanting to gain attention and attract new clients. Lately Foursquare proudly announced the number of 1 Million "Check Ins" per day (you check in at a location to tell your friends you are there and collect so-called badges/bonuses.).

Furthermore there are applications like Twitter and Mobile Payments like Square and Apple's iAd, which leverage the complete online advertising market. They use aggregated user information, topics, users and their friends talk about and the GPS-Signal to place advertisements directly to the users phone.

Last but not least there are the really big players like Facebook and Google using their huge amount of information to contribute specific advertisements on the likes and needs of the users. Even if Sheryl Sandberg (COO Facebook) recently underlined that the anonymity of each and every user is extremely important to Facebook and its new "Facebook Advertising", the core of the system is to collecte data, evaluate and use it for promotion on each and every individual Facebook Page.

There are two scenarios, that I believe, will become true:

  • First, consumers attention referring to advertisement decreases, companies have to spent more and more money on attentive advertisements which lowers the profits of the product to a point where either the price must be set higher or the product does not even make any profits at all.
  • Secondly,  the user is overloaded with individual advertisement and bridles or even worse quits most of the activities he used to do in the world wide web.

As the first scenario is already "on its way" lets take a look at second one.

The advertising market is going to get into a crucial stage, not only in terms of relations between offline and online promotion, new plattforms and more specific ways of exploiting advertising results, but also in terms of arrangements and types of advertising.
I even dare to predict: what we call advertisement right now (banners, display etc.) will lose its significance and will be replaced by a more individual dialogue between the company and the consumer (similar to what we call "support" today).

It is not a secret, that the amount of money spent on new consumers is much higher then keeping consumers. But people are up to buy something faster if they get personal consultancy for e.g. from friends or a salesman. As soon as there is the feeling of individual help the consumer identifies himself with the product easily and is more willing to buy it. Companies need to understand these characteristics, get more personal, speak human and get the right intuition for their different groups of consumers.

We are  moving away from classic banner advertisement, bloomy descriptions of products and high tech commercial videos towards personal and social advertisement. And with social advertisement I do not mean private messages with a link to a product,  I do talk about specific promotion to help the consumer individually. I do talk about a dialogue between consumer and company on the same level, which allows both to better understand their desires. And social media will enable us to make this possible in a scale we never achieved before.

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