Wednesday, April 29, 2009

OnlineSpin: The Next Big Thing?

Last week Cory wrote "5 Steps To Effect Change In Online Advertising."

Sarah Grant wrote in response, "It's interesting to look at your thoughts on what area of online advertising has the most room to grow, compared with where eMarketer thinks spending will increase the most.

It seems like there's so much room for creative growth in video ads, but everyone's projecting that search advertising will capture most of the online spend increase.

It'll be interesting to see what advertisers actually do in 2009."

Wednesday, April 29, 2009
The Next Big Thing?
By Cory Treffiletti

"What's the next big thing?"

That's the question I hear the most from people every month. Everyone assumes that our business is based on the next "big thing," and they need to know about it before everyone else. But I'm here to ease your tension; the next "big thing" is not a "big thing" at all, but rather a series of "little things."

It's rare that something comes along with a profound, individual impact on our business. The development of Flash had a profound impact. The MP3 had a profound impact. Google had a profound impact. MySpace and Facebook had a profound impact. Twitter is in the process of having a profound impact, but if you remove these monumental occurrences from the historical landscape, you can see that the evolution of our business comes from a series of incremental changes rather than a singular disruptive change.

Given that there's very little disruptive change on the immediate horizon, we focus on the category of our business that is most aptly suited for change. Right now the best place to look for that change is in the area of targeting technology.

Our business has always been rooted in technology, and over the last few years I've witnessed technology being brought back to the forefront. If you examine the parallel path of advertising with the evolution of the consumer Web, you can see that Web 1.0 coincided with reach. During this period the majority of online advertising was focused on portals like Yahoo, MSN, Excite and Lycos. These portals aggregated audience in one place. During Web 2.0, online advertising focused on contextual relevancy, driven by search and the rise of the "long tail" as a viable place to place a marketing message. As we shift into Web 3.0, the focus has moved to targeting -- and not just any targeting, but the rebirth of the cookie and profiles, retargeting, and other action-based audience targeting via cross-platform opportunities.

Targeting is not a new concept, but since behavioral targeting launched about six years back, numerous companies have been funded to try and build the better mousetrap. It's gotten to the point where it's having a profound effect on how media planners plan their buys.

In a recent meeting with a client of mine, we had to ask the question of whether their upcoming plans should be focused on contextual targeting or behavioral, profile-based targeting technology. The question created a pause, but it also sparked a good debate because this is a conundrum unlike any other form of media. In every other form of media you plan based on a combination of contextual relevancy and audience composition. In our business you target based on these same pieces of information, but the audience can literally be followed around no matter where they are, contextually relevant or not.

Imagine if Coke and Pepsi could dynamically have their outdoor, print and TV ads follow you around and reduce the waste against their ad spend. Imagine if you picked up a random magazine at the newsstand and all the ads were targeted at you, even though you rarely (if ever) read Soldier of Fortune magazine. The goal of targeting is to eliminate waste, and right now we can dramatically eliminate waste because of these advances in technology. Theoretically you can reduce your waste to 0% if you're diligent with the tools at hand.

I've joked in the past that becoming a media planner these days requires a Ph.D in mathematical analysis, but the joke is not far from the truth. The next "big thing" is certainly not a disruptive change, but it lies in the evolution of the models for targeting. Just having strong real estate is no longer the most important component for a publisher to consider. You must also have access to tools that segment your audience right down to the individual user. The next "big thing" is baby steps towards one-to-one brand marketing (not just direct response), and it requires a capability that you may not have previously needed in media planners.

So for those of you asking me what the next "big thing" is, this is what my response would be.

Do you agree?

Cory is president and managing partner for Catalyst SF.

Online Spin for Wednesday, April 29, 2009:

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