As promised, albeit a while back, I’d like to share some of my own thoughts on where the future of media and marketing is headed. Rather than focus on which companies will disrupt markets a la Facebook or whether we are facing another tech bubble as in 2001, I’d like to focus a bit more on the changes we can expect behind the curtains. Namely, how will the proliferation of new media companies changed the way brands interact with customers, and how will the processes and systems behind those interactions be fundamentally transformed?
As context for those not as familiar with the current state of the web, I would highly recommend a read through Mary Meeker’s highly regarded overview, guided by 10 questions internet execs should ask themselves.
Brands as publishers — an old idea taking on new (technology-enabled) life.
For some time now, digital strategists have been advising brands to act as media companies and engage with consumers by sharing relevant content. While I was still at Monitor, Jeffrey Rayport and Andrew Heyward had been arguing that “every company is a media company” as far back as I can remember. If it’s not immediately clear, this means two things: first, traditional media companies are no longer the gatekeepers to information about brands or branded information, and second, brands who engage with consumers via content could create long-lasting relationships as opposed to quick, “one to many” sound-bites.
This adage been proven radically true over the last year, particularly within social media channels. Coca-cola, a pioneer in the social media space, has over 20 million fans on Facebook who get real-time updates about the brand on their newsfeed. Threadless, a crowd-sourced t-shirt design company, has over 1.5 million followers on Twitter. By comparison, Newsweek gets 7 million unique visitors a month and the NYT has close to 3 million Twitter followers. Sure, we’re not comparing apples to apples, but it is clear that brands can now reach audiences at the same scale as traditional media companies. In turn, they are required to dial-up the quality and relevancy of their content engines to make sure “fans,” “followers” and the like stick around.
Two trends are fueling the transition to brand-led conversations even further, namely the rise location-based technology and the surge of e-commerce and mobile commerce (m-commerce). With regard to location, brands can now tailor messages, recommendations and the broader dialogue to a consumer’s specific geographic and situational context. Although Foursquare and its peers have yet to reach Twitter and FB scale, brands are able to communicate in relevant ways, providing information that is both interesting and actionable because they are context-aware. (For more on how mobile technology empowers the personalization of brands, check out the piece for which I helped research in MIT Tech Review.) And on the transaction front, as more and more people shop online or use technology (e.g., QR codes) to enhance their in-person shopping experiences, brand-led conversations can drive conversion rates in non-intrusive ways. E- and m-commerce (within broader brand communication strategies) are beginning to help answer the billion dollar question as to how companies can monetize social media efforts.
Say goodbye to traditional marketing plans.
A second major change precipitated by new media companies is the disruption of marketing budget planning, both in terms of how we consider (1) the length of budget cycles and (2) budget allocation. Historically, a marketing budget is prepared on an annual basis and is allocated across traditional and now digital channels. For example, a $1 million budget might have been split 60% traditional media (and within that, divided among print, TV, radio, outdoor, etc) and 40% digital media (including social media, search, email marketing, online ads, etc.). Mobile was often couched within digital, or given a ~5% separate allocation. I predict that within the next two years, and perhaps even longer for less nimble companies, this model will fundamentally change. Here’s how.
(1) The rise of ever-improving data analytics, which allows for real-time ROI measurement and tracking, is forcing marketers to be far more nimble with their budget allocations to ensure spend aligns with results. Sense and respond marketing is key in our fast-changing landscape, and planning how to best spend one year in advance seems ridiculous in a market where new ways of engaging with customers crop up almost every day. Whether marketing budgets move to quarterly cycles, or if there is a bifurcation of the budget to allow for both large media buys and flex spending, expect big (and hopefully highly innovative) changes.
(2) As I mentioned in my first post on the “future of media,” the split between traditional and digital is quickly dissipating as all media becomes digitally enabled. As such, allocating budgets according to media channel (tv, print, online, etc.) is increasingly difficult. We are moving into a channel-agnostic age where creative 30-second spots can be repurposed for TV sets or mobile devices, and everything in between. Although the technology is not streamlined yet, and the buying process as to how you place those ads still remains divided along old party lines, one can expect that the systems in place to help companies have their messages reach consumers will soon be cross-channel (aka, expect ad network consolidation, or at least major disruption). Soon enough, marketing budgets are far more likely to be associated with platforms, or through which “screen” a consumer is likely to view an ad.
So what? Moving away from a channel-based, yearly marketing budget has huge implications for how ad agencies work with clients and how they position themselves, which has historically been aligned with channels (aka TV creative versus social media focused). It is also likely to affect how marketing functions are organized internally, whether they have separate digital teams and within those teams, how effectively customer experiences are holistically managed.
For consumers, the effects will likely be more subtle, although expect a highly personalized, highly contextual experience.
In a world where trust is everything, trust that nothing is free.
Finally, and I don’t plan to spend too much time here as there are far more enlightened people capable of discussing the future of online privacy, it is important to note that how companies identify consumers remains TBD. As of now, machine ID tracks users across their entire online experiences; names and addresses are kept “private,” but companies are able to track demographics and devices (unless Congress decides to legislate otherwise).
The shift from segment-based marketing to targeting individuals based on their behaviors is huge in and of itself. The verdict is still out as to whether segmentation methodology remains valid, since behavioral targeting could also enhance rather than supplant the aging field. That said, how marketers think about users (in groups, en masse, or as individuals) is bound to change.
The latter prediction I’d like to posit on privacy is something I’ve already noted within the news context — consumers will eventually have to decide whether they are willing to forfeit privacy for free products and services (as is the norm, supported by a data-driven advertising model). The alternative is a resurrection of pay walls in the online space, because without targeted ads fueling the new media business, we are unlikely to see the same leaps and bounds of start-up creative destruction. Perhaps there is a middle ground that has yet to be unleashed, in which users can both have faith in their data patrons and pay little to nothing. I personally just have a hard time seeing this happen in light of classic prisoner dilemma strategizing but would welcome insights into an alternative future.
So what now?
In the spirit of sense and respond, consumers and pundits will have to wait and watch. I welcome other visions of the future. And if you want to predict Google’s next acquisition, Facebook’s next foray or which start-up is a must-watch, I’d welcome that too. Happy forecasting…