Having spent the last week or so attending to less demanding electronic devices — the Xbox, the DS and the iPhone chief among them — I’m now hopelessly late with this post. But I still find the intersection of technology and advertising to be very interesting, and hope you’ll bear with me even if the holidays have played havoc with the bloggy news cycle.
As soon as I read myself described as “always-interesting” I had a feeling that Tim might not wholeheartedly agree with my predictions about the fate of the advertising industry. That’s perfectly understandable: I am, at heart, a crackpot — one who’s taken the institution of advertising as a personal affront since he was sixteen or so. I’ve mellowed a bit since then, but it’s fair to say that my perspective on the matter is abnormal. I still feel motivated to explain it, though, so let me take a crack at it.
Before that, there’s Jeff‘s in-comments query to respond to. I think that answering it may provide some useful context:
Could you maybe elaborate on your claim that “It’s easy to forget how quickly advertising has evolved…”, because I just don’t see it. TV ads today are pretty similar to TV ads 50 years ago, and print ads look a lot like they did 100 years ago. The technology has improved, but the fundamentals seem pretty similar. Aside from a few horrible attempts at viral advertising in recent years and college bowl sponsorship, what’s really changed?
I should clarify: the old forms aren’t wholly supplanted by the new. You’re less likely to see a 100-word black and white full-page testimonial for a product in Life magazine than in days past, of course. But in general the old techniques persist in one way or another: the billboard; the artless car commercial; the couple yammering on the radio about something or other. Variants of these have and seem likely to continue to remain with us.
But novelty goes a long way toward making an impression, because it’s interesting and can conceal the mercenary underpinnings of the message. Jeff mentions viral marketing as a relatively recent innovation, and I think it’s a great example. There are plenty of others, though: product placement in sitcoms. Infomercials. Scientific papers paid for with industry grants. Some types of service journalism. Exclusivity agreements between college sports teams and apparel manufacturers. There have, and will continue to be, innovations in the field of product-selling, even if they aren’t always self-evident.
But novelty necessarily comes with an expiration date, so it’s an endless battle. We have continually-evolving defenses that let us tune these distractions out. A decade ago I might not have noticed the subtly-placed Aquafina bottle in the medical examiner’s office in The Spirit; now, trained by decades of carefully turned-toward-the-camera product labels on network sitcoms, I couldn’t help but see it. Although I’m sure that its presence still made some small, brand-reinforcing impression, it’s a minute one compared to the success that this technique must have first enjoyed. And, in this case, it was coupled with a healthy dose of resentment at Aquafina for its commercial intrusion into entertainment I’d already paid for.
I think advertising serves basically two functions, which I will, in a grossly unfair act of framing, refer to as its informative and manipulative aspects. First, there’s the informational side: educating consumers about products and services that they might be interested in purchasing, but about which they might remain ignorant if intervention isn’t pursued. That’s pretty straightforward, I think. Not every worthwhile commercial service is interesting enough to prompt unsubsidized media coverage, so informing interested parties of these services’ availability is a useful function that advertising can provide. A listing for a plumber in the yellow pages fits this description pretty well.
On the other hand, there are the manipulative aspects of advertising. These aren’t necessarily bad — they may compel behavior that’s desirable from one standpoint or another — but they’re essentially cynical attempts to affect consumers’ decisions on the basis of criteria other than the fundamental value of the good or service being purchased and its utility to the consumer (in the absence of the commercial message). Coca-cola’s Santa ads are a decent example: they really have nothing to do with the soda’s quality, and are therefore basically an attempt to distort the market for it by using unrelated appeals.
Most ads reflect both of these aspects to some extent, of course. And I don’t mean to imply that this is the only way to classify advertising. But I think it’s a useful way to approach it, so bear with me for a moment.
This brings us to Tim’s response to my assertion that the advertising industry is likely to shrink:
Digital media allows advertisers to be a lot more specific about the users they want to target and to collect a lot more data about their effectiveness. Tom suggests that this is a bad thing because once companies discover their ads aren’t working well, they’ll stop spending money on them. But the flip side is that advertisers can measure when a particular ad is working, and that ad inventory becomes correspondingly more valuable. Even better, better measurement means that the average ad should improve over time. Ads that don’t work can get dropped more quickly, and the ones that perform well can be put on heavy rotation, emulated by other advertisers, and so forth. That can only be good for ad revenues.
Tom also suggests that advertising is doomed because the Internet makes it a lot easier to avoid it. But peoples’ hatred for advertising isn’t inevitable. It’s a consequence of the limitations of 20th century media technologies that required advertisers to adopt “scattershot” approaches to advertising. There was no way to target car ads at the 5 percent of the population that’s in the market for a car at any given time, so the other 95 percent of us had to sit through endless car commercials. But online there are lots of ways to more narrowly target ads at people who are likely to be interested in them. In the long run, as we’ve said before, advertisers are going to have to realize that content is advertising. If you can make ads relevant, interesting, or entertaining, people aren’t going to try as hard to avoid them. Search engines do this by only showing ads relevant to the particular keyword a user entered. Other advertisers have figured out that if they make their commercials fun to watch, people will be more willing to watch them. Of course, it’s hard to predict whether the total amount of advertising revenue will go up or down over the next decade. But as long as people buy stuff, companies will be willing to spend significant amounts of money to influence their decisions.
I think Tim is seriously overstating advertisers’ enthusiasm for being non-annoying — it’s not as if they’ve only now figured out that people don’t like being intruded upon in irritating ways, and are resolving to turn over a new leaf. My understanding is that the efficacy and reported consumer enjoyment of an ad are inversely correlated. Much better to make an infuriating jingle that will force the consumer to mentally recite the word “Garmin” ad infinitum than to, say, cast Tina Fey in a funny credit card commercial for… uh… Amex? Or was it Mastercard? Anyway the ending with the fire extinguisher was funny.
But I agree with Tim, too: I think that the localization functionality he refers to will indeed continue to evolve, and I’m sure it will be a boon. But it’s hard for me to believe that it will really be the savior of the ad industry. Anecdotally, it seems like online ads already target me pretty well, yet almost never earn my clicks. More generally, the role Tim is describing is entirely within the benevolent, information-providing aspect of advertising that I outlined above. But this is also the most straightforwardly-doomed aspect of the industry. It’s now much easier to get more and better information about products and services than it used to be; from Yelp to Amazon reviews to the simple act of searching Google, the utility of deliberately-placed informational advertisements has been seriously diminished. We should consequently expect that aspect of the industry to shrink. If people want information about a product, they can get it. That pretty much leaves the narrow case wherein the consumer has a material need, yet doesn’t know what they want before being told how to get it. But it seems to me that the industry is pinning a huge amount of hope on this relatively minor class of purchases.
To me, this whole argument sounds eerily similar to the one that maintained that the MP3 revolution would ultimately benefit the recording industry because of all the promotional power provided by giving people free access to music. There’s something to this, but the positive effects will almost certainly not be enough to reverse the contraction of a now-unnecessary industry. In a very broad sense, information has gotten much cheaper, and all information vendors should therefore expect the size of their markets to shrink. That includes advertisers hoping to “educate” the public about the availability of their clients’ products.
That leaves the burden of making money to the manipulative aspect of advertising. And I admit, this is more open to debate. But I really do think that when you and I tell ourselves we can filter out commercial appeals, it’s not entirely self-flattery. Sure, we’re subtly affected by that billboard or radio spot or iPod commercial. But we’re less affected than we were the first time, and far less affected than would be someone who hadn’t grown up in an ad-saturated environment. Sure, ads can still warp our opinions. But we’re being constantly trained to ignore them. And I stand by my basic contention that advertising’s set of novel permutations is limited in a way that will ultimately let the consumer gain ground on the manipulations leveled against her. To return to the last post‘s metaphor, we consumers are like increasingly antibiotic-resistant strains of bacteria. Perhaps the ad industry will develop a miraculous new class of techniques. If not, I think that the importance of that sort of artificial intervention into our natural — and by and large perfectly-adequate — system will continue to decline.
So yeah, I still think that ads will continue to get less effective. The informational function they serve is vastly less relevant in the internet age; the opinion-manipulating function of the industry is a never-ending struggle, but one that, with each passing season, has fewer novel weapons at its disposal. In the face of those facts, how can the industry do anything but contract?
I think that by drawing your informative/manipulative dichotomy, you’re ignoring the fact that the vast majority of ads are somewhere in the middle. Take, for example, Apple’s popular “Mac vs. PC” ads. Manipulation or information? Clearly there’s some manipulation going on, as PCs aren’t literally uptight men in suits. But there’s also some element of information going on–typically there will be some reference to an advantage that Apple, at least, believes to be an advantage of Macs over PCs. For a user who pays little or no attention to the computer industry, seeing a couple dozen of those ads might make her start to think about whether she’d be happier with a Mac. She might then go on CNet or Consumer Reports and read some reviews, but in the absence of those ads she might never have considered the possibility of switching.
I think a lot of ads are like that: they provide information that most consumers wouldn’t think to seek out, but which might influence their behavior given that they have it. When I was in the market for an engagement ring, I went to the Shane Company because I’ve heard a million of their ads on the radio. I would have been less likely to go there if those radio ads hadn’t run. Again, is that information or manipulation? It’s informative at least to the trivial extent that I would have had no idea they existed but for their ads.
There are a ton of instances where consumers want some product in a given category but are basically ignorant of the choices and don’t care enough to do any serious research. Perhaps it’s something like laundry detergent or paper products where the choices are basically interchangeable. In those circumstances, it’s just a fact of human nature that people are more likely to select a brand that’s familiar to them because advertisements informed them of its existence and imparted positive associations. This is why companies sponsor sporting events, pay for celebrity endorsements, sponsor public radio programs, and so forth. Even weak associations with things consumers already value may be enough to nudge consumers to buy that firm’s products over those of a competitor.
Of course, none of this proves that the advertising business won’t shrink. And truthfully, I think it’s quite possible that it will. But I still think the fundamental currency of advertising is human attention. And that’s basically fixed. Ten years from now, there will be roughly as many people in the United States as there are now, and they’ll spend roughly the same amount of time consuming media. And given this roughly constant inventory of eyeballs, I think the amount firms will be willing to pay for that inventory will at a minimum be of the same order of magnitude that it is today. My guess is that we’ll see a short-run dip followed by a longer-term upward trend, but that’s only a guess.