The Future of Advertising: How 3 Dimensions Boost and Flatten It

Start-ups in the advertising industry are taking-on existing business models in a stealth mode – slowly and silently. Advertisers and the overall advertising industry are eagerly tapping into the opportunities presented by the explosive growth of devices of different screen sizes, apps, social platforms and increasing amount of time spent on mobile and social – which is good. At the same time, many start-ups and existing businesses are coming up with business models that re-look at the industry fundamentals pushing some existing businesses onto thin ice.

According to Flurry, a San Francisco based mobile analytics start-up, in 2012 the average time spent on mobile apps per day is 127 minutes (was 94 mins in 2011) vs 168 minute on TV. With the emergence of mobile and social media, companies and people need to quickly re-align their models and skill-sets to stay competitive. New products, models from start-ups and existing companies across the following 3 dimensions are boosting and flattening the advertising industry by removing middle-men, inefficiencies and driving performance based approaches.

Dimension 1: Direct value

As any industry matures with technological progress it moves from activity to output to outcome based models, such as eyeballs and click-through rates to sale-based payment. Technology also makes the original value creation to consumption path shorter and more direct by eliminating some middlemen who play a role as aggregators with minimum or no value addition in the turbocharged digital era.

Data driven outcome- and value-based models: Today, multiple devices owned by a single customer pose a different challenge to advertisers due to inflated results, duplication. Also delivering cross-device ads on mobile is a challenge because it doesn’t have cookies like desktop PC, so this requires some kind of matching of multiple devices to a unique user (in an anonymized way, without knowing who the person is). This is exactly what Drawbridge, a US-based start-up, is doing. Started in 2011 and backed by Google Ventures, Drawbridge is solving user identity issues by mapping different devices based on usage patterns to a unique user.

One can now retarget customers at scale from Desktop to Mobile – for example, if you search for something on your desktop, later on you can receive a retargeted, and relevant advert on your mobile. Also in a different scenario, if you see an ad on your mobile and then use your desktop to make the purchase, companies would be able to understand the real source. Hence, companies can charge more for an advert that triggers the sale.

In terms of mobile app marketing in an anonymized way, Drawbridge is able to narrow down and determine valuable app users and also analyze who spends money after downloading the app. All of this would only improve results, increase the advert prices based on outcome and remove duplication. Companies such as Drawbridge who have built up such models based on data and mapping, would be able to charge value/outcome (sale) based pricing hence challenging the companies who base their pricing mainly on eyeball and click-through rates.

Shortening of original value to consumption path: With the value offered by a demand-side platform, real-time-bidding, and real-time analytics to client teams and the amount of coordination required for social media programs, the impact of mobile across all channels are forcing companies to insource capabilities that were once offered by agencies. (Read more on similar shifts in other industries – Titanic, Icebergs and Network Leadership).

Dimension 2: Cross-leverage across the virtual and physical world

Cross-leverage across these two worlds enhances the value of individual adverts/experiences, builds on the other and improves retargeting and customer engagement.

Channel cross-leverage: According to Bluefin (a social TV analytics company acquired by Twitter for about $90Mn), 95% of live TV conversations currently happen on Twitter. Twitter amplify can help brands match advertisements with Twitter commentary by viewers and send timely content that amplifies the physical world (including TV) experience. For example, brands can send instant tweets (promoted by) of replay videos of goals during a football match or an advert based on the conversation.

Trialpay helps social media game developers with monetization by enabling gamers earn extra premium virtual currency when they buy items such as clothing, burger, coffee etc. Instead of making gamers sit through an advert to gain virtual currency, SocialVibe offers FramVille, PetVille and Mafia players an opportunity to collect virtual currency by engaging with other adverts such as Kia’s SuperBowl 2011 advert. Though this is not a typical advertising route, it comes at the expense of adverts in games and signals a new wave which is about cross-channel engagement and enhancement.

Data cross-leverage: Drawbridge is now working with eXelate, which collects online/offline household demographics, purchase intent, behavioral data from its proprietary sources, Nielsen, and Mastercard. The company will be able to determine when customers would be most likely to buy their insurance, car etc. and make relevant adverts instead of sending an insurance advert 8 months before the renewal date.

Location cross-leverage: Most retail stores have mobile apps, so as a user when you use it and enter a store the apps shifts to in-store mode to help you locate different products. Imagine being at a particular aisle for a while, this location based information along with possible products nearby gets stored, analyzed and later on you receive a relevant ad or promotion (video). At Walmart, 10% of their online sales through apps happen when a customer is in the store, so think about the impact of context specific ads based on the examples shared in dimension 1 above.

Dimension 3: Crowd-sourced advertising

People enjoy a good interaction based on own views and preferences (videos, ads, incidents etc) anytime, anywhere. The rise of mobile-first companies – such as WhatsApp, Kakao Talk, and WeChat – have impacted the amount of time people spend on Web-first companies, such as Facebook and Google. Though companies like Google are taking an integrated approach by bringing Talk, Plus, Mail, and Hangouts in one place to increase user time on the platform, the key issue is still good timely interaction. Imagine leveraging this ecosystem of interactions through crowd-sourced advertising, where customers/contributors are involved in some shape or form in advert creation which could then dovetail into good interactions.

Crowd-sourced advertising has been around for a while – right from,

User-generated ads: For Big Rock, a Canadian microbrewery, June 27^th 2013 marks the 20^th year since it started leveraging its customers to create Big Rock commercials.

In 2004, Converse, a shoe company wanted to reinvent the iconic Chuck Taylor brand and asked for 24 second spots from customers, budding film makers to tell them how much they loved the iconic Chuck Taylor sneaker. Within few weeks they received more than 1000 submissions and the best were run on TV.

In 2007, out of the 5 finalists selected in Doritos’ Crash the Super Bowl contest, one of the winning teams, Bill Federighi and Brett Snider, was the same team that created a winning ad for the Converse Gallery campaign.

Community-based creative agency: In 2011, Harley Davidson, came out of a 31 year ad partnership with Carmichael-Lynch and partnered with Victor & Spoils, an agency that is believed to be the world’s first advertising agency built on crowd-sourcing principles (Source – Reuters). The result – this video: Harley Davidson(No Cages),

Community of film-makers: In 2013, Coca-cola’s TV commercial ‘Happiness in the Air’ was in response to Coke’s brief for 2012 Cannes video contest hosted by Mofilm. Mofilm connects brands directly to film-makers. (Jon Landau, the two-time Golden Globe® winning producer of movies including Avatar and Titanic is the Chairman of Mofilm advisory board.)

Chuck Jones , the legendary animation director, once said ‘Painting does what we cannot do – it brings a three-dimensional world into a two-dimensional plane’. In the digital era, crowd-sourced advertising turns a 2 dimensional plane (advertiser, agency) into a 3-D plane by adding the customer into the mix, thereby boosting resonance and relevance.

Imagine, ‘Direct value’( Dimension 1) as the X axis, ‘Cross-leverage across the virtual and physical world’ (Dimension 2) as the Y axis, ‘Crowd-sourced advertising’ (Dimension 3) as the Z axis, then companies need to shift towards the top right corner and away from the 2 dimensional plane. Of course, the extent will vary across industries mainly in B2B, but innovative companies will find ways to get there.

How well companies and people work across these 3 dimensions will have an impact on customer and prospect engagement and in turn the company’s future.

What do you think? Post your comments below.

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