Future of Advertising - Networked Media & Networked Agencies

THE FOLLOWING PRESENTATION HAS BEEN APPROVED FOR RESTRICTED AUDIENCES ONLY BY THE CLUB OF AMSTERDAM THE FEATURED PRESENTATION HAS BEEN RATED PG6+ AD PEOPLE STRONGLY CAUTIONED Some Material May Be Found Offensive For Traditional Ad People CONTAINS HALF-TRUTHS, HUMOR, HARSH LANGUAGE AND A SUBJECTIVE VISIONARY PERSPECTIVE www.brandedchannels.com www.clubofamsterdam.com

FROM TRADITIONAL MEDIA TO NETWORKED MEDIA

THE FUTURE OF ADVERTISING “Half the money I spend on advertising is wasted …

THE FUTURE OF ADVERTISING “Half the money I spend on advertising is wasted … … the trouble is I don't know which half.”

JOHN WANAMAKER US DEPARTMENT STORE MERCHANT (1838 - 1922) • Retail innovator – “Fixed price and goods returnable”

JOHN WANAMAKER US DEPARTMENT STORE MERCHANT (1838 - 1922) • Retail innovator – “Fixed price and goods returnable” – First department store in Philadelphia

JOHN WANAMAKER US DEPARTMENT STORE MERCHANT (1838 - 1922) • Retail innovator – “Fixed price and goods returnable” – First department store in Philadelphia – Contributor to campaign for Mother’s Day

JOHN WANAMAKER US DEPARTMENT STORE MERCHANT (1838 - 1922) • Retail innovator – “Fixed price and goods returnable” – First department store in Philadelphia – Contributor to campaign for Mother’s Day • Father of modern advertising

TV ADVERTISING TODAY EUR 855 million ad spend on Television in 2008 ...

TV ADVERTISING TODAY EUR 855 million ad spend on Television in 2008 ... … so EUR 427.5 million is wasted!?

TV ADVERTISING TODAY Q: (How) do we know?

TV ADVERTISING TODAY Q: (How) do we know? A: We don’t

A RATINGS TALE

A RATINGS TALE 14-16.4 2-10 • Dutch population growth 1980-2008 • Growth of national TV channels • From 5 to 7.2 million Dutch households between 1989-2006 • Single households now 34% 260 240 220 200 180 Population 160 Households 140 Single Households 120 100 • + special interest + international + digital channels: 60-90 channels

RATINGS = BASIS FOR AD SPEND 1280/2900 • Households/participants determine what ALL of us watch • 0,017% of Dutch Households/Population • Every participant represents 5,655 others

RATINGS = BASIS FOR AD SPEND 1280/2900 855 • Households/participants determine • Million Euro is spent on TV what ALL of us watch Advertising in the Netherlands • 0,017% of Dutch Households/Population • Every participant represents 5,655 • That’s Eur 294.827 per participant others (and they get paid Eur 22,50 pp per year)

TV ADVERTISING TODAY I don’t buy it …

TV ADVERTISING TODAY I don’t buy it … (Why) do you?

TV ADVERTISING TODAY I don’t buy it … (Why) do you? Do we really want better measurement?

TV ADVERTISING TODAY I don’t buy it … (Why) do you? Do we really want better Or are we too afraid of the measurement? real results?

NETWORKED MEDIA

ARE WE STILL WATCHING TV? PROLIFERATION OF MEDIA BETTER MEASUREMENT 1. (New) technology 1. WTSIWYG 2. Changing consumer behaviour 2. Online/mobile vs mass media

ONLINE VERSUS MASS MEDIA 2001 • Internet boom  Internet bust • Unrealistic expectations • Too much money around

ONLINE VERSUS MASS MEDIA 2001 • Internet boom  Internet bust • Unrealistic expectations • Too much money around 2003-2008 • Reinventing the web: user-centric • Web 2.0, social networking

ONLINE VERSUS MASS MEDIA 2001 • Internet boom  Internet bust • Unrealistic expectations • Too much money around 2003-2008 2003-2008 • Reinventing the web: user-centric • Business-as-usual • Web 2.0, social networking • No better measurement methods

ONLINE VERSUS MASS MEDIA 2001 2009 • Internet boom  Internet bust • Screaming need for accountability • Unrealistic expectations • Advertisers are shifting budget • Too much money around towards online & mobile 2003-2008 2003-2008 • Reinventing the web: user-centric • Business-as-usual • Web 2.0, social networking • No better measurement methods

GENERATION NEXT IS HERE ON DEMAND MEDIA • Why wait when you can see it now? Coen & Maud

A BRAVE NEW WORLD Analogue Digital Interruption Permission Few channels Many channels Limited choice Unlimited choice Linear content Content on demand Broadcaster in control User in control

NETWORKED MEDIA MODEL FUSION OF DIALOGUE & BROADCASTING + Transmitter Receiver Dialogue (1-to-1)

NETWORKED MEDIA MODEL FUSION OF DIALOGUE & BROADCASTING + = Transmitter Transmitter Receiver Rec. 1 Rec. 2 Rec. 3 Rec. n… Dialogue (1-to-1) Broadcasting

NETWORKED MEDIA MODEL FUSION OF DIALOGUE & BROADCASTING + = Content & context Transmitter Transmitter organiser Receiver Rec. 1 Rec. 2 Rec. 3 Rec. n… User 1 User 2 Dialogue (1-to-1) Broadcasting Networked media model

TRADITIONAL AD AGENCIES

WHY DO ADVERTISERS HIRE AD AGENCIES? • Creativity? • Strategic insight? • Account Management Skills?

Account manager Grey guy/board member (Eur 140 an hour) Traffic/project mgr (Comes in to say hello) (Eur 120 an hour) Strange guy (Fixes the door) Account director Jr. account executive (Eur 180 an hour) Sr. Art director (Eur 100 an hour) (Eur 180 an hour) Sr. copywriter (Eur 180 an hour) The client (gets charged Eur 900 an hour) Scene from “Mad Men”

ANSWER = RISK REDUCTION! Because we don’t know (for sure), we hire someone who is • Ad business = Risky business! • Possible outcomes

ANSWER = RISK REDUCTION! Because we don’t know (for sure), we hire someone who is • Ad business = Risky business! • Possible outcomes It sucks Client has been ill-advised Change of agency

ANSWER = RISK REDUCTION! Because we don’t know (for sure), we hire someone who is • Ad business = Risky business! • Possible outcomes It sucks Client has been ill-advised Change of agency It rulez Client takes all the credit Review/Pitch Client is promoted New client Agency stays

ANSWER = RISK REDUCTION! Because we don’t know (for sure), we hire someone who is • Ad business = Risky business! • Possible outcomes It sucks Client has been ill-advised Change of agency It rulez Client takes all the credit Review/Pitch Client is promoted New client Client stays Totally happy Agency stays

ANSWER = RISK REDUCTION! Because we don’t know (for sure), we hire someone who is • Ad business = Risky business! • Possible outcomes It sucks Client has been ill-advised Change of agency It rulez Client takes all the credit Review/Pitch Client is promoted New client Client stays Totally happy Agency stays Gets nervous

IS IT ALL BAD? NO

IS IT ALL BAD? ADVERTISING STILL IS NO THE MOST FUN BUSINESS TO BE IN

AGENCIES MISSING THE BOAT?

GROWTH MARKETS ONLINE/MOBILE • Technology skills • User interaction • Think & act campaigns, versus channels & relationships • Eur 159.6 mln in 2008 in online advertising Source: IAB.nl

GROWTH MARKETS ONLINE/MOBILE BRANDED CONTENT • Technology skills • Media agencies in driver’s seat, • User interaction together with broadcasters and • Think & act campaigns, production houses versus channels & relationships 1200 1000 93 119 800 85 600 Televisie Non-Spot 400 797 851 855 Televisie Spot 200 0 2006 2007 2008 • Eur 159.6 mln in 2008 in online • >Eur 200 mln in 2008 advertising (all media) Source: IAB.nl Source: SPOT/NUV/estimate 3MO

ONLINE + BRANDED CONTENT ONLINE • Building brand sites? • Display/search advertising? • Social networking? BRANDED CONTENT • Integrate ads with programming?

ONLINE + BRANDED CONTENT ONLINE • Building brand sites? BRANDED CHANNELS • Display/search advertising? • Create your own content • Social networking? • Syndicate in external media BRANDED CONTENT • Link with programming • Integrate ads with programming?

OUTSIDE-THE-SITE THINKING • Existing model – Every brand their own site (brand channels)  drive traffic to it • User has evoked set of favorites – Youtube, Hyves, Nu.nl, ... – Google is your best friend • Challenge: meeting users wherever they are – Branded channels

INTERNAL VS EXTERNAL Branded channel Site extension Branded Branded channel channel • Managed Brand • Up-to-date content Channel • Goes beyond campaigns Branded Branded channel channel Branded channel

THINK OUTSIDE THE SITE Site 1 Site … Site 2 Site 7 Brand Channel Site 3 Site 6 Site 4 Site 5 traffic/lead generation

THINK OUTSIDE THE SITE Site 1 Site 1 Site … Site 2 Site … Site 2 Site 7 Brand Channel Site 3 Site 7 Brand Channel Site 3 Site 6 Site 4 Site 6 Site 4 Site 5 Site 5 traffic/lead generation content syndication

JEFF JARVIS ON BRANDED CHANNELS “I agree on the branded channel approach and think that media companies had better get themselves into a position of helping marketers in such a way.” Jeff Jarvis, e-mail 20-3-2009

NETWORKED AGENCIES

Italian Economy 80% work in SME businesses

Italian Economy 80% work in SME businesses Hollywood Economy Depends on Freelancers

ITALIAN OR HOLLYWOOD MODEL NEW REALITY • Clients have less money to spend on more media • More production, less fluff

ITALIAN OR HOLLYWOOD MODEL NEW REALITY • Clients have less money to spend on more media • More production, less fluff CONSEQUENCES • 500k shooting trips to South Africa for a single 30 sec spot are over • 10 short films for 20-50k each • 200k for 400 videos

ITALIAN OR HOLLYWOOD MODEL NEW: NETWORKED AGENCY • Small core – Focus on brand development & brand management

ITALIAN OR HOLLYWOOD MODEL NEW: NETWORKED AGENCY • Small core – Focus on brand development & brand management • Extensive periphery of independent professionals (freelancers) – Project-by-project – Work anywhere, anytime

FUTURE OF ADVERTISING = NETWORKED MEDIA + NETWORKED AGENCIES

THANK YOU RICHARD VAN DEN BOOGAARD RICHARD@BRANDEDCHANNELS.COM +31 6 52 368 276

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Future of Advertising - Networked Media & Networked Agencies

by Branded Channels on Oct 30, 2009

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Future of Advertising - Networked Media & Networked Agencies Presentation Transcript