The End of Advertising as We Know It…I am Small Business, so Why do I Care?

A few days ago I read a research report from the IBM Institute for Business Value titled “The end of advertising as we know it”, which basically concludes that in the next 5 years the advertising industry will change inevitably. Like most advertising executives do, according to the report, I agree with this statement. Significant changes have happened over the last few years in the marketing world and most have had to do with technology developments, and how they have affected consumer behavior towards advertising and the business dynamics of the advertising industry. As one could expect from a large consulting organization, they simplified the situation on a 2 x 2 chart for analysis purposes. So, they outline four different possible scenarios based on the speed of adoption of two major change drivers: media consumption control and ad inventory systems.

Over the next few days and weeks I will take this report and share my thoughts on how these changes and possible scenarios affect small and medium businesses, how they can prepare to maximize the opportunities that these changes will bring. I will do my best to discuss B2B and B2C scenarios

Stay tuned! I will share them as I post them.

Below is the first one so you can get a glance at what I will be writing about.

From the IBM report: “Consumers are increasingly exercising control of how they view, interact with and filter advertising in a multichannel world, as they continue to shift their attention away from linear TV and adopt ad-skipping, ad-sharing and ad-rating tools. Our survey suggests personal PC time now rivals TV time, with 71 percent of respondents using the Internet more than two hours per day for personal use, versus just 48 percent spending equal time watching TV. Among the heaviest users, 19 percent spend six hours or more a day on the PC versus just 9 percent who watch a similar amount of TV.”

So, there are a three interesting thoughts and findings in the previous paragraph: First, people are spending more time online than in front of a TV, second, consumers have new tools to control how they interact with advertising on all channels, and heaviest users spend significant more time on the Internet versus on the TV. This means that TV advertising (perhaps with the exception of product placement) is slowly dying not only due to the penetration of the DVR and the penetration of the Internet, but also due to the sociographic characteristics of the Generation Y (those born from the mid 1970s to early 1990s).

People are watching TV more than ever before, but they do it in a different way. As of March 2009, 30.6 percent of households in Nielsen’s National People Meter Panel have a DVR, and the penetration of the DVR is expected to reach 40% by the end of 2010, which will only hurt the effectiveness of TV ads. In addition to this, radio advertising is also being blocked thanks to satellite radio. Mass broadband Internet penetration is a fact already and the Generation Y has been shaped by instant communication technologies and new media such as social networking websites, which may explain Generation Y’s reputation for being peer-oriented.

So, what does this mean for small and medium companies?

It means that the field is leveling in terms of marketing and branding. Larger firms will eventually not be able to sustain their brand awareness and reputation based only on gigantic marketing budgets. New media is much more affordable for a many reasons; among those is the nature of social media which I will cover in a later post in this series. What I want to highlight in this post is that small and medium firms have a window of opportunity to get ahead of their larger competitors in adopting new media. Because smaller firms are more nimble and agile, they should take this opportunity to embrace new media and familiarize themselves with it.

To get started I would recommend the same of what many are saying, so below are some links that I suggest reading before kicking it off. However, I would like to emphasize that new media and in particular social media is about honest marketing and is based on trust, so don’t apply the same old rules of traditional marketing which is based on “interruption”.


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