Where is the ad business going?

David Verklin, who just stepped down as CEO of Aegis Media Americas, and author of Watch This, Listen Up, Click Here, offered his answer to the question “where is the ad business going?” recently in a keynote address at the IAA-New York’s Global Marketing Summit. His message assured the audience that the future of the advertising business is bright, because “we are on the cusp of advertising to the interested.” For David Verklin, advertising is becoming more precise, a concept that he feels should excite all of us. His message to the industry is: “Data is the new creative.”

David Verklin believes that advertising today might best be called the business of creative persuasion and that technology has been its biggest catalyst. (Technology has also, in his estimation, trained consumers to have short attention spans.) In an era where the word “engagement” has become the new advertising mantra, he is clear in establishing that “creative persuasion” means much more than engagement.

It is no secret that most sophisticated advertising today is trying hard to move away from old approaches of interruption and intrusion. Decades of such tactics have caused too many consumers to be skeptical of ad messages or even seek to avoid advertising altogether. And most of us have heard some version of a story that illustrates how half of an advertising budget doesn’t work, but no one knows which half. Marketers have placed ads in magazines or bought time on TV in the hopes that attentive consumers would learn more about their products — whether they wanted to or not.

Verklin recognizes that when an ad message precisely reaches an audience of the interested, it is less likely to be viewed as a disruption. Rather than advertise to everyone, today's marketers have the ability to seek out smaller groups with shared interests across a broader range of media than ever before. Their success at finding these select audiences and new media permutations has made media buyers and strategists a very important component of the advertising mix.

“From 2009 and beyond,” says Verklin, “action will replace watching.” The old interest in “eyeball awareness and recall” will be replaced by with a concern for “new behavior or actions taken.” Marketers will send messages to “the interested,” or exclusively to those individuals who have the likelihood of doing something. Verklin continues, “We need to better understand consumer behavior, attitudes and interests. It is not simply a matter of metrics or a new algorithm.”

Verklin has his eye on a number of developments now occurring in media that will reshape our industry in the next 36 months. He suggests that we watch the following:

• EchoStar Communications is at the forefront of technological innovation as install digital set-top boxes in nearly 14 millions homes as part of the company’s pay-TV DISH Network, comprised of 125 U.S. satellite programming networks. The boxes will help determine how a person watches television, so that marketers can be as flexible a possible with messages—even to viewers with short attention spans. The boxes represent the first automated system for buying, delivering and measuring TV ads, so that EchoStar can offer more targeted and more relevant ads to viewers.

• In an unprecedented move, Google entered in to a partnership with EchoStar in order to have access to a portion of DISH Network’s advertising inventory across all channels and dayparts. The move enables Google to extend its current advertising platform to a U.S. television audience with the ability to deliver ads that are both more germane to viwers and more measurable.

• Project Canoe is another U.S. example to watch. All six major cable systems operators, including the likes of Cablevision, Comcast, Cox and Time-Warner, are combining to standardize interactive technology and provide set-top boxes with the potential for targeted TV ads to viewers. It is projected that these operators will be able to deliver addressable internet ads by this October. It also could mean that the operators may glean a greater share of U.S. television ad revenue if they can deliver scalable technology and uniformly showcase the capability of interactive advertising.

• Joost, from the creators of Skype, offers global potential by combining free TV with instant messaging and channel chat, while also providing advertisers a chance to tailor ads based upon survey information from participants. Joost also tracks behavior, which can be used to influence customers. These tailoring aspects, according to Verklin, take Joost beyond video on the internet to offering a new global solution for advertisers. He also has some guidelines on how to better advertise to the interested:

Data cannot be undervalued, especially when it is intelligently interpreted. Google, for example, saves every search. There is tremendous value in understanding what people want. Verklin has no doubt that with significant data that our televisions will soon be able to recommend the kind of programs we prefer. How does such information translate to marketers? Certainly consumers who demonstrate an interest are worth more to an advertiser. A client will gladly pay $1000 per target, for example, for someone interested in his product, rather than paying $100 per target for a pool of individuals who may or may not have a tangible interest. “Target-ability,” according to Verklin is at the core of 21st century advertising models. And behavior targeting is key to “advertising to the interested.” For example, Net Flix, the movie rental company, attributes much of its success to software that tracks rental behavior as it continually recommends new movies of proven interest to repeat customers. He stresses that an advertiser looking for targeted solutions needs to be part of an opt-in environment. (The Facebook-Beacon project from Autumn 2007 failed, says Verklin, largely because it was an opt-out network.)

Emotion or passion is an element that as important as timing and target-ability when working to “advertise to the interested.” Verklin assures us that “the fully-engaged spend more.” Products like the Apple iPhone that are associated with great emotional-appeal demonstrate that a price-tag is irrelevant when consumers are enthusiastic about the offering. Geography and location, Verklin believes, will play a larger role in the integrated marketing and media mix in the next 36 months. We are moving further away from time-dependent media as the 8pm TV slot becomes less relevant in a world were TiVo, the internet and mobile demonstrate that appointment viewing is no longer necessary. Subway, the sandwich chain, for example, can send a coupon via mobile phone when a customer is in the vicinity of a store. In 18-24 months, Wal-Mart will accept payment by cash, credit or phone; the French retailer Carrefour offers phone payments now in its stores around the world. Finally, Verklin admits that content continues to be king, if one aspires to truly engage with a customer. And only through great, emotionally-connected content can one truly present “advertising to the interested.”

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