Posted on: Thursday 12th of July 2012
One of the sessions at the recent World Economic Forum Tiger Team meeting in London focused on rethinking advertising. This session made it absolutely clear: traditional media companies – in TV and press in particular – need to reinvent their business models.
The control shift gives them an opportunity to do so.
The story so far
Advertising funded 20th century media companies were hugely successful. There were many combinations and permutations: high reliance on display advertising vs high reliance on classified advertising; free vs a cover price. But underneath the nuances the model was pretty simple: advertising funded journalism, journalism attracted audiences who were able to access quality content for free (or heavily subsidized), these audiences were duly exposed to the advertising. A win-win-win.
Then came the internet. It attracted audiences and advertisers – especially classified advertisers where search-driven services offer much greater convenience and cost effectiveness than long lists of small print.
For a while, many people thought online behavioural targeting would be save the day. It would provide ‘relevant’ advertising to individuals, leading to higher advertising returns and, therefore, higher advertising fees. Phew! An alternative virtuous spiral!
In fact, behavioural targeting is a dead end. By invading individuals’ privacy, failing to provide ‘relevance’, and failing to give advertisers the returns they were hoping for, it is sucking online companies into a vicious circle, not a virtuous spiral.
This leaves media companies peering into the abyss. In their traditional businesses they face declining revenues, leading to poorer quality journalism and an inability to compete with other sources of information for audiences or advertisers. And online, there isn’t another way to fill the revenue gap.
A way forward
To see the way forward we need to remember three things:
- First, there is still strong demand for quality journalism, including one aspect of traditional media: impartial, knowledgeable commentary on companies and their products and services.
- Second, there is an ongoing role for display advertising which creates brand awareness. This can remain an element of the future, more or less unchanged (though perhaps at reduced volume).
- Third, media owners have always made their money by helping sellers exchange information with buyers. Advertising as we know it is just one form of this general principle. Media owners now have the opportunity/ challenge to reinvent and re-apply this core principle to a digital age.
Profiting from user control
The way to do this is to put ‘audiences’ – readers, viewers – in control. Under this next-gen model (and assuming an ongoing background level of display advertising) the media owner makes it simple and easy for readers/viewers to also:
– build profiles of their interests, media consumption preferences, and more. These profiles are under the control of the individuals themselves: they can choose whether to share all or part of them, and if so, who with.
– express their interest in products/brands and/or give permission to be communicated with while also maintaining their anonymity and giving them complete protection from spam.
The media owner can then present these audiences to advertisers: “here are X thousand people who have expressed an interest in your product and here is additional profile information (anonymous, remember) that qualifies their interest”.
This approach to user control is based on two simple principles:
- An ‘anonymity shield’ where the media owner acts as an intermediary between readers/viewers and advertisers, creating a mechanism (such as personalized url or email address) by which advertisers can communicate with specific individuals – but where the individual only reveals their identity (e.g. name, contact details) once they choose to.
- Granularity: individuals can express their interest in products, ask for information or offers and turn these expressions of interest on and off at will, so that advertisers are only communicating with them when requested.
The anonymity principle Spam and intrusions into privacy (including unnecessary and unwanted collection and use of personal data) are destroying trust and prompting consumers to withdraw from engaging with advertising and online platforms. By creating an anonymity shield for their customers, media owners can protect their identity/privacy while providing advertisers with reach, detailed, relevant and timely information. For example, an individual’s personal profile might say they earn £55000 and have an excellent credit rating, and their expression of interest might say they are planning an adventure holiday. All this information could be shared with an advertiser without the need to pass on the individual’s name or contact details. The advertiser then responds to the specification, and only when/if the individual decides to buy do they hand over these details.
In this way, users can engage confidently with advertisers, while advertisers can engage in a relevant way with consumers who have an expressed and permissioned interest in their service.
User control For user control to work it must be ‘tweakable’. Users must be able to specify:
- I’m interested in this (gardening) but not that (motoring) – subject matter
- I was interested in this; I’m now interested in that – timing
- I want messages from this brand but not that brand – information source
- I want no more than three messages a week – volume
These ‘tweaks’ or specifications are, potentially, infinitely extendable, opening up the opportunity for the media owner – and individuals – to add ever more detail. For example, an individual might say:
- I’m generally interested in travel and open to messages/offers about travel
- I’m generally interested in adventure holidays (another layer of detail down)
- I’m interested in an adventure holiday in the month of June, with this budget (i.e. highly specific)
Because the individual can turn the expression of interest on or off at any time, or change it (‘I’m now interested in relaxing beach holidays’), he or she is assured of only getting relevant messages, and advertisers know they are communicating with interested buyers. Advertising is turned into an information service – one that dovetails neatly with renewed emphasis on impartial, quality journalism.
Obstacles along the way
There are many obstacles along the way.
- If managing the communication dashboard isn’t incredibly easy, it just won’t happen.
- Consumers have to get value from the process: access to better offers, more useful information. This process is less about getting messages in front of eyeballs and more about advertisers finding ways to add value to individuals’ decision-making processes. This may require advertisers to rethink the content, as well as the process of what they do.
- For advertisers to bother making changes on their side, they have to see a) the commercial benefit and b) the potential for this alternative approach to scale. For this reason, the best places to start are probably in high value categories like mortgages, cars and holidays or in high involvement areas such as gardening or health and fitness.
Putting users in control of what we once called advertising – but which is increasingly morphing into a new form of commercial information exchange – won’t reach critical mass over night. Consumers and advertisers need to get used to the idea. But there is one very simple reason why it’s certain to happen. Media owners now have their backs to the wall. They have to do something. Starting to experiment in this direction can only enhance their relationships with their two key stakeholder groups – reader/viewers and advertisers – while generating incremental revenue at the same time.