Umair Haque / Bubblegeneration
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Design principles for 21st century companies, markets, and economies. Foreword by Gary Hamel. Coming January 4th. Pre-order at Amazon.

Tuesday, September 04, 2007

Research Note: The Adpocalypse and the Next Media Value Chain

Nick has an interesting post about ad blocking plugins.

There was a lot of discussion about it - but mostly sound, fury, and a bit of bewilderment.

Look. Forget about Google and Microsoft. Google is way (way) ahead of this, and Microsoft is way (way) behind it. Despite Nick's argument (Google is more vulnerable than Microsoft) - it's Microsoft that has committed to an obsolete value chain; it's just spent billions to acquire...a digital ad agency.

Let's try and get to some strategic insight - because we can learn a great deal from this.

One day, in the very near future, consumers will be able to avoid ads always and everywhere - unless they're in places and spaces they have no control over (ie, trains, buses, shops, etc).

What does that mean?

Listen. The problem is really, really simple. Let's unpack the economics a little bit.

The first point we should note is that marketing sucks. It blows.

That's not a creative judgment (ok, well, partially it is :) - rather, it's a description of economic reality.

Ads are nothing but nuisance costs to most consumers. Media planning and strategy makes little economic sense (how many times did you see the same ad last night? Believe it or not, much of that is actually intentional - talk about hyperinefficiency).

Marketers have to figure out how to make "ads" that benefit consumers - not impose nuisance costs on them.

In a world where control shifts inexorably, ineradicably, irreversibly to consumers - because of the elemental structural imbalances between media supply and media demand - there is no other possible outcome for marketing.

Either marketers discover how to benefit consumers, directly, vitally, tangibly, visibly - or they will go the way of record labels and film studios.

What's really going on here? It's critically important to understand the economic and strategic signal through the noise.

This is strategy decay moving inexorably through the value chain - sweeping along the rusting, moribund, industrial media value chain like a tsunami.

First, it was retailers. Then, it was publishers. Now, it's the turn of marketers.

Of course, if you haven't noted it by now, all of this suggest very naturally what Google and Microsoft should both be doing...

-- umair // 1:42 PM // 2 comments


(how many times did you see the same ad last night? Believe it or not, much of that is actually intentional - talk about hyperinefficiency).

Not that I'd ever defend the practice... but there's is a point to that. The more you hear something, the better you'll remember and, more importantly, the more you're likely to think it's true.

Advertisers know you'll see an ad over and over and over. More often than not, that's the goal - that's how marketing sinks in and your beliefs (and spending behavior) get manipulated.
// Anonymous Eric // 6:09 PM

Hey Eric,

Sure - there is a behavioural aspect to this.

But even that behavioural model depends on economics.

In this case, if I'm saturated by 10 billion "ads", I'll likely tune them all out. If I can block them, since I'm being saturated, I always have a strong incentive to do so...

These concepts don't work anymore, because the equations are not so simple anymore.

There *was* a point to repeating ads, in a mass media economy - today, it's an obvious point of inefficiency which the market simply won't bear.

The larger point is that marketing needs to move *way* beyond yesterday's naive fundamental concepts, like awareness/recall/even engagement/etc...

Thx for the comment.
// Blogger umair // 4:18 PM
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