I recently wrote a post titled It's the Relationship, Stupid in which I start to describe the distinction between digital advertising and digital marketing. The premise of the post is that in a constantly connected world, its more valuable for brands to focus on establishing relationships of trust with customers. This post will expand on my earlier post and provide more details why. I also encourage you to check out the earlier post before reading on.
The diminishing value of search and banner advertising.
As background information regarding the online advertising market, I recommend the working paper by Tim Hwang and Adi Kamdar titled The Theory of Peak Advertising and the Future of the Web. This paper introduces the idea that advertising on the web will diminish in value over the long-term (10+ years).
The paper sets out four main problems with search and banner advertising on the web today:
- Younger users engage with advertising less than older users;
- Ad blocking software is utilised by between 9% and 23% of web browsers;
- Click fraud is severe, amounting to $53M USD in wasted spending in the US in the first 6 months of 2013. A staggering 25% of ad spending may be wasted on fraudulent inventory according to a respected industry source.; and
- Over supply of inventory conflicts with limited attention of users.
Notwithstanding these problems, search and banner advertising is an effective lead generation or customer acquisition channel, particularly for internet businesses. As Marc Andreessen discussed recently with Fortune, Google has been an insanely effective direct marketing channel for years. However, any click-based effort must feed a content driven strategy for a story to emerge from hyperlinks and banners, and resonate.
The web as a communications platform.
The main reason the web is so transformative is that it is continually and relentlessly removing frictions. Broadly, it is a network connecting people (as well as buyers and sellers), and it is also an incredibly efficient digital distribution platform (software, content). When combined with its uptake — its userbase continues to surge and will eventually comprise the entire population of the globe — it's obvious why it is the ultimate communication platform.
There are several interesting points here:
- the majority of new users (Asia, Africa, South America) connecting to the web will do so for the first time via mobile devices.
- engagement (or connection) on mobile devices is far greater than desktop because its a companion device and because a mobile device can do so many more jobs for a user than a PC.
Attention is the important resource.
In the mass media model of audience aggregation, attention is essentially assured because there is no competition within the distribution channel. The mass media organisation creates "least offensive" content to meet the needs of the maximum number of people. There is a standard of content that people will tolerate without ignoring it, and "good enough" content maximises the audience because it cannot alienate.
In the network distribution model of the web, the opposite is true. The cost of distribution is effectively zero. Accordingly, there is extreme competition within the distribution channel (the web) and everyone is creating content. This dictates that for content to capture and retain attention, the quality of the narrative and the quality of the story-telling itself must be amazing.
For a detailed analysis of the difference between the industrial information economy and the networked information economy, The Wealth of Networks by Yochai Benkler is a must read.
Optimising for attention.
It is imperative for any marketing organisation to recognise where and how its customers are focusing their attention. As a starting point, given mobile devices are the computing device of choice into the future, consumer facing businesses will understand that to succeed they must either:
- capture the attention of customers directly on mobile devices; or
- pay an intermediary with the attention of customers for access.
Naturally, this presents marketers with three potential approaches to optimise for:
- create a system to capture the attention of customers (generally involves building a community by communicating the authentic story or narrative of the brand over time for people to connect with);
- buy attention from third parties (generally involves banner advertising, social media advertising and search engine marketing); or
- a hybrid of option 1 and option 2.