The Convergence Conversation

Groups & Committees

The evolution of advertising the era of convergence

The UK media marketplace has seen dramatic change over recent years. Consumers’ choices have evolved from 4 terrestrial TV channels and one fixed phone line to a complex multi-channel, on-demand market offering the endless options of where, what and how to consume. 

The new range of platforms and services has challenged the advertising business models which have traditionally funded a large proportion of content production, creating challenges for all parties. Advertisers have had to adapt to new technologies, being forced to innovate and creating communications for different platforms, many of which have quickly taken hold. At the same time, technology companies have had to adapt to advertising, developing advertising based business models to fund the new services they are launching. These changes are already evident in the marketplace; internet advertising spend is now twice the size of outdoor advertising and consumer magazines and three times the size of radio advertising (1). The market for advertising on mobile phones is expected to be worth £6 billion annually within the next 5 years (2).  Meanwhile spending on advertising via traditional channels continues to decrease.

The marketing mix…

So what’s winning strategy? How should companies get their message out now that people consume across platforms, away from broadcast schedules and on the move? It can be argued that industry gloom about the decline of advertising is misplaced. New technologies do mean that the scatter gun approach and the 30 second slot are now less effective, but in their place new technologies offer the possibility of more effective advertising. It is now possible to target the consumers you really want to talk to. There is no better example of this than the Google model which gives advertisers access to consumers who are searching for products, services or information which is central to their business or offering. New technologies may mean less advertising because we can advertise so much more effectively. 

It is important to take account of the new consumer behaviours characterising the convergence market place. People are no longer passive, there is far greater user interaction with content and services; with the market is moving from the mass models towards personalisation at every level. The user tailors their environment at all times from the mobile/iPod experience when on the move, to the on-demand experience in the home. Advertising will continue in this context but consumers are less likely to tolerate interruption type communications, a fact demonstrated by the latest industry research shows that the pop-up advert model has already been overtaken (3); pop-ups appear to annoy people, who quickly click to close the ad. This behaviour tendency has undermined the pop-up as a means of communication.

Meanwhile other forms of online advertising allow far more profiling and tracking of consumer behaviour, something TV style advertising has never been able to deliver. It is now possible to quickly react to what consumers appear to like, and more importantly don’t like, offering the opportunity for far more efficient communications. 

Consenting adults?

The notion of tracking consumer behaviour via online communications certainly presents some reassurance for advertisers balancing out the decline of traditional methods, however it does raise questions around consumer consent. Consumers are becoming savvier, they subscribe to mail preference services to reduce junk mail, use PVR technologies to skip TV ads and spam filters to reduce unwanted email communications. Whilst new technologies allow more insight into consumer reaction to communications, there is a balance to be struck between commercial communication and intrusion into privacy. 

Advertisers will increasingly need to develop new relationships with consumers, using incentives to encourage opt-in to future communications. This model is already well established with store loyalty cards; the consumer surrenders information on their consumption habits in return for incentives, discounts and rewards. These types of quid pro quo relationships are likely to increase but the challenge for advertisers lies in getting through to their customer in the first instance, bypassing the spam filter, PVR ad skip or mail preference, or indeed the consumer themselves who do not like being interrupted with corporate communications.

Conclusion

The impact of convergence on advertising presents some interesting debates and questions for industry to engage with over coming months. It is certainly important that new advertising models to continue to develop and succeed, as advertising revenues fund the production of much of the content which continues to drive the market. But as online advertising models embed, bringing with them the ability to track consumer behaviour to a far greater degree than with broadcast or print advertising, key debates around privacy and consent emerge. What is clear however, is that whilst convergence has impacted advertising in a fundamental way, forcing a rapid evolution of communications methods, companies will always need to market their products and services to consumers; there will always be advertising.

1. Interactive Advertising Bureau stats cited in MediaGuardian, 5.10.06

2. Informa Telecoms and Media research cited in MediaGuardian, 7.9.06

3.Interactive Advertising Bureau stats cited in MediaGuardian, 5.10.06

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