By Dave Morgan
I spent an amazing morning today at Media Kitchen’s annual Venture Capital Conference in New York City listening to leaders in media, investing and banking talk about “new TV”: the merging of broadcast TV, social video and everything in between.
This is the 11th year that Media Kitchen CEO Barry Lowenthal has put on the event to help drive critical thinking, inspiration and innovation for our industry.
In my remarks, I focused on what I thought would the key drivers of the advertising industry over the next five years. Here they are — and AI is not one of them:
Direct to consumer. All marketers and media companies that want to be relevant into the next decade are working hard to build direct consumer relationships.
Most incumbents here are in a bad spot. If you are Proctor & Gamble or CBS, you are basically in a B2B business. You make your sales in multiyear agreements with Walmart or Comcast, not to the Sally Browns or Joe Smiths of the world.
Not so a Warby Parker or Amazon Video. They create products and sell them directly to consumers. They know their customers’ names. They can and do talk to them directly.
This is the fast-emerging direct-brand economy — and nobody has done a better job laying out its potential than the Interactive Advertising Bureau’s Randy Rothenberg, in a must-read for all who care about the future.
ROI. For decades, legacy brand companies have been managing their advertising as a cost center. That’s why they focus so much on outdated media measurements like gross rating points, and are maniacal about per-ad unit pricing and cost-per-thousands.
Not so if you sell direct to consumer. In the world of the Dollar Shave Clubs or Casper mattresses, advertising is a profit center. For them, sales has an ROI for each and every ad. As more companies go direct to consumer, more and more advertising will be managed as profit centers and measured by ROI.
Identity. Cookies, device IDs and IP addresses aren’t identity, even if they help ads follow you across the web. In the world of direct selling, people buy things — and it’s very important for marketers to know who those buyers are. That’s why we are seeing the rise of customer data platforms (CDPs), where companies aggregate customer data sets to make them more accessible and actionable to drive their advertising and marketing.
Critically, these systems contain ways to make data available to drive action-based systems — ad servers, email servers, TV planning systems — without leaking private data, keeping personal data within the walls of the marketers. This area is growing fast, with this week’s Facebook hearings only adding urgency.
TV advertising. What’s old is new again. Nothing sells like sight, sound and motion, and television is unrivaled in reaching more people faster, with more impact, cost-effectively. That’s why so many of the new direct brands like Dollar Shave Club, Warby Parker, Peloton, Wayfair and Ring are building their businesses with TV ads.
As we learn from research by the Video Advertising Bureau, not only does 80% of all video viewing today still occur on linear TV, but digital brands that use it see spikes in their website traffic of hundreds of percentages.
As these drivers take hold, they will have significant implications for our industry. Here are a few:
— Data management platforms and customer relationship management systems will subsumed by CDPs.
— Privacy-safe, software-based identity matching will overtake traditional “safe havens.”
— Analog media wlll become data-optimized, performance-focused and coordinated with digital.
— Platforms will take over TV media analytics/planning/activation/optimization.
— We will see true leverage created relative to the digital walled garden duopoly.