Oct 8, 2009

3 Signals: Why The Future of Advertising is Digital Direct Marketing

There are three signals which will change the advertising industry forever. I'm sorry to break this news to all ad agency creatives: The future's pay day for advertising professional will only come from results. Goofing around with clients' money is over.

Whose fault?

The internet came and made everything measurable. Today, ideas are still very much in demand, but now your ideas have to also ring a cash register. Your job is to prove why your advertising and marketing efforts work. Can you do that?

Signal 1: Direct-response advertising is back

Direct-response has transformed to Digital Direct Marketing. The Digital Direct Marketing combines old proven direct-response advertising techniques with new social media tools. Digital Direct Marketing allows you to have a real conversation with your customer. The conversation with a goal: to make a sale for you. For the advertiser the sales speech and the conversation can be made automatic. For the customer it is highly personalized interaction which leads to the purchase.

Forbes.com calls this future "revenge of the nerds". Ogilvy, one of the largest advertising agencies in the world, is leading the advertising industry to measure and understand online data. I personally consider Ogilvy to become one of the greatest winners of this new information era. They have always been consistent with their work to create advertising that sells. And they have gone great lengths to prove it too, even as early as in the 1960's. Now that hard work from testing and re-testing direct marketing techniques pays off. Today, the direct marketing field, on what almost all creatives have despised, is becoming the center of the digital revolution. Hooray!

Signal 2: Traditional creative ad agencies are trying to catch up

A French advertising giant Publicis acquired digital marketing agency called Razorfish from Microsoft. Why would something as conservative company as Publicis do something like this? At first it didn't seem to fit into picture at all. Unless there is a change coming. A quickly after the acquisition they announced their ambition to lead the future change of advertising.

Signal 3: Coca-Cola is open about their new Value-Based Compensation (VBC) for ad agencies

Here is an interesting article from 4A's Business Development Blog. It summarizes what kind of a compensation model Coke is trying to make as the industry standard for all agencies and advertisers. They are currently testing it and are hoping to roll out the Value-Based Compensation model around the globe within few years. How long do you think that other companies will continue as spectators?


The future of advertising in brief

1. The comeback of direct-response adverting as the digital direct marketing. Geeks are hired to ad business. An automated sales process.

2. Followers are trying to become leaders. Publicis acquires Razorfish.

3. Ad agencies will get paid only from delivering measurable results. Coca-Cola shares its plans openly about their Value-Based Compensation for ad agencies.


My conclusion: If you can't measure it, it doesn't exist.


A question: What do you think? Is this a good or a bad thing?


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Written by Timo Jäppinen
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4 comments:

  1. Not having started out my own business leads to all of my opinion being based on theory. Although I fully support learning from ones own mistakes, I also believe that these risks must be well analyzed before jumping into action.

    Entrepreneurship is firstly about doing what you love while generating profit through sales.
    Secondly it is about coping with the demand. You do this by expanding the manufacturing facilities, staff, and what not.
    Thirdly it is about automating as much as possible. Now, Automating your production is one thing, but your sales is a complete other universe. And at that point you see the leaders break away from the followers.

    Throughout the world human kind’s decision-making is influenced by a great big system. May it be on a small scale or large, the fact of the matter is that how we keep count is money. Now the way I see it is: either you jump into the market with no idea how many sales you are going to generate, or you jump in with a system of your own.


    I am sure there are many internet-based marketing concepts that guarantee sales results. But one, which has caught my eye, in particular is the pyramid scheme taken online. Like Tupperware, Mannatech and many others have done so far.
    Our current reality is that a rapidly growing masses of people around the world are looking for home based jobs. Now these people are both: easy to employ and an easy target for companies who need clients who are driven by greed. These companies have a merit system worked out to provide you with a level of income depending on how many clients you bring to the table. Instinctively more is better and people are willing to go to great lengths to get more clients absorbed into the system. Thus the company gets an exponentially growing client base that is dependent on the company.

    There are many moral issues I could go into here, but what counts is that it sells. And oww does it sell!!!

    Mannatech’s shares soared ever since sep.11 2001, since most of the people wanted to earn an income whilst being at home.

    French Telecom has started using the same kind of system as well. By getting more people to join the operator your monthly pay rises. The slight problem is that if you call and harass all your friends and family with this, then you end up a loaner. Now this is a long shot, but it way explain the 24 suicides French Telecom has had so far and 18 attempts.

    The guardian explained it as “management by bullying” http://www.guardian.co.uk/business/2009/oct/05/telecoms-france
    In conclusion:

    1.The comeback of direct-response adverting as the digital direct marketing. Geeks are hired to ad business. An automated sales process.

    With popups and ad spaces Internet is already too noisy. So maybe it would be better keeping only the techniques that work. Go Geeks! Clean this mess up!!!!

    2. Followers are trying to become leaders. Publicis acquires Razorfish.

    Good! Diversify the market! Contribute to competition!

    3. Ad agencies will get paid only from delivering measurable results. Coca-Cola shares its plans openly about their Value-Based Compensation for ad agencies.

    “Advertising is the price you pay for being unoriginal. Pay it in full!!” I mean If your product sucks and it won’t sell its not the advertisement companies bad. By the time you know it ad agencies are paying their quality employees in penuts.
    ReplyDelete
  2. Thanks for you comment, Risto. I appreciate it a lot.

    About the Digital Direct Marketing, and why I think it will be the future of advertising, is because you can measure it so well. As long as you measure it, you can improve it.

    Spamming or marketing without a permission is not the idea.

    I believe that all marketers should focus on how to build relationships that will lead to bigger and bigger sales in the future.

    Digital direct marketing means that you do your best to serve your customers while monitoring and testing different ways to deepen your marketing permission.

    The ultimate level is a total trust by the customer. Like a doctor you can recommend a product to your customer and he will be glad to pay for it. That's the kind of marketing I'm interested in.

    Digital Direct Marketing is the greatest and most powerful tool today for marketers, if face-to-face communication is not possible. When use it like a real salesman your success is guaranteed.

    Bear in mind that the best salesmen are not pushy or aggressive, but very low-key, polite and professional. Just like your online advertising campaigns should be.


    -Timo
    ReplyDelete
  3. I think this is a very interesting conversation - lead by advertising people as it is! From a PR agency's point of view things are at least as exciting: our target groups have expanded to cover bloggers & consumers directly in addition to press only. E.g. our webisodes /video newsletters reach both of these target groups. Influencers can be found in a great variety of places. The strong point of PR industry in the social media that we are used to thinking long-term and to going ahead by means of discussion and an exchange of thoughts, albeit with a clearly focus. This suits the way consumers want to be treated today. And - getting paid for results sounds familiar already from earlier years. -Pia
    ReplyDelete
  4. Pia, Thanks for joining the conversation.

    I believe there is a window cleaning process going on throughout industries. We need more transparency. Us, as communication professionals, have to help companies to build an open door policy. The internet is here to stay.

    However, we all have seen different kind of social maps with dots showing how everything is connected. The big question many clients have how do we measure conversations? And better yet, how to monetize those conversations?

    From my point of view, the answer is digital direct marketing. That best way is to create a conversation with a goal. A goal to sell; whether it's your product, service or idea.

    What do you think?
    ReplyDelete

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