The New Advertising System: Innovations and Issues

1. The New Advertising System:Innovations and Issues Joseph Turow Annenberg School for Communication University of Pennsylvania at RIA Novosti

2. Summary • Marketers and many academics are fond of saying that in the early twenty-first century consumers rule the media. • But if you look "under the hood" of the emerging media world, you see that advertisers and their agencies are establishing a new kind of influence over media firms and consumers.

3. Summary • In fact, at the start of the twenty-first century, the advertising system is guiding history’s largest project to label people and act on those labels. • It is doing it through a new mini-industry centered on media planning and buying.

4. Summary • Media agencies, data companies and marketers are working with media firms (publishers) toward the goal of labeling individual consumers (often anonymously) with demographic, lifestyle, social, and other characteristics as a result of tracking their behavior across digital media.

5. Summary • The new institutional arrangements are profoundly influencing publishing norms and activities. • And they are encouraging a trajectory toward increasing social discrimination via the media.

6. The Theme of Consumer Power Among academics: • Nicholas Negroponte • Yochai Benkler • Henry Jenkins • Clay Shirkey • Cass Sunstein

7. The Theme of Consumer Power • Among marketers: • 1994: Rust and Oliver predict “the death of advertising” in the Journal of Advertising. They related it to the simultaneous increase in media fragmentation and audience power: In advertising’s prime, producers held virtually all of the power in the marketplace. This was true in part because their agents, the advertising agencies, controlled the then very powerful mass media. Producers controlled the products, terms and conditions of sale, and the communications environment. Power has been steadily shifting toward the consumer. (p. 74)

8. The Theme of Consumer Power • 2008: RishadTobaccowala (CEO Denuo) From an iMedia.com profile: When it comes to connecting and communicating, people want three things, Tobaccowala says. First, they want access -- access to content and to people, at any time, in any place, on any device. Second, they want participation. And third, they want empowerment. And not just any old empowerment, Tobaccowala notes. They want to be like gods, limited by neither time nor space. Thus, he says, marketers must learn to live in the world of the omniscient consumer.

9. The Theme of Consumer Power • 2009: OgilvyOne report on mobile advertising in 2020: Pushing messages out to unwilling consumers is replaced with producing ideas and content that individuals will seek out and incorporate into their own world…

10. Academic Counter-Arguments Certainly Exist • Mark Andrejevic notes that we must be aware of “the ongoing attempt to equate new media technologies with the promise of empowerment, individuation, and creative control.”

11. Zwick, Bonsu, and Darmody: “[Managers are] always on the lookout for new ideas, products, and services to market, managers are seeking ways to appropriate, control, and valorize the creativity of the common.”

12. Jose Van Dijk • “…user agency as a complex concept involving . . . his economic meaning as a producer, consumer, and data provider . . .” • But where is the most important location of power? In the “user” or elsewhere?

13. The Importance of Media Buying • My previous writings suggested that marketers and ad agencies have pivotal roles in shaping a new media world. • Part of shaping that world involves the “construction of audiences.”

14. In my new book The Daily You (Yale University Press, in November) I go further to show how the media planning & buying system within the advertising industry is most responsible for a transformation that is taking place in audience-media relationships, and for the effects that is having on publishers.

15. The Rise of the Media-Buying Industry • Media buying before the 1980s-part of full-service ad agencies. • Rise of “agency holding companies” • Big Four: WPP, Omnicom, Interpublic, Publicis • The creation of media buying subsidiaries • Today media planning and buying stands as the central force in the ad system.

16. Monetary Power of the media buying industry • RECMA measured media global buying billing estimate: • $400 billion (2007) • RECMA measured media US buying billing estimate: • $127 billion (2007) • David Verklin (who helped launch US Carat office in 1998) said in 2006: “'Six companies will buy 80 per cent of all network TV in the US this year,' he says. 'Ten years ago, many people in advertising would barely have heard of those six companies. That's how amazing the revolution has been.'

17. Media Buying Before 1985 Agency Planners and Buyers “Publisher” Ratings Companies Client

20. http://www.lumapartners.com/resource-center/lumascapes-2

21. The key players today • Media buying divisions of agency holding companies • Independent media buyers • Advertisers • Media ratings firms • Publishers • Ad networks • Technology developers • Competition/cooperation among them—WPP (Sorrell) & Google; Publicis (Levy) and Google

23. Internet revenues of Big 4

24. Globally—over $250 billion “According to independent data from RECMA, MediaCom was responsible for planning and buying media worth $24.9 billion in 2010, making it the third-largest agency network in the world. As part of GroupM, MediaCom brings global buying power of some $82.2billion (RECMA) to the negotiating table. GroupM is the largest media investment management operation in the world, responsible for 29% of global advertising spend.”

25. The media buying industry has developed a new logic toward “publishers.” • It involves a redefinition of how to evaluate a successful advertisement. • The targeted “click” and the mantra of accountability • The click broadly understood as the indication of direct human response to an advertisement

26. This need for increasingly detailed audience constructions in the digital environment has led to new metrics and metric technologies. • Development of cookie, flash cookie (and respawning), and “super” cookies • CPM, CPC, CPA, and time with medium • “Engagement”

27. Retargeting • Lookalikes • Data providers and the merging of cookies • Social graph targeting

28. Arguments over “the final click” • The ideal of “the long click

29. All these elements are part of a broad re-imagining of marketing communication in a way that re-establishes its direct power over media firms.

30. What we discussed before the break increasingly threaten the viable pricing of “legacy” publishers • These requirements continually push publishers down the food chain • Example comparing print and digital CPMs by USA news publishers.

31. One result: Advertisers tell publishers to push harder to track, target, tailor. • Publishers use yield optimization firms such as Pubmatic and Rubicon. • Rich media and video ads seen as possible saviors; same with iPads.

32. Further competing with publishers: Owned media and earned media • The meaning of “owned” and “earned” media • Marketing communication as the new advertising • The growing importance of product placement, product integration (including video games), coupon promotions (online, mobile, offline), in-store advertising, contests, and cross-platform coordination • Metrics: buzz online; offline traffic and ratings; word of mouth; coupon redemptions, increase in sales.

33. Traditional journalistic norms do not allow for earned media activities. • But magazines are diving into it. • And newspapers are considering it.

34. The demise of media context with the rise of real-time targeting through ad-buying platforms and ad exchanges. • The rise of content farms – eg Demand Media • The bundling of synergistic editorial and ad content tailored to targets

35. Mobile and television: the web on steroids • Mobile: The personal target marketer • Television: The household target marketer • Visible World, Google TV, Simulmedia—just the beginning of new approaches to news, entertainment and advertising • With and without traditional publishers • Questions about distribution of revenue in food chain

36. What About the Public? • The new world assumes the broad sharing of audience data. • The public knows it, but doesn’t understand it.

38. Public doesn’t like it when it hears about it.

40. The World in the Making • A world of reputation silos rooted in social discrimination—targets and waste? • Reinforcing and creating increased social discrimination, tensions, distrust

41. Normative balance of segment-making and society-making media • The emerging world not totalizing but changing the balance even beyond segment-making • The process is just beginning. • What can be done?

42. Publishers have an interest in taking the public’s side. • Rethinking “privacy” as discrimination • Regime of information respect as goal • Education in digital media • Transparency of behind-screen activities • Ground-level regulations

43. THANKS FOR COMING! Kiitos kun tulit!