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The Collapse
&of
Advertising
Rebirth
How the crumbling foundation of the advertising industry as
we know it is making way for a new, more valuable one.
written by Judah Phillips
2The Collapse & Rebirth of Advertising
Most global industries have changed and are evolving at a
quickening pace due to technological advancements in device and
distribution. All this change revolves around a better end user
experience making things easier, more enjoyable and ultimately
valuable to the individual. The film, music, photography, news and
media industries will never be the same. More music, film and
photos are produced, made, taken, and viewed than ever before.
These industries continue to evolve dramatically and there have
been many winners and losers throughout the process.
The structure and model for advertising, however, has not evolved
with the pace of these other industries. Billions of dollars are still
being spent placing ad messages in the middle of programming
that people are enjoying while people are paying less and less
attention to what brands have to say. Many believe the advertising
model also has a negative effect on the quality of programming
and digital content, but billions of dollars continue to be spent
because marketers are unsure what else they could and should
be doing. 2mrw believes now is the time for dramatic change
in the advertising business and, as a result, commissioned this
study in collaboration with SmartCurrent and Experfy.
We believe there has never been more opportunity
to effectively build powerful brands than today and
it’s not that complicated. Hopefully, we can shed
light on an evolved approach and way of thinking
through this POV. We hope you enjoy.....
SmartCurrent delivers business and technology consulting services around
digital analytics, conversion optimization, business intelligence and big data, and
applied data science. SmartCurrent has worked with many companies across
different sectors and industries to help improve business performance - from
global consumer brands, advertising agencies, financial services firms, internet
and ecommerce companies, media and publishing giants, technology and software
innovators, and fast-growing, dynamic start-ups.
› www.smartcurrent.com
2mrw is a hybrid consultancy and production company that believes every
individual has their unique point of view. Built from the ground up and
specifically designed to evolve with the changing demands of modern marketing
communications, their teams are constructed to include a unique mix of
strategists, data scientists, behavioral psychologists, technologists, designers,
journalists and storytellers. These experts work together with their clients to
craft tailored, branded experiences and build tools that uniquely activate a brand’s
promise, are memorable, useful and leave people wanting more.
› www.2mrw.co
Experfy is a big data consulting marketplace where enterprises hire vetted experts
and vendors on-demand. All experts undergo a rigorous application process to
demonstrate both technical expertise and domain knowledge. Experfy platform
includes procurement, compliance and marketplace tools to leverage the power
of extended, on-demand virtual talent. Experfy provides a self-service model for
smaller companies and a high-touch concierge service with project management
for larger enterprises. Experfy is based in the Harvard Innovation Lab.
› www.experfy.com
_Why You Should
Read This
3The Collapse & Rebirth of Advertising
_Contributors
Judah Phillips
Judah Phillips, CEO and Founder of SmartCurrent, helps people
improve their analytics and marketing in order to identify and take
advantage of the business opportunities that significantly impact
results, achieve goals, and create value. He helps companies find
innovative ways to use data and analytics to improve efficiency,
increase revenue, reduce cost, and boost profitability. Judah
specializes in strategic reviews and the resulting work required
for enhancing the effectiveness of your business. Judah is the
author of the books “Building a Digital Analytics Organization” and
“Digital Analytics Primer.
Paul Woolmington
Paul is known as one of the world’s most innovative marketers,
disrupting and redefining traditional communications models
while working with many of the world’s leading brands. He was
named one of the ten most creative people in marketing and
advertising by Fast Company, he has launched two successful
media and communications concerns and served as an advisor
to governments, startup firms, and social cause organizations
worldwide. Paul is also serving as a Senior Fellow at Columbia
School of the Arts.
Eric Vukmirovich
Eric’s unique background includes years of business strategy,
finance, operations, legal, and M&A experience. Most recently,
Eric was the CFO/COO/partner of mcgarrybowen where he
was instrumental in its evolution from a 25-employee boutique
traditional advertising agency to a 1,000+ employee multi-service
global communications company. Eric cut his teeth serving in
various positions at Ernst & Young and Arthur Andersen before
venturing out into more entrepreneurial roles.
John McGarry
As Founder and CEO of 2mrw, John is driven by helping clients
navigate today’s rapidly changing marketing landscape by tapping
into his passion for new technology, advertising, and over 20
years experience from both the agency and client side of the
business. Most recently, John founded and led the digital practice
at mcgarrybowen as Chief Digital Officer and Partner, providing
innovative digital solutions to Fortune 500 clients.
David Papworth
As Creative Cultivator for 2mrw, David leads the agency’s creative
vision with a firm belief that creativity can come from anyone,
making it part of the fabric of the agency and not a department.
With a very non traditional history, his work is driven by embracing
new technologies and pushing innovative thinking. Most recently
David was Creative Director and Practice Lead of the LABS
group at mcgarrybowen, a group dedicated to the exploration of
emerging technologies and their impact on marketing.
Rob Quish
Rob is a C-suite Executive and Creative Strategist in the media
and marketing services industry helping client companies and
brands transform their market position and marketing story.
Based in NYC, he has worked for and led global, regional and
local marketing communications agencies within WPP (JWT), IPG
(Lowe), Omnicom (DDB) and inVentiv Health.
4The Collapse & Rebirth of Advertising
_Contents
Executive Summary
The Collapse
What is an Ad?
Why Is It Hard For Agencies and Advertisers to
Think About Message-Centric vs Value-Centric
Advertising?
Why is it Hard to Deliver Value-Centric Advertising?
What Does it Take to Be Effective with Value-Centric
Advertising?
Understanding the Elements of Effective,
Value-Centric Advertising
Key Takeways
End Notes
Pg 5
Pg 8
Pg 13
Pg 16
Pg 21
Pg 25
Pg 30
Pg 36
Pg 39
1.
2.
3.
4.
5.
6.
7.
8.
9.
5The Collapse & Rebirth of Advertising
_Executive
Summary
Advertising, as we know it today, for building
brands is ineffective because people’s behaviors
are shifting due to the rapid pace of technology
advancement. The advent of newer methods for
advertising, such as programmatic marketing, can
help target a message about a brand to an audience,
but interrupting an audience isn’t the most effective
approach for reaching them. Continually “reaching”
an audience with a branded message doesn’t
mean it will be recognized and responded to in
any meaningful way. In fact, saturating a target
audience with a message can cause the advertising
to be completely ignored at worst and only passively
noticed at best. Consumers reject banner ads at
rates greater than 99%. 1 in 1000 impressions result
in what could be a deliberate click on ad. Message-
centric advertising for creating brand equity is
not really working as well as in the past. So why
are billions of dollars being spent supporting an
advertising model that doesn’t really work that well
anymore?
You’ve probably heard the quote often misattributed
to Albert Einstein that “doing the same thing over
and over again and expecting different results is
the definition of insanity.” The smartest and most
sophisticated advertisers seem to understand that
advertising today can’t keep doing the same thing
ad-infinitum and expecting higher returns. Simply
putting similar, brand-specific messages in front of
audiences in a way that prevents them from doing
what they want to do is just ineffective. It’s not the
best way to spend advertising dollars. Instead, savvy
advertisers realize that it is much more effective to
give audiences something of value and utility that
ladders up the brand. We call this “value-centric”
advertising.
When major advertisers take a value-centric
approach, the benefits of doing so are monetarily
significant and much greater than messaging. Kraft
has realized a four-times return on advertising
spend (ROAS) from content marketing compared
to message-centric advertising. Kraft gives people
something of value (recipe cards) and their audience
buys more Kraft foods to use in those recipes.
Netflix isn’t peppering every affiliate site on the
planet with special membership offers. The red
Netflix banners seen across the web just a few years
ago are not rendered as frequently. Instead, you’ve
probably heard about or even watched “House of
Cards,” or that Netflix is producing Adam Sandler
movies, or that Netflix custom programming like
“The Square” is award-nominated content. Apple
gave away an entire U2 album. BitTorrent offered
an exclusive, paid Thom Yorke record at a discount
Executive Summary_
6The Collapse & Rebirth of Advertising
to its musically-influenced audience. Converse
gives away concert tickets. MTV produces concerts
with major musicians in local markets, gives away
tickets, and then broadcasts the content globally.
All of these advertisers already realize the power of
“value-centricity” and what we’re talking about in
this paper: value-centric advertising is much more
effective than message-centric advertising. It is
much more effective for advertisers to provide value
to an audience in a way that aligns and builds the
brand than just saying something about the brand,
hoping and wishing whomever sees it believes it,
won’t ignore it, and will eventually buy it.
Delivering value-centric advertising where value is
recognized and exchanged instead of interruptive
messaging is the future of advertising. That future,
with the right agency, is right now. 80% of online
visitors will watch something brand-centric, but only
20% will read something. Content marketing, thus,
is one effective method for transitioning advertising
away from being message-centric to being value-
centric. But transitioning from message-centric
advertising to value-centric advertising is not a
simple task. In fact, most agencies and marketing
departments have only created messages.
Messaging and the process for message-creation
is part of their agency DNA and part of the agency
muscle-memory. It causes them to do the same
thing over and over again, expecting new and better
results, which is just not going work for advertisers.
It doesn’t matter if
the agencies super-
desk has an Oculus
Rift residing on it or a
showroom of cool, new
technology on which
messages are being
created to be served.
It doesn’t matter if the
creative messaging was
talked about in the trade
magazines in the advertising industry. What really
matters is that the advertising achieved its goals of
building the brand, creating demand, and causing
people to buy.
In order to create value-centric advertising,
advertisers and marketing departments must find
new agency partners who actually understand
value-centricity. But value-centric agencies are
unique and rare. They are led, managed, organized,
and were created for different outcomes than
message-centric agencies. Advertisers must work
with these newer agencies that are not encumbered
by their own past campaigns and self-limited ways
of working. These new agencies are not burdened
and locked-into being message-centric using only
methodologies, client-interaction frameworks,
creative approaches, and advertising channels that
primarily support the delivery of just messages.
It doesn’t matter if the agencies
super-desk has an Oculus Rift
residing on it or a showroom of
cool, new technology on which
messages are being created to
be served.
Executive Summary_
7The Collapse & Rebirth of Advertising
A value-centric agency uses alternative approaches
to advertising that creates utility and value for
audiences. As a result, the value-centric agency
creates more effective advertising and a better
return for the same dollar for advertisers. The
sooner advertisers and marketing departments
realize this ongoing, paradigm shift in advertising
and find new agencies that get it, the sooner they
will be creating more effective advertising and
better spending their advertising budgets. But what
is value-centricity; how does it apply to advertising;
and what are the attributes of value-centricity and
the agencies that can create it? Read this white
paper to find out and learn more.
The future of
advertising is
about value
not messages;
and, this
future
requires
new agency
partners.
Executive Summary_
The Col-
lapse
9The Collapse & Rebirth of Advertising
Using advertising, as we know it today, to build
brands is ineffective. As media fragments and
people’s behaviors shift at the increasingly rapid
pace of new technological advances, effectively
“reaching” an audience is becoming near
impossible. Programmatic marketing is a more
efficient way to get a message in front of someone
that may care about it, but is not necessarily an
effective way to build a brand. If you can reach
someone through a programmatic buy, at targeted
TV, print, outdoor, online or mobile media buy, are
you really reaching them? Ad effectiveness is not
about reach, nor frequency. It’s not even about
the catchiness of the messages. Just because an
advertiser continually reaches an audience with a
message, it doesn’t mean the ad’s message has
actually “reached” the audience in a meaningful
way. It’s more likely the ad reached a passive
audience in a way that interrupted whatever it
was they were trying to do. It may have even been
ignored entirely. Consumers simply don’t want to
bothered by ads rendering in the middle of whatever
experience they are having. People aren’t watching
TV, browsing web sites, or using mobile applications
in order to see ads about brands - even brands they
like. They want to be doing whatever it is they were
doing when the ad attempted to interrupt them.
Almost 10% of all digital ad impressions are blocked
completely from view, with some sites reaching as
high as 50%.1
Consumers reject banner ads at rates
greater than 99%.2
The average click-through rate
for display ads is 0.11%. Mobile banner ads have an
average click-through rate of 0.35%.3
Audiences want to do something. People are looking
for entertaining experiences that positively impact
them and are worthy of their time because they
provide some kind value in return. In fact, today,
the most effective ads aren’t really perceived by
audiences to be ads at all; they look and feel more
like original content. Take for example, Kraft Foods
that has a four-times higher ROI through content
marketing - such as recipe cards - than through its
message-centric advertising. Kraft is building their
brands by providing benefit, not simply creating
messages. Or Netflix that produces more and more
original content following the success of “House
of Cards” and the academy-award nominated “The
Square”. Showtime is relaunching the influential
drama “Twin Peaks” twenty-five years after it went
off the air.
Why are billions of dollars continually
spent on an advertising model that just
doesn’t work anymore?
The Collapse_
10The Collapse & Rebirth of Advertising
There’s a huge difference between advertisers
buying an audience and putting messages in front of
them versus providing some type of utility or value
to an audience. Whether that utility comes from
relevant content, an immersive social experience,
mobile application, or a local market event will
depend on the brand and the audience. So why
aren’t brands spending their money creating what
the consumer wants in a way that builds the brand?
Why not create something of value and utility to an
audience? Why not do something as a brand instead
of just saying something? Advertising must focus
away from delivering messages to instead delivering
tangible value to audiences.
Messaging about a brand in a way that intrudes on
the audience’s intent in order to communicate a
product attribute they likely don’t care about is done
all the time on TV and radio. This message-centric
approach can be effective, but it is self-limiting in
that a brand has a message it communicates in
an ad - and that’s it. It can be argued that it does
little to truly build a brand. That limited message,
however effective within a traditional medium, is
never going to attain the same reach and frequency
as an ad that was created with an intention of going
outside the confines of message - to go viral or be
shared broadly on social networks.
Take for example Red Bull’s Stratos jump with Felix
Baumgartner. The entire event had global reach
in excess of 8 million viewers accessing the live
stream online, and 40 TV stations broadcasting the
live event. The entire lifecycle of the event promoted
intense conversation. It wasn’t considered to be
the giant advertisement for Red Bull that it was.
When compared to a traditional media buy, the
brand impact was not immediately self-limited,
it was immediately unlimited. Yes, of course
traditional media still works, but it doesn’t work
as well as creative ideas that challenge tradition.
Any advertiser would much rather be able to
convince people that a brand is what they think it
is instead of just being able to say what they think
it is. Convincing occurs by doing. Saying is just
words. 90% of information transmitted to the brain
is visual, and visuals are processed 60,000X faster
in the brain than text.4
Brand “qualities” exposed in
advertisements are not as meaningful to audiences
as the “actions” from brands that impact them in
meaningful ways.
Providing value and utility from advertising, of
course, requires that the ad must still help build and
align with the brand. It’s not sufficient to replace
a message-based campaign with a neat and funky
campaign. Felix Baumgartner and the Stratos
Jump live the adrenaline and the idea of “Red
Bull Gives You Wings” without saying, but by doing
it. It provided real value to its audience and was
worthy of their time while building the brands more
effectively than any simple message could.
8million
Viewers accessing the live
stream online
40TV
Stations
Broadcast the live event
The Collapse_
11The Collapse & Rebirth of Advertising
It is time for advertisers to figure out what
customers are interested in and give it to them,
just like Red Bull. It’s time for advertisers to stop
saying things about their brand via only traditional,
interruptive messaging. It’s time to start doing
new and innovative things for audiences and for
customers. Netflix understands that creating high-
quality, award winning programming will increase
memberships more than buying volumes of banner
ads. Netflix understands it is better to give people
what they want - powerful, engaging content - than
to continue to spackle the web with red banner ads
and affiliate marketing offers. 80% of online visitors
will watch a video, while only 20% will actually read
content.5
Take for example, Netflix releasing the
sequel to “Crouching Tiger, Hidden Dragon” at the
same time it is being released in IMAX theaters. Not
only does this ad campaign give people what they
want, it also ladders up and strengthens that Netflix
brand in a way members completely understand and
totally want.
The most incredibly powerful brands now and
those in the future will give their audiences what
they want. Apple attempted this by giving its
customers music in the form of a U2 album. While
the execution was flawed, it was an astounding
achievement in terms of reach and frequency. What
customers in key markets for Apple hasn’t heard
about them giving away the U2 album - for better
and for worse? The massive coverage and earned
media only created more fervor for their recent
smartphone release - and lots of engagement with
iTunes from playing and deleting. Instead of Apple
telling its customers more about itself, it took an
action to give people what it thought they wanted,
which acted as proxy for its customers to deduce
their own meaning in the message of the brand’s
action. Apple didn’t just say something. Apple gave
away value. In fact, content creation is taking an
increasing share of marketing budgets. Nearly
half of marketers devote at least 10% of their total
budgets to content development. One in five spend
25% or more.6
Marketers
›
›
›
Marketers devoting
10% budget to content
development
Marketers devoting
25% or morebudget to
content development
The Collapse_
12The Collapse & Rebirth of Advertising
Advertising is no longer a one-way communication
channel delivered across a limited number of
message-centric media formats. For example,
Twitter users follow a median of six brands on
Twitter, looking for things like interesting and
fun content, news and updates, and discounts
and promos.7
In order for advertising to be most
effective, advertisers must rethink and reconsider
their media mix and then broaden it to include
value-centric, interactive, and action-based
advertising. New techniques and experiments for
reaching consumers must be tested in order to
produce the best return on ad spend and deliver
effective advertising.
The prize fruit is
right there. shinier
and juicier than it’s
ever been before.
So it will be all the
more shame on each
and every one of us
if we don’t reach out
and seize it.8
- Kevin Spacey
The Collapse_
What is
14The Collapse & Rebirth of Advertising
The goal of advertising is generally believed to be
for either branding or direct response. Ads that
are for branding attempt to create a perception
about the attributes and properties of products
and services that resonate and are aligned with
the viewer of the ad in a way that creates brand
awareness or equity. A television advertisement,
such as a Super Bowl ad, is purported to be effective
media to help establish or enforce a brand. While
brand advertising does not preclude a user from
taking a subsequent action, the goal of a brand
advertisement is primarily to communicate
messages about the brand. On the other hand,
direct response advertising is solely meant to
compel the ad-exposed audience to take a specific
action, which typically is commercial in intent. Take
for example, an ad that contains a promotional
code, a time-limited offer, or a personalized URL
where the goal is to get the user to take the step of
engaging with the brand. Of course, it is possible
for a brand advertisement to contain message or
call to action for a direct response. And vice versa,
a direct response ad can also communicate brand
attributes.
Advertising in the 21st Century manifests itself
differently than in the past. An advertisement
today can be anything: from a movie
to programming to a video to a mobile
app. The Lego movie is, of course, a
giant, long-form advertisement for
plastic blocks that connect to one
another, but what child or parent
really sees it that way? It’s viewed, not
as an ad, but as entertainment that
is worth paying for. Advertising today,
when done well with a value-centric approach,
may not even be perceived as an ad by those that
consume it. Lego’s advertising still builds the brand
and increases brand equity in a way that is fun and
memorable, but not in a message-centric way nor
with a typical approach to ad creation.
Advertisements, since they are part of marketing
programs, are elements within an overall marketing
strategy, which can include many different channels
and media in which the advertising is delivered. At
the highest level, media is categorized into paid,
owned, and earned channels where advertising
can be deployed. A paid channel, like Paid Search
or Affiliate Marketing, will contain direct response
Advertising is defined by Wikipedia as
a form of marketing
communication used to encourage,
persuade, or manipulate an
audience (viewers, readers or listeners;
sometimes a specific group) to take or
continue to take some action.9
What is an Ad?_
15The Collapse & Rebirth of Advertising
advertising. Display media, whether delivered on
billboards or via an online banner, can be a mix
of branding and direct response. Owned media
where the advertiser actually creates their own
advertisement or marketing messaging via a
channel like Facebook or Twitter can function for
both branding and direct response. A brand like
Coca-Cola used owned social media for branding
while a brand like Uber used owned social media
for direct response via community engagement
and offers. Earned media can be considered “free”
advertising because it occurs as a result of both
good and bad advertising. Take for example, the
brand equity and direct donations that were a
response to the Ice Bucket Challenge.
Today’s Chief Marketing Officers and other
marketing leaders constantly struggle to determine
the best media mix for a given return on investment
in terms of brand equity or direct response across
the paid, owned, and earned media channels in
which to advertise. Within the cosmos of advertising
in the 21st Century it is no longer sufficient to only
consider branding and direct response as the ad
goal.
Figure 1.1 shows how to consider message-centric
and value-centric ads in the context of branding and
direct response:
Message-centric.
To communicate a brand message or a
message that leads to an immediately
direct or latently direct response.
Value-centric.
To create value by giving the viewer something
they find valuable - and as secondary benefit
enhance the brand or cause direct response.
or
What is an Ad?_
Figure 1.1: The Goal and Centricity Matrix
MESSAGE-CENTRIC
Insert into content as
interruptions in the experience
in order to create a sum
accumulation of perception
about a product or service. TV
ads are message-centric.
Targeted within existing
content causes a viewer to do
something now, soon after
exposure, or in the near future.
Online banners, affiliate offers,
and paid search are message-
centric.
BRAND AD
DIRECT-RESPONSE AD
VALUE-CENTRIC
Create experiences that are
valuable and relevant to an
existing customer or prospect
such that brand affinity and
brand equity are created or
maintained. Sponsored events
or programs are value-centric.
Provide experiences that
customers or prospects find so
valuable that the only logical
step is to engage with and
respond to the brand. Planned
services that enhance product
value are value-centric.
Now is the time to think about advertising
effectiveness across brand and response campaigns
by considering whether the ad’s goal is also:
Why Is It Hard
For Agencies and
Advertisers to Think
About Message-Centric
vs Value-Centric
Advertising?
17The Collapse & Rebirth of Advertising
Since the dawn of advertising,
branded and direct response ads
have largely been message-centric.
Advertising agencies and marketing
departments have created countless
jingles, creative slogans, interesting
catchphrases, trendy buzzwords,
comedic copy, and all sorts of other
compelling copy to communicate
messages to audiences.
These messages are then targeted to specific
audiences through agency or marketing team
activities like media planning, buying, and execution.
The resulting data, such as reach, frequency, GRP’s,
CTR, dwell time, “engagement,” and conversion
rates, are all analyzed to quantify the effectiveness
of advertising across the various channels in a
media mix. Then the results of the advertising
are presented to advertisers or the brand’s CMO
who then make decisions on whether to extend
the campaigns or renew the agency services. The
message-centric approach creates billability,
revenue, physical evidence and internal processes
for planning, buying, executing, and analyzing data
that support the effectiveness of the marketing
team’s and agency’s services and ads. These
organizations have been built and evolved over
the years by attracting message-centric thinkers,
hiring them and training them to effectively
create, evaluate, present, sell, produce and place
messages. Process, timetables, departments and
people all built around making messages. Why
would an agency or marketing organization risk
changing what they think, or is perceived by clients
or their managers, as working - messages - to
focus on a value-centric approach? In most
cases agencies and marketing teams
do not and can’t change their ways of
working - despite the consumer
wanting something different and of
value from ads.
It is this self-sustaining,
message-centric approach
to advertising that is pretty
much all most ad agencies
know how to do because
it is encoded in the “muscle
memory” of the agency. “Muscle
memory” means doing almost the
same thing over and over again for different
clients. In marketing organizations and agencies,
muscle memory causes people to repeat existing
behaviors. Every agency has such a muscle memory.
It is created from explicit and tacit knowledge,
data, and deliverables used to frame and deliver
Why is it hard for agencies to think about message-centric vs value-centric advertising?_
18The Collapse & Rebirth of Advertising
every client engagement. Muscle memory causes
the agency to generally mostly always think in one
way, or a small numbers of ways to deliver effective
advertising: the media plan to support message-
centric advertising.
Now that isn’t to say that muscle memory is
necessarily a bad thing. After all, the message-
centric memory was reinforced because it worked.
It’s risky to move away from what has worked -
and it’s even riskier for an agency to completely
forget what has succeeded in the past. As a
result, message-centric agencies lock into their
muscle memory of being message-centric and not
encouraging creative experimentation into value-
centric advertising, which is where the higher return
on advertising spend (ROAS) can be found.
Advertising has also reached a fundamental
inflection point in that it is pervasive everywhere -
and media dollars are being allocated to address
this new, often digital, nature. Newer “digital
agencies” have to deliver advertising where the ads
are no longer delivered just on TV, radio, billboards,
direct mail, and in print media. Digital technology
has enabled message-centric ads to be displayed
- and interacted with - in a multitude of formats
with the same creative “scent” applied across
channels to tie campaign themes together. Ads
are on your phone. Ads are in your glasses. Ads are
in the bathroom. Ads on are in your taxi. Ads are
on your refrigerator. Ads are on your thermostat.
Ads are in your music. Ads are everywhere. But do
people actually respond to message-centric ads
in digital advertising created by even the newest
digital agencies? With the average click through rate
of a message in a banner ad around 0.11% where
only 1 click is recorded per 1000 impressions, it’s
clear that message-centric digital advertising does
not generate an effective response. Meanwhile,
data shows that the rate for interaction with value-
centric ads - at more than 2.4% - is nearly 20x the
rate of message-centric ads.
Does that mean that brands should expect their
agency of record - who has, for years, managed
their creative budgets - to simply evolve their
message-centric ads to be more interactive across
new and emerging formats? Can a staff that is used
to executing message-centric programs adapt,
evolve, and rapidly change to accommodate newer
forms of advertising and use them to become value-
centric? While message-centric agencies would like
clients to answer “yes” and believe in their digital
capabilities to transcend messaging, it is almost
insane to think that these agencies can adapt. It’s
unlikely even if some agencies have “Centers of
Excellence” or have carved out new R&D or “digital”
groups to explore new ways of advertising, such as
value-centricity and creative experimentation. The
emergence of some agencies creating a room where
new and innovative technologies, like a GoPro or
Why is it hard for agencies to think about message-centric vs value-centric advertising?_
19The Collapse & Rebirth of Advertising
Samsung SmartTV, are on display is more and more
common. But what does that really show? Oculus
Rift and 3D printers in a room are just eye candy
and something to talk about. Neither is sitting on an
innovative advertising panel at SXSW or Advertising
Week. They are not indicators of competence
to think and act differently nor of the capability
for forward-thinking, value-centric advertising
innovation.
These rooms, incarnations, and technology
showcases may look good on paper, a Facebook
post, in the office, and in marketing materials but
isn’t it really just the same message-centric agency
attempting to change its muscle-memory of doing
the same thing over and over again: messaging via
interruption? For an advertiser to expect different
or new results from a message-centric agency
model because they bought a GoPro or Oculus Rift
to put on their Super Desk is in itself just a message
instead of really being valuable to anyone.
Figure 1.2 shows what consumers want from TV. It’s
not message-centric ads created by most agencies.
Why is it hard for agencies to think about message-centric vs value-centric advertising?_
Most Important Future TV/Video Services and Options
% of respondents across 15 markets
September 2013
Free from ads/commercials
Excellent quality (HD quality)
Time shift/on demand
Usability, super simple interfaces
À la carte TV-/content
Extreme quality (4K/4xHD)
Push to see the content best
suited for you
My TV/video content on all my devices
Access internet on your
traditional TV screen
Theatrical releases directly in the TV
One search, watch & pay
interface for online
Advanced online video
search (actors, lines...)
3D TV
Personalized TV-screen info
Video telephony
Access apps on your standard TV screen
Accessing/watching different
camera angles
Interactive TV
10.7%
9.8%
9.1%
8.5%
7.7%
6.6%
6.2%
5.9%
5.7%
5.3%
4.7%
4.4%
3.3%
2.9%
2.7%
2.4%
2.1%
2.1%
20The Collapse & Rebirth of Advertising
It’s obvious the times have changed; the media
has changed; the needs of brands have changed;
the demands of clients have changed; the
requirements of consumers are different. Thus,
the smart advertiser that wants the most effective
ads will need to find partners who understand and
emphasize value over messages. They will need to
find partners who understand Godin’s unchartered
territory of “alternative approaches.” Netflix, again,
is a fantastic example because their app model
is disrupting and ruining the message-centric
programming model.
Consumers don’t desire or care very much about the
advertising output of message-centric agencies or
marketing teams. They want value - and that value
can only be created by newer agencies that execute
much more than message-centric approaches
to advertising. Facebook and Pinterest are being
challenged by newcomers, like Ello. Why? Because
Ello is about giving social networkers what they
want. Ello provides an ad-free experience where
value is created by selling features that people
find valuable instead of selling member data to
advertisers. Whereas Facebook and Pinterest are
simply filling the message-centric network model by
using and selling member data so little messages
can interrupt the social experience or augment the
targeting of message-centric ads served on other
sites. In the process, they are ruining the purity
of what made them great for consumers instead
of advertisers. The only way advertising agencies
and marketing teams can respond efficiently and
successfully is to rethink, rearrange, reorient, and
reengineer the way they think about and deliver
advertising to move from not only being message-
centric to being value-centric.
Why is it hard for agencies to think about message-centric vs value-centric advertising?_
Why is it Hard
to Deliver
Value-Centric
Advertising?
22The Collapse & Rebirth of Advertising
It is hard to create value-centric
advertising because doing so
requires agencies and marketing
teams to change the way they think,
operate, and innovate.
McKinsey believes “these forces are making
companies transform not just the marketing
function but also everything from corporate
affairs and product development to distribution
and manufacturing models.”
10
Digital media and
technology has massively disrupted message-
centric advertising. The digital ecosystem is rapidly
becoming the focal point of media planning and
buying - and the formulaic network model that
sells campaigns is hard to move away from. Today’s
consumers; however, live in a world of “always-on”
mobile devices that allow an audience to be reached
in many different ways: from mobile apps to paid
search to social media and more. Digital has created
new ways to connect, changed the way consumers
view and interact with ads, and has generated new
methods and metrics for measuring effectiveness.
It’s hard to keep up.
It’s hard to compete when content creation is
different. People have to think differently when
ad distribution is programmatic. It’s important to
consider consumption across “omnichannels” by
known people and to specific cohorts and segments.
New ad models and methods for monetization and
attribution are available. Past preferences, previous
behavior, and known interests can be analyzed
for retargeting. Personalization on a one-to-one
basis, based on past purchases and expressed
interests, is possible with the right ad technology.
As a result of all of this flux and constant change,
clients can be aware of these current possibilities
and opportunities in advertising and, as a result,
have different expectations for agency services and
outcomes.
Clients don’t just want message-centric ads; they
want ads that use new media and technology that
deliver value in ways that build brand equity and
encourage interaction and response. They want
to produce ads that people talk about, but in a way
that reaches the right audience and goes beyond
the short-term yield of conversation caused by a
popular Super Bowl ad. Oreo, was able to get into
people’s feeds with their “dunk in the dark” post as
part of the Daily Twist campaign. But this did not
create conversation among consumers, instead
the advertising world navel-gazed at their own
innovation and talked about it among themselves;
unfortunately, the majority of consumers were
less intrigued by it. The value exchanged for this
particular effort was more valuable to the marketer
and the agency within the industry than true
Why is it Hard to Deliver Value-Centric Advertising?_
23The Collapse & Rebirth of Advertising
value for the consumer. It takes a different kind of
focused, fearless and creative agency to create real
value-centric advertising.
Agencies also now have to deliver effective
advertising globally. That’s hard when people just
don’t typically believe a pure message-centric ad
anymore. It doesn’t matter if the ad was seen on a
street in Glasgow or delivered on a .com address.
People all over the world can see it. And they want
to know that the brand stands for what they, as
people, are saying and doing. Travelers who may
want to fly United Airlines aren’t going to simply
believe United is “friendly” because an ad says
so. It would be much more impactful if United did
something to prove they were the friendliest airline
for global travelers - and that demonstration of what
it means to be friendly will differ by culture.
Value-centric advertising provides what an audience
needs regardless of location. It’s just as likely that a
viral event in Glasgow will be seen in Germany or in
Georgia. That is hard for global agencies who have
offices that hardly talk to each other as they operate
distributed, matrixed organizations autonomously
across the world. Thinking globally about value-
centric advertising means thinking locally. It means
producing ads that give audiences what they desire
localized to them regardless of country or culture
where the ad was served or displayed.
Social media has been another game changer for
marketing departments and agencies focused
on message-centric advertising, which is hard to
keep pace with. Messages about brands aren’t
what socially-enabled consumers want from
advertisers. Social audiences want to be actively
engaged, have conversations, learn what others
similar to them like, buy, share, or find value in. It’s
hard to participate in the community and create
engagement and conversation if all an agency or
marketing team knows are messages and the ways
to create them.
Delivering value and utility to brand advocates and
influencers is not easy. It takes different thinking.
Value-centric organizations understand social and
its constant state of change. They know how to
target highly-specific advertising to audiences who
will find it worthwhile, differentiated, and valuable.
The best social ads online are created by people who
“get it” and aren’t just trying to fit message-centric
ads into 140 characters as part of a media plan.
Mobility has also changed the ways consumers
are exposed to and interact with advertising. An
ad that works on a smartphone may not work on a
tablet, which may not work on TV. But a message-
centric agency may show all three devices the
same message. It’s just hard to change the muscle
memory and be value-centric.
Why is it Hard to Deliver Value-Centric Advertising?_
24The Collapse & Rebirth of Advertising
According to Nielsen, nearly one in two smartphone
users use their phones while watching TV. Users
are social networking, shopping and researching
products, and communicating to other people about
the media they are watching - while mostly ignoring
TV advertising altogether. Consider that 94% of
TV viewers and 73% of online video viewers used
“distraction” media like smartphones and tablets
during ad breaks.
11
60% of ESPN’s traffic actually
now comes via smartphones and tablets. Heineken
recently went from zero awareness in a region of
the US to 23% due to mobile efforts alone.
12
Value-
centric efforts take advantage of these facts by
becoming the focus of mobile attention instead of
just surrounding it with ad messages meant for
other forms of media.
Advertising in traditional print media, such as
magazines and newspapers, continues to decline
precipitously. Message-centric ads aren’t just less
effective, they just don’t have the same reach and
frequency across all audience segments as they
once did. That’s a hard market situation to be in.
It’s an even harder position to be in as a message-
centric agency that must replace lost revenue from
losing channels. TV is being challenged for ad
dollars - as advertisers realize that message-centric
approaches have limited return on advertising spend
(ROAS). Television advertising’s upfront volume fell
by 6.1 percent to $18.1 billion. Cable went down for
the first time in four years to $9.675 billion.
13
It appears that ad dollars are shifting from TV, which
is highly message-centric, to advertising across
content of all types, which can be value-centric.
Remember Kraft Foods sees four-times the return
on non-traditional media from their value-centric
approach. Can a message-centric agency adapt or
should the marketing department look elsewhere
for agency partners that understand value-
centricity? The answer is obvious. Message-centric
agencies are having a hard time delivering the same
level of excellence as newer value-centric agencies
that are unburdened by rules of tradition.
Why is it Hard to Deliver Value-Centric Advertising?_
Reasons for Watching TV Ads, by Genre
% of online respondents in the US, UK, Germany and Brazil
July 2013
Movies Sports Drama Entertainment/
reality
Kids
29.8%
24.4%
23.4%
18.9%
13.6%
18.7%
13.0%
18.9%
18.1%
9.4%
7.2% 7.2% 7.7%
8.7% 8.9%
I am really enjoying the show and I
want to watch through the ad break
It doesn’t seem worth it just to
change the channel
I find adverts entertaining
What Does
it Take to Be
Effective with
Value-Centric
Advertising?
26The Collapse & Rebirth of Advertising
Advertising must be effective in a world that Seth
Godin describes as one where:
...most products are invisible.
Over the past two decades, smart
business writers have pointed out
that the dynamic of marketing is
changing. Marketers have read
and talked about those ideas, and
even used some of them, but have
maintained the essence of their
old marketing strategies. The
traditional approaches are now
obsolete, though. One hundred years
of marketing thought are gone.
Alternative approaches aren’t a
novelty - they are all we’ve got left.
14
- Seth Godin, Purple Cow.
What Does it Take to Be Effective with Value-Centric Advertising?_
This brave new world demands advertisers rethink
what it means to create effective ads. It just isn’t
logical to perpetuate message-centricity in ads
when audiences want more. Advertising isn’t
effective because it is bought and executed across
multichannel or even omnichannel media plans.
Instead, ads are considered effective because they
deliver better return, often in unexpected and
unusual ways, that contributes to expected and
unexpected outcomes where value is exchanged or
created. Yet most advertisers consider that an ad is
effective because data analysis proves it succeeded
in a single channel or perhaps within a small set of
channels. The idea that a television commercial can
drive a web search and then compel an in-store visit
is necessarily lost on most advertisers. It’s just hard
for organizations to create ads and campaigns that
are focused on delivering value across the different
media within a customer journey. Why? Because
messages just say something. They don’t encourage
or even ask people to do something in the way that
a value-centric ad campaign can. If all one knows
is how to create, plan, and distribute a message,
then how can they be expected to instead create
value-centric ads? Yet 78% of CMOs believe custom
content is the future of marketing.
15
Exacerbating the limitations of message-centric
ads are the way ad effectiveness is measured.
Message-based agencies default to traditional
formats and metrics that prove their success - at
27The Collapse & Rebirth of Advertising
0.11% average click-through rate (CTR). Thus
agencies cobble together measurements from
disconnected systems; make assumptions about the
customer journey; and perhaps apply the attribution
model that shows the most positive performance
in order to prove value from messaging. This loose
approach isn’t how value-centric ads are proven to
be effective. Value-centric advertising is not solely
measured by actions, it’s measured also by how the
ad makes a consumer feel and includes qualitative
measures such as positive sentiment, an increase
in the likelihood to recommend, brand equity, and
customer satisfaction.
New technologies and techniques for advertising -
from buying and selling intent, to programmatic and
automated-algorithmic exchanges - are creating
new distribution models that have no measurement
precedent, which is why it’s even more important to
understand and analyze how value-centric ads make
an audience feel and react to those feelings about
the brand. Even the measurement of television
advertising is changing due to social TV, DVRs,
and the multi-screen consumer. Advertisers are
no longer satisfied with traditional data collection
and fairly random reports about ad performance in
one channel or even the overall performance of the
media mix. Advertisers want deep analytics about
how an ad contributes to an eventual purchase
despite many of the challenges to measurement
that “digital” has brought. They want to increase
positive sentiment and promote positive feelings
about the brand that promotes conversation offline
and online. Thus proving advertising efficacy in
new ways when you are trailblazing in Seth Godin’s
“alternative approaches” is core to being effective
with value-centric advertising.
Advertising is pervasive everywhere. Being effective
with a value-centric approach means understanding
how to make pervasive advertising into persuasive
advertising by creating “alternative” advertising
ecosystems. No longer are advertisers sufficiently
served by ads just in TV, radio, billboards, direct
mail, and in print media. Digital technology has
enabled ads to be displayed - and interacted with
- in a multitude of formats. From touchscreens on
floors in shopping malls to sending text messages
to interactive billboards on highways to creating ad-
based interactive experiences in your glasses. Ads
are everywhere. The most effective agencies give
consumers value by creating ads that utilize these
new platforms to give audiences what they want.
To be effective value-centric ads must use new and
emerging technologies. Even agencies that have
a “digital” team that can leverage new technology
often don’t step outside of the realm of what they
know: the channels and formats in the media
plan. The skills to create effective value-centric
advertising are in huge demand. Advertising
agencies face huge gaps in the skill sets needed to
What Does it Take to Be Effective with Value-Centric Advertising?_
28The Collapse & Rebirth of Advertising
create effective ads. It is no wonder that most ads
are not very effective nor are they value-centric.
Over 80% of companies face significant challenges
in consistently locating, hiring, and retaining top
talent. The largest skill gaps are in mobile, analytics,
and marketing automation - all of which are needed
to create effective, alternative advertising. 74%
of agencies surveyed believe mobile is a very
important/important skill to have, but only 31%
believe their talent is stronger/much stronger than
competition—a gap of 43 percentage points. There
are more open positions than available talent. 40%
of companies have more projects and positions open
than they can fill with qualified talent, and analytics
is the most desirable skill.
16
Talent issues are not only staff-related, they also
apply to leadership. Managers who understand
value-centricity and can execute iterative value-
centric programs are rare. Being value-centric
takes leaders that understand how to manage
people in order to get them to think and collaborate
differently. Value centricity also caters to the
intrinsic motivation of why people even want to work
at an agency or on a marketing team. Agency staff
don’t want to create message-centric ads that are
ignored. They want to create something that impacts
people’s lives and makes a difference. Value-
centric ad creation can be considered a virtuous
activity because it is aligned with audience goals,
not opposed to them. Value-centricity is rewarding
for agency staff and marketing teams to create
because audiences care about it and it is valuable
and meaningful to them. It’s rewarding work for
staff to deliver in a way message-centric ad creation
is not and never will be. With a dearth of talent
across staff and leadership and different orientation
toward employee motivation and job fulfillment, is
it any wonder that it’s hard for companies to deliver
effective value-centric ads from their resource-
constrained, message-centric ways of working?
In a world of fragmented media it can be more
important to address a smaller audience of
influencers and high-value customers than to
reach a large number of people with a message.
In this case general reach and frequency can be
counterproductive to ad effectiveness. To figure out
the right campaign strategy, the right segment to
target, the best “creative,” and the best methods
for delivery an advertiser must go to agencies that
have both creative power and analytical talent to be
effective with value-centricity. Technology and data
are used to find out what the brand is about and
then used to make content that is right for people
and ladders-up the brand.
Analysis has proven that traditional marketing
communications just aren’t relevant anymore.
17
Effective advertising just isn’t as simple to deliver
as it was in the 20th century. No longer can a brand
What Does it Take to Be Effective with Value-Centric Advertising?_
29The Collapse & Rebirth of Advertising
advertise in a limited number of media vehicles
and placements - print, on the radio, or on TV - and
then expect an ad-exposed customer to come into a
store and buy. The number of possible touchpoints
that influence brand perception are enormously
larger and more complex than ever before due to
“digital.” Advertisers just can’t expect ads to work
in the same way as they did years ago because their
journeys are so different. It takes an agency to
understand how to use technology to weave value-
centric ads into audience lifestyles.
Today, when consumers are exposed to advertising
in digital formats across multiple screens via an
ad, they can then check out the product online and/
or read reviews and other people’s experiences.
The social nature of advertising cannot be
underestimated as a key component to effective,
value-centric, brand-building ads. Audiences
price compare, look at the brand’s website, read
reviews, and even reach out to people who already
own the product. They browse and “showroom”
in-store, then buy the product online; or they buy
online and pick up in the store. As Seth Godin said
“as consumers, we’re too busy to pay attention to
advertising, but we’re desperate to find good stuff
that solves our problems.”
18
Advertisers need
agencies that stop adding to a shopper’s deficit in
attention via messages and instead concentrate on
giving consumers what they need via value-based
advertising that they notice and respond to.
Getting noticed; however, requires value-centric
ads that use alternative approaches to rise above
the noise and saturation of all those messages-
because many people simply block or ignore ads.
19
Adweek and Harris identify that 63% of people
ignore all types online ads. 22.7% of Internet users
use ad-blocking software, which is growing in
usage at 43% per year.
20
The customer journey
has changed so much that philosophies about
where advertising fits or doesn’t fit historically
just doesn’t work anymore. Message-centric
ways of thinking about the customer, the path to
purchase, and the shopper experience are no longer
relevant nor effective. Advertisers must adapt to
include value-centricity in their ads or suffer from
underperforming and ineffective ads that get 0.11%
response rates.
What Does it Take to Be Effective with Value-Centric Advertising?_
Understanding
the Elements
of Effective,
Value-Centric
Advertising
31The Collapse & Rebirth of Advertising
Effective, value-centric advertising
is part of the new reality between
advertisers, consumers, and
agencies. Creative ideation,
innovation, and the aesthetic
qualities of effective value-centric
ads require artistry, while the
technology, programming, and
analytics underlying these ads
require science.
Effective advertising balances an emotional quotient
(EQ) and an intelligence quotient (IQ) in order
to appeal to broad audience, engage them, and
create efficacy. Art and science are intertwined
and inextricably linked in value-centric advertising.
By diving into the ever increasing amounts of
available data, we now know more than ever before
about what our audiences, want, dream, feel, and
purchase. By applying this knowledge to the art
of advertising we can conceive completely new
methods of connecting to an audience by delivering
what they want.
Effective value-centric advertising creates an
emotional connection that isn’t only nor simply a
Understanding the Elements of Effective, Value-Centric Advertising_
message interrupting a user experience. The soap
operas of yesteryear gave women who were at home
programming they wanted to watch, which in turn
helped to sell the brand of laundry soap - Ivory
Snow - that sponsored the show. These soap operas
were value-centric and they worked wonders for the
brands involved. The original Netflix programming
of today is more closely aligned to the soap opera
model of long ago, than to the network model of
ad interruption. Thus, the best value-centric ads
of tomorrow also meet core emotional needs and
become part of people’s lives like the programming
of long ago. These value-centric ads are not
differentiated based on the channel or media.
Instead the form of the value-centric ad is more
important than the format. Effective value-centric
advertising:
Orients around actions and “doing” not just
messaging.
It’s estimated that 37% of message-centric ads
are ignored.
21
This active ignorance likely occurs
because the ad messages interrupt the content,
which is the main purpose and goal of the viewer.
Traditional, message-based advertising can be
strong enough to breakthrough to viewers - it’s
hard to ignore ads that interrupt what you want
to do, listen, or see - but it is suboptimal for
producing the best return on ad spend. Instead of
creating messages that are placed into content,
effective advertising uses the power of creative
32The Collapse & Rebirth of Advertising
content to reflect positively on the brand. Average
website conversion for companies with defined
content processes is more than twice that of
companies without (5.9% vs. 3.8%).
22
Take for
example, BitTorrent’s content-sustainability
experiment “Children of the Machine” whose goal
is to get people to use their Bundle product and
its “paygates.” Or the case of Netflix that decided
instead of putting little ads that says “Netflix has
the best streaming content” to actually produce
what some people consider the best content. The
return in terms of viral brand equity and revenue
from new account registrations has had a “very nice
impact” according to Reed Hastings, the founder of
Netflix.
23
Or take the example of Converse’s Rubber
Tracks program that holds concerts with popular,
edgy artists that brand advocates can attend for free
- and who will soon allow for bands to book time,
for free, at a recording studio in their soon-to-be-
opened Boston headquarters.
Gives people what they want in order to be
effective.
Advertising that provides what people are interested
in and then gives them what they want is highly
effective. That’s the core of being value-centric. 90%
of consumers find custom content useful and 78%
believe that organizations providing custom content
are interested in building good relationships with
them.
24
For example, it could be more effective for a
credit card company to build its brand by assigning
to a customer a live concierge to work with when
they enroll for the card instead of saying “You can
call us on the phone and talk to a live person.”
Those advertisers that start providing what their
consumers want create incredibly powerful brands
and loyal audiences with high lifetime value and
potentially lower cost of customer acquisition.
Value-centric ads provide tangible value because
they are a better and more “effective” way to meet
the emotional needs of key audiences in a way that
becomes part of people’s lives and truly shapes
brand perception and affinity over the long-term.
Actively engages the consumer via branded
platforms.
Participation and engagement with ad campaigns is
a key attribute of effective, value-centric advertising.
The premise that it is better to create something
that engages the person via the brand than to
deliver a message in a format where media is
being consumed passively is key value-centricity.
Value is created when a consumer is an active
participant engaging with the brand. This fact
doesn’t necessarily mean that social media, in the
traditional sense of Facebook or Twitter, is required.
Rather it means the most effective advertising
causes people to touch, look, feel, experience, and
share from within branded-platforms. Research
shows that by using five hashtags on Instagram,
brands can gain a 180% increase in likes on a post.
Understanding the Elements of Effective, Value-Centric Advertising_
33The Collapse & Rebirth of Advertising
Is customer-focused, brand-centric, and
measurable.
Ads targeted across new media formats in ways that
deliver cohesive, branded experiences regardless
of channel will resonate with audiences and the
customer. These ads cause customers to engage
with brands within their preferred modality,
environment, and device. Research shows 90% of
internet users say that watching a video about a
product is helpful in the decision process.
25
Effective
value-centric advertising creates narratives that
compel customers to take the next steps in their
journeys on the path to purchase. Value-centric
measurement focus on the customer, their lifetime
value, and can be evaluated against the cost of
customer acquisition to ascertain ROAS. The impact
of ads on brand equity and satisfaction are qualified,
quantified, and reviewed with advertisers.
Creates transcendent brand narratives
that are channel agnostic and
omnichannel.
Effective, value-centric advertising in the future will
come from ideas that transcend specific channels
because they will be shared across channels. Again,
the form is more important than format. Brand
events will be streamed. Content about brands will
be shared socially - just look at 2014’s Apple Watch
and iPhone 6 event, which is nothing more than
a big corporate product advertisement. It doesn’t
feel that way to most people, but Apple’s events are
just that: non-traditional, alternative approaches
to value-centric advertising that are much more
successful than buying only message-centric
media. Apple proves that the channel in which
the media was produced will be secondary to the
creation of narratives that can be weaved across
different media, such as the earned media that
Apple received from countless journalists, socially-
engaged consumers, and bloggers about the iPhone
6 or the free U2 album. Interruptive messaging has
been replaced at Apple, not entirely, but for the most
part by an alternative approach that work by giving
people what they want. Apple has sold more than 10
million iPhones in one week by taking a value-
centric approach supported by messaging.
Focuses on experimentation and
testing.
Today’s ad testing and optimization
technologies makes it possible to
test multiple versions of ads - from
AB to Multivariate. Advertisers can
experiment with different media and
media mixes to drive the highest
possible levels of engagement,
sharing, conversion, and revenue.
The resulting data can be collected,
measured, and analyzed to
identify what has worked, predict
what could work, and prescribe
Understanding the Elements of Effective, Value-Centric Advertising_
34The Collapse & Rebirth of Advertising
suggested approaches to optimize the advertising.
Attribution models can be evaluated to understand
which ads are the most effective at which point in
the customer journey, and campaigns can be tuned
and tested in near real-time. Testing content efforts
propels ROI improvements: Companies who test are
75% more likely to show ROI for content marketing
than those who fail to test their strategies.
26
Uses new and emerging technology.
The best advertising can be experienced across
mobile and wearable internet-connect devices in
order to cater and appeal to “always on” audiences.
The use of new technology for connecting to an
audience is a top of mind concern - and forms a
large part of the strategy - for delivering effective
value-centric advertising. Take for example that
Twitter drives amplification for brand messages.
78% of user engagement with a brand’s Tweets is in
the form of retweets.
27
Uses analytics to eliminate the ambiguity
of performance.
While it is almost trite to say “you can’t manage
what you can’t measure” or “50% of my marketing
budget is being wasted, I just don’t know which
50%” it is truer than ever. Effective ads can be
measured even when there are enormous volumes,
velocity, and variety of data working within all
the technologies used to deploy the ad. The
emergence of newer data sciences, like prediction,
optimization, and automation enables advertisers to
measure cost, revenue, and profit of ads in order to
determine their effective performance and quantify
the financials behind being truly driven by value-
centricity.
Requires new agency processes,
procedures, and organization.
A value-centric agency looks and functions
differently than a message-centric agency. In fact,
one of the first attributes of a new agency is that it
does not differentiate itself based on the channel or
media on which it focused. Again the form of the ad
is more important than the format.
The people working at a value-centric agency are
not necessarily defined by their titles, but rather by
their skill sets. Hierarchy can still be an organizing
principle, but client excellence is more important.
Each team member must have a speciality, and
must be skilled enough to understand and care
about the roles and responsibilities of other team
members. Management must know how to work
with and across these disciplines - and be able
to motivate and lead people to work together
against common, shared goals. Management isn’t
a checklist of executing campaign activities - but
rather of making sure client value is created.
Success instead will be understood as a team
outcome.
Understanding the Elements of Effective, Value-Centric Advertising_
35The Collapse & Rebirth of Advertising
A value-centric agency will have thus less
reliance on “departments.” People are the key.
Instead of arranging an agency based on vertical
competencies, like email or TV, the idea of
“horizontality” will be more important. Horizontality
means that team will be created to serve clients
in a way where engineers work hand-in-hand with
artists who work hand-in-hand with analytics.
Research suggests that marketers work in very
small teams: 81% of all content teams contain fewer
than six people.
28
A value-centric agency will build
teams that have all the right competencies to deliver
client value over the long term.
In many ways, the value-centric agency model can
consist of client-specific miniature agencies that
organize uniquely and collaborate differently based
on the needs of each clients. Each miniature agency
will have exactly the right team members and skill
sets to deliver value to a unique client.
The most effective advertising today and tomorrow
will not be based on a philosophy of “digital first”
or “mobile first” or even “TV first.” Instead the
best performing advertising will be created by
value-centric agencies that seek to create and
deliver value via high-quality content that provides
audiences with what they want in a way that
compels the audience to take the desired action
toward advertiser’s goal. Advertising will continue
to evolve away from a focus on message-centricity
to a core focus on value-centricity. Innovative
content-based, alternative approaches for “giving”
audiences what they want will eventually replace
traditional media “buying.” Messaging will no longer
be the primary thesis for advertisers nor agencies.
Instead advertisers will create ads that are based
on giving people value and utility in a way that helps
audiences get what they want out of the brands as
they journey on the path to purchase. Are your ads
value-centric? Is your agency even ready to adopt
today the value-centric approach that will succeed
tomorrow? If not, it is now the right time to find a
new agency and move to a value-centric approach to
advertising that will yield the most effective ads of
tomorrow.
Understanding the Elements of Effective, Value-Centric Advertising_
Key
Takeways
37The Collapse & Rebirth of Advertising
Advertising effectiveness is not simply a matter a
reaching a targeted audience with a message and
communicating that message frequently. Most ad
messages interrupt whatever it is the audience was
doing before the advertisement was shown, which
results in the ad being passively noticed or ignored.
Thus, brands that focus on alternative approaches
to advertising that goes beyond messaging offer an
opportunity to connect to an audience and achieve
better advertising results.
Advertising that delivers value and utility to an
audience as opposed to communicating brand
messages generates a better return on advertising
spend. Brands such as Kraft, Red Bull Netflix, and
Converse have advertising programs that focus on
giving audiences something of value - whether that
is high-quality programming, content marketing,
custom events, or free music. The return from
this approach to advertising is higher than only
messaging.
Ads are for branding, direct response, or a
combination of both and are mostly message-
centric. Being message-centric means that an
ad, regardless of the goal, is inserted into another
experience where a message is communicated often
via interrupting the audience. This dated approach
doesn’t work as well as a value-centric approach to
advertising.
Being value-centric means creating advertising that
impacts the audience in positive ways by giving them
something of value or utility that they want. Instead
of saying something about the brand, a value-centric
approach is action-based and can be interactive in
doing something related to the brand.
Most agencies do not operate with value-centricity
as a primary goal for advertising because most
agencies only create message-centric advertising.
It is hard for these agencies to adapt to new
technology, to globalize and localize advertising, and
to take advantage of mobile and social channels.
Advertisers that want to create value-centric
advertisements must rethink what it means
to create and deliver effective advertising to
audiences. Advertisers need to move away from
message-centric approaches to value-centric
approaches, which likely involves using different,
smaller agencies who are not encumbered by
historic methodologies and models for delivering
advertising.
Value-centric advertising is about the form of the
ad and not the format. Thus, creative ideation,
innovation, and experimentation are necessary
for producing value-centric advertising. Creativity
mated with science and technology are necessary to
create value-centric ads.
Key Takeaways_
1
2
3
4
5
6
7
38The Collapse & Rebirth of Advertising
Value-centric advertising is oriented around
actions and not just messaging. It is focused on
experimentation and testing in order to give people
what they want, and actively engage them via
branded platforms that can exist both online and
offline.
Focused on the customer and the brand, value-
centric advertising is measurable both qualitatively
and quantitatively across omnichannels; yet,
the channel where the ad was delivered is less
important than what was delivered.
Value-centric advertising uses new and emerging
technology that enables data to be collected and
analyzed to identify performance and reduce the
ambiguity of media measurement.
Creating value-centric advertising requires agencies
to define, create, and execute new processes,
procedures, and organizational structures. Value-
centric agencies deliver client-value over the long-
term.
Advertisers who are not creating value-centric ads
and working with agencies that understand value-
centricity are missing opportunities to lower the cost
of customer acquisition, build brand awareness and
affinity, and increase engagement with and for the
lifetime value of customers.
Key Takeaways_
8
9
10
11
12
39The Collapse & Rebirth of Advertising
_End Notes
“Ad Block Report”
- ClarityRay, May 2012
“B2B Content Marketing 2014.
Benchmarks, Budgets, and Trends - North America”
- Content Marketing Institute, September 2013
Susie Schoppler, “Digital Advertising: Click-Through Rates”
- COULL.com, February 2014
Mike Parkinson, “The Power of Visual Communication”
- Billion Dollar Graphics
Sarah Mincher, “25 Amazing Video Marketing Statistics”
- Digital Sherpa, January 2014
Tom Pick, “83 Exceptional Social Media and Marketing Statistics
for 2014”
- Business 2 Community, April 2014
Courtney Seiter, “A Scientific Guide to Writing Great Tweets: How
To Get More Clicks, Retweets and Reach”
- Buffer Social, May 2014
Michael Brenner, “WTF Does Kevin Spacey Know About Content
Marketing?”
-B2B Marketing Insider, November 2004
“Advertising”
-Wikipedia, http://en.wikipedia.org/wiki/Advertising
David Court, “The evolving role of the CMO”
-McKinsey Quarterly, August 2007
“The Effectiveness of Online and Televised Video Advertising”
-IPG Media Lab & YuMe, May 2011
Christopher Heine, “8 Big, Fat Stats From Advertising Week”
-AdWeek, October 2014
Sam Thielman, “Where Have All the Upfront Dollars Gone?”
-AdWeek, August 2014
Seth Godin, “Purple Cow - Transform your Business by Being
Remarkable”
Thom Pick, “83 Exceptional Social Media and Marketing Statistics
for 2014”
-Business To Community, April 2014
“2014 State of Digital Marketing Talent”
-Online Marketing Institute, November 2013
Bill Lee, “Marketing Is Dead”
-Online Marketing Institute, November 2013
Seth Godin, “Purple Cow - Transform your Business by Being
Remarkable”
Adweek Media/Harris Interactive -2010
PageFair -2013
Chris Bell, “Why Are Online Ads Being Ignored?”
-DidIt, March 2014
“Crossing the Chaos: Managing Content Marketing
Transformation”
-Aberdeen Group
Julianne Pepitone, “Netflix stock surges 25% on solid
subscriber growth”
-CNN Money, April 2013
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
End Notes_
40The Collapse & Rebirth of Advertising
“Better Lead Yield in the Content Marketing Field”
-CMO Council, June 2013
Sarah Mincher, “25 Amazing Video Marketing Statistics”
-Digital Sherpa, January 2014
“2013 State of Inbound Marketing”
-Hubspot
Courtney Seiter, “A Scientific Guide to Writing Great Tweets: How
To Get More Clicks, Retweets and Reach”
-Buffer Social, May 2014
“2013 State of Inbound Marketing”
-Hubspot
24
25
26
27
28
End Notes_
© 2015 2MRW LLC. All rights reserved. Unauthorized reproduction is strictly prohibited. Information is based on best available
resources. Opinions reflect judgement at the time and are subject to change. For additional information, go to www.2mrw.co

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THE COLLAPSE AND REBIRTH OF ADVERTISING

  • 1. The Collapse &of Advertising Rebirth How the crumbling foundation of the advertising industry as we know it is making way for a new, more valuable one. written by Judah Phillips
  • 2. 2The Collapse & Rebirth of Advertising Most global industries have changed and are evolving at a quickening pace due to technological advancements in device and distribution. All this change revolves around a better end user experience making things easier, more enjoyable and ultimately valuable to the individual. The film, music, photography, news and media industries will never be the same. More music, film and photos are produced, made, taken, and viewed than ever before. These industries continue to evolve dramatically and there have been many winners and losers throughout the process. The structure and model for advertising, however, has not evolved with the pace of these other industries. Billions of dollars are still being spent placing ad messages in the middle of programming that people are enjoying while people are paying less and less attention to what brands have to say. Many believe the advertising model also has a negative effect on the quality of programming and digital content, but billions of dollars continue to be spent because marketers are unsure what else they could and should be doing. 2mrw believes now is the time for dramatic change in the advertising business and, as a result, commissioned this study in collaboration with SmartCurrent and Experfy. We believe there has never been more opportunity to effectively build powerful brands than today and it’s not that complicated. Hopefully, we can shed light on an evolved approach and way of thinking through this POV. We hope you enjoy..... SmartCurrent delivers business and technology consulting services around digital analytics, conversion optimization, business intelligence and big data, and applied data science. SmartCurrent has worked with many companies across different sectors and industries to help improve business performance - from global consumer brands, advertising agencies, financial services firms, internet and ecommerce companies, media and publishing giants, technology and software innovators, and fast-growing, dynamic start-ups. › www.smartcurrent.com 2mrw is a hybrid consultancy and production company that believes every individual has their unique point of view. Built from the ground up and specifically designed to evolve with the changing demands of modern marketing communications, their teams are constructed to include a unique mix of strategists, data scientists, behavioral psychologists, technologists, designers, journalists and storytellers. These experts work together with their clients to craft tailored, branded experiences and build tools that uniquely activate a brand’s promise, are memorable, useful and leave people wanting more. › www.2mrw.co Experfy is a big data consulting marketplace where enterprises hire vetted experts and vendors on-demand. All experts undergo a rigorous application process to demonstrate both technical expertise and domain knowledge. Experfy platform includes procurement, compliance and marketplace tools to leverage the power of extended, on-demand virtual talent. Experfy provides a self-service model for smaller companies and a high-touch concierge service with project management for larger enterprises. Experfy is based in the Harvard Innovation Lab. › www.experfy.com _Why You Should Read This
  • 3. 3The Collapse & Rebirth of Advertising _Contributors Judah Phillips Judah Phillips, CEO and Founder of SmartCurrent, helps people improve their analytics and marketing in order to identify and take advantage of the business opportunities that significantly impact results, achieve goals, and create value. He helps companies find innovative ways to use data and analytics to improve efficiency, increase revenue, reduce cost, and boost profitability. Judah specializes in strategic reviews and the resulting work required for enhancing the effectiveness of your business. Judah is the author of the books “Building a Digital Analytics Organization” and “Digital Analytics Primer. Paul Woolmington Paul is known as one of the world’s most innovative marketers, disrupting and redefining traditional communications models while working with many of the world’s leading brands. He was named one of the ten most creative people in marketing and advertising by Fast Company, he has launched two successful media and communications concerns and served as an advisor to governments, startup firms, and social cause organizations worldwide. Paul is also serving as a Senior Fellow at Columbia School of the Arts. Eric Vukmirovich Eric’s unique background includes years of business strategy, finance, operations, legal, and M&A experience. Most recently, Eric was the CFO/COO/partner of mcgarrybowen where he was instrumental in its evolution from a 25-employee boutique traditional advertising agency to a 1,000+ employee multi-service global communications company. Eric cut his teeth serving in various positions at Ernst & Young and Arthur Andersen before venturing out into more entrepreneurial roles. John McGarry As Founder and CEO of 2mrw, John is driven by helping clients navigate today’s rapidly changing marketing landscape by tapping into his passion for new technology, advertising, and over 20 years experience from both the agency and client side of the business. Most recently, John founded and led the digital practice at mcgarrybowen as Chief Digital Officer and Partner, providing innovative digital solutions to Fortune 500 clients. David Papworth As Creative Cultivator for 2mrw, David leads the agency’s creative vision with a firm belief that creativity can come from anyone, making it part of the fabric of the agency and not a department. With a very non traditional history, his work is driven by embracing new technologies and pushing innovative thinking. Most recently David was Creative Director and Practice Lead of the LABS group at mcgarrybowen, a group dedicated to the exploration of emerging technologies and their impact on marketing. Rob Quish Rob is a C-suite Executive and Creative Strategist in the media and marketing services industry helping client companies and brands transform their market position and marketing story. Based in NYC, he has worked for and led global, regional and local marketing communications agencies within WPP (JWT), IPG (Lowe), Omnicom (DDB) and inVentiv Health.
  • 4. 4The Collapse & Rebirth of Advertising _Contents Executive Summary The Collapse What is an Ad? Why Is It Hard For Agencies and Advertisers to Think About Message-Centric vs Value-Centric Advertising? Why is it Hard to Deliver Value-Centric Advertising? What Does it Take to Be Effective with Value-Centric Advertising? Understanding the Elements of Effective, Value-Centric Advertising Key Takeways End Notes Pg 5 Pg 8 Pg 13 Pg 16 Pg 21 Pg 25 Pg 30 Pg 36 Pg 39 1. 2. 3. 4. 5. 6. 7. 8. 9.
  • 5. 5The Collapse & Rebirth of Advertising _Executive Summary Advertising, as we know it today, for building brands is ineffective because people’s behaviors are shifting due to the rapid pace of technology advancement. The advent of newer methods for advertising, such as programmatic marketing, can help target a message about a brand to an audience, but interrupting an audience isn’t the most effective approach for reaching them. Continually “reaching” an audience with a branded message doesn’t mean it will be recognized and responded to in any meaningful way. In fact, saturating a target audience with a message can cause the advertising to be completely ignored at worst and only passively noticed at best. Consumers reject banner ads at rates greater than 99%. 1 in 1000 impressions result in what could be a deliberate click on ad. Message- centric advertising for creating brand equity is not really working as well as in the past. So why are billions of dollars being spent supporting an advertising model that doesn’t really work that well anymore? You’ve probably heard the quote often misattributed to Albert Einstein that “doing the same thing over and over again and expecting different results is the definition of insanity.” The smartest and most sophisticated advertisers seem to understand that advertising today can’t keep doing the same thing ad-infinitum and expecting higher returns. Simply putting similar, brand-specific messages in front of audiences in a way that prevents them from doing what they want to do is just ineffective. It’s not the best way to spend advertising dollars. Instead, savvy advertisers realize that it is much more effective to give audiences something of value and utility that ladders up the brand. We call this “value-centric” advertising. When major advertisers take a value-centric approach, the benefits of doing so are monetarily significant and much greater than messaging. Kraft has realized a four-times return on advertising spend (ROAS) from content marketing compared to message-centric advertising. Kraft gives people something of value (recipe cards) and their audience buys more Kraft foods to use in those recipes. Netflix isn’t peppering every affiliate site on the planet with special membership offers. The red Netflix banners seen across the web just a few years ago are not rendered as frequently. Instead, you’ve probably heard about or even watched “House of Cards,” or that Netflix is producing Adam Sandler movies, or that Netflix custom programming like “The Square” is award-nominated content. Apple gave away an entire U2 album. BitTorrent offered an exclusive, paid Thom Yorke record at a discount Executive Summary_
  • 6. 6The Collapse & Rebirth of Advertising to its musically-influenced audience. Converse gives away concert tickets. MTV produces concerts with major musicians in local markets, gives away tickets, and then broadcasts the content globally. All of these advertisers already realize the power of “value-centricity” and what we’re talking about in this paper: value-centric advertising is much more effective than message-centric advertising. It is much more effective for advertisers to provide value to an audience in a way that aligns and builds the brand than just saying something about the brand, hoping and wishing whomever sees it believes it, won’t ignore it, and will eventually buy it. Delivering value-centric advertising where value is recognized and exchanged instead of interruptive messaging is the future of advertising. That future, with the right agency, is right now. 80% of online visitors will watch something brand-centric, but only 20% will read something. Content marketing, thus, is one effective method for transitioning advertising away from being message-centric to being value- centric. But transitioning from message-centric advertising to value-centric advertising is not a simple task. In fact, most agencies and marketing departments have only created messages. Messaging and the process for message-creation is part of their agency DNA and part of the agency muscle-memory. It causes them to do the same thing over and over again, expecting new and better results, which is just not going work for advertisers. It doesn’t matter if the agencies super- desk has an Oculus Rift residing on it or a showroom of cool, new technology on which messages are being created to be served. It doesn’t matter if the creative messaging was talked about in the trade magazines in the advertising industry. What really matters is that the advertising achieved its goals of building the brand, creating demand, and causing people to buy. In order to create value-centric advertising, advertisers and marketing departments must find new agency partners who actually understand value-centricity. But value-centric agencies are unique and rare. They are led, managed, organized, and were created for different outcomes than message-centric agencies. Advertisers must work with these newer agencies that are not encumbered by their own past campaigns and self-limited ways of working. These new agencies are not burdened and locked-into being message-centric using only methodologies, client-interaction frameworks, creative approaches, and advertising channels that primarily support the delivery of just messages. It doesn’t matter if the agencies super-desk has an Oculus Rift residing on it or a showroom of cool, new technology on which messages are being created to be served. Executive Summary_
  • 7. 7The Collapse & Rebirth of Advertising A value-centric agency uses alternative approaches to advertising that creates utility and value for audiences. As a result, the value-centric agency creates more effective advertising and a better return for the same dollar for advertisers. The sooner advertisers and marketing departments realize this ongoing, paradigm shift in advertising and find new agencies that get it, the sooner they will be creating more effective advertising and better spending their advertising budgets. But what is value-centricity; how does it apply to advertising; and what are the attributes of value-centricity and the agencies that can create it? Read this white paper to find out and learn more. The future of advertising is about value not messages; and, this future requires new agency partners. Executive Summary_
  • 9. 9The Collapse & Rebirth of Advertising Using advertising, as we know it today, to build brands is ineffective. As media fragments and people’s behaviors shift at the increasingly rapid pace of new technological advances, effectively “reaching” an audience is becoming near impossible. Programmatic marketing is a more efficient way to get a message in front of someone that may care about it, but is not necessarily an effective way to build a brand. If you can reach someone through a programmatic buy, at targeted TV, print, outdoor, online or mobile media buy, are you really reaching them? Ad effectiveness is not about reach, nor frequency. It’s not even about the catchiness of the messages. Just because an advertiser continually reaches an audience with a message, it doesn’t mean the ad’s message has actually “reached” the audience in a meaningful way. It’s more likely the ad reached a passive audience in a way that interrupted whatever it was they were trying to do. It may have even been ignored entirely. Consumers simply don’t want to bothered by ads rendering in the middle of whatever experience they are having. People aren’t watching TV, browsing web sites, or using mobile applications in order to see ads about brands - even brands they like. They want to be doing whatever it is they were doing when the ad attempted to interrupt them. Almost 10% of all digital ad impressions are blocked completely from view, with some sites reaching as high as 50%.1 Consumers reject banner ads at rates greater than 99%.2 The average click-through rate for display ads is 0.11%. Mobile banner ads have an average click-through rate of 0.35%.3 Audiences want to do something. People are looking for entertaining experiences that positively impact them and are worthy of their time because they provide some kind value in return. In fact, today, the most effective ads aren’t really perceived by audiences to be ads at all; they look and feel more like original content. Take for example, Kraft Foods that has a four-times higher ROI through content marketing - such as recipe cards - than through its message-centric advertising. Kraft is building their brands by providing benefit, not simply creating messages. Or Netflix that produces more and more original content following the success of “House of Cards” and the academy-award nominated “The Square”. Showtime is relaunching the influential drama “Twin Peaks” twenty-five years after it went off the air. Why are billions of dollars continually spent on an advertising model that just doesn’t work anymore? The Collapse_
  • 10. 10The Collapse & Rebirth of Advertising There’s a huge difference between advertisers buying an audience and putting messages in front of them versus providing some type of utility or value to an audience. Whether that utility comes from relevant content, an immersive social experience, mobile application, or a local market event will depend on the brand and the audience. So why aren’t brands spending their money creating what the consumer wants in a way that builds the brand? Why not create something of value and utility to an audience? Why not do something as a brand instead of just saying something? Advertising must focus away from delivering messages to instead delivering tangible value to audiences. Messaging about a brand in a way that intrudes on the audience’s intent in order to communicate a product attribute they likely don’t care about is done all the time on TV and radio. This message-centric approach can be effective, but it is self-limiting in that a brand has a message it communicates in an ad - and that’s it. It can be argued that it does little to truly build a brand. That limited message, however effective within a traditional medium, is never going to attain the same reach and frequency as an ad that was created with an intention of going outside the confines of message - to go viral or be shared broadly on social networks. Take for example Red Bull’s Stratos jump with Felix Baumgartner. The entire event had global reach in excess of 8 million viewers accessing the live stream online, and 40 TV stations broadcasting the live event. The entire lifecycle of the event promoted intense conversation. It wasn’t considered to be the giant advertisement for Red Bull that it was. When compared to a traditional media buy, the brand impact was not immediately self-limited, it was immediately unlimited. Yes, of course traditional media still works, but it doesn’t work as well as creative ideas that challenge tradition. Any advertiser would much rather be able to convince people that a brand is what they think it is instead of just being able to say what they think it is. Convincing occurs by doing. Saying is just words. 90% of information transmitted to the brain is visual, and visuals are processed 60,000X faster in the brain than text.4 Brand “qualities” exposed in advertisements are not as meaningful to audiences as the “actions” from brands that impact them in meaningful ways. Providing value and utility from advertising, of course, requires that the ad must still help build and align with the brand. It’s not sufficient to replace a message-based campaign with a neat and funky campaign. Felix Baumgartner and the Stratos Jump live the adrenaline and the idea of “Red Bull Gives You Wings” without saying, but by doing it. It provided real value to its audience and was worthy of their time while building the brands more effectively than any simple message could. 8million Viewers accessing the live stream online 40TV Stations Broadcast the live event The Collapse_
  • 11. 11The Collapse & Rebirth of Advertising It is time for advertisers to figure out what customers are interested in and give it to them, just like Red Bull. It’s time for advertisers to stop saying things about their brand via only traditional, interruptive messaging. It’s time to start doing new and innovative things for audiences and for customers. Netflix understands that creating high- quality, award winning programming will increase memberships more than buying volumes of banner ads. Netflix understands it is better to give people what they want - powerful, engaging content - than to continue to spackle the web with red banner ads and affiliate marketing offers. 80% of online visitors will watch a video, while only 20% will actually read content.5 Take for example, Netflix releasing the sequel to “Crouching Tiger, Hidden Dragon” at the same time it is being released in IMAX theaters. Not only does this ad campaign give people what they want, it also ladders up and strengthens that Netflix brand in a way members completely understand and totally want. The most incredibly powerful brands now and those in the future will give their audiences what they want. Apple attempted this by giving its customers music in the form of a U2 album. While the execution was flawed, it was an astounding achievement in terms of reach and frequency. What customers in key markets for Apple hasn’t heard about them giving away the U2 album - for better and for worse? The massive coverage and earned media only created more fervor for their recent smartphone release - and lots of engagement with iTunes from playing and deleting. Instead of Apple telling its customers more about itself, it took an action to give people what it thought they wanted, which acted as proxy for its customers to deduce their own meaning in the message of the brand’s action. Apple didn’t just say something. Apple gave away value. In fact, content creation is taking an increasing share of marketing budgets. Nearly half of marketers devote at least 10% of their total budgets to content development. One in five spend 25% or more.6 Marketers › › › Marketers devoting 10% budget to content development Marketers devoting 25% or morebudget to content development The Collapse_
  • 12. 12The Collapse & Rebirth of Advertising Advertising is no longer a one-way communication channel delivered across a limited number of message-centric media formats. For example, Twitter users follow a median of six brands on Twitter, looking for things like interesting and fun content, news and updates, and discounts and promos.7 In order for advertising to be most effective, advertisers must rethink and reconsider their media mix and then broaden it to include value-centric, interactive, and action-based advertising. New techniques and experiments for reaching consumers must be tested in order to produce the best return on ad spend and deliver effective advertising. The prize fruit is right there. shinier and juicier than it’s ever been before. So it will be all the more shame on each and every one of us if we don’t reach out and seize it.8 - Kevin Spacey The Collapse_
  • 14. 14The Collapse & Rebirth of Advertising The goal of advertising is generally believed to be for either branding or direct response. Ads that are for branding attempt to create a perception about the attributes and properties of products and services that resonate and are aligned with the viewer of the ad in a way that creates brand awareness or equity. A television advertisement, such as a Super Bowl ad, is purported to be effective media to help establish or enforce a brand. While brand advertising does not preclude a user from taking a subsequent action, the goal of a brand advertisement is primarily to communicate messages about the brand. On the other hand, direct response advertising is solely meant to compel the ad-exposed audience to take a specific action, which typically is commercial in intent. Take for example, an ad that contains a promotional code, a time-limited offer, or a personalized URL where the goal is to get the user to take the step of engaging with the brand. Of course, it is possible for a brand advertisement to contain message or call to action for a direct response. And vice versa, a direct response ad can also communicate brand attributes. Advertising in the 21st Century manifests itself differently than in the past. An advertisement today can be anything: from a movie to programming to a video to a mobile app. The Lego movie is, of course, a giant, long-form advertisement for plastic blocks that connect to one another, but what child or parent really sees it that way? It’s viewed, not as an ad, but as entertainment that is worth paying for. Advertising today, when done well with a value-centric approach, may not even be perceived as an ad by those that consume it. Lego’s advertising still builds the brand and increases brand equity in a way that is fun and memorable, but not in a message-centric way nor with a typical approach to ad creation. Advertisements, since they are part of marketing programs, are elements within an overall marketing strategy, which can include many different channels and media in which the advertising is delivered. At the highest level, media is categorized into paid, owned, and earned channels where advertising can be deployed. A paid channel, like Paid Search or Affiliate Marketing, will contain direct response Advertising is defined by Wikipedia as a form of marketing communication used to encourage, persuade, or manipulate an audience (viewers, readers or listeners; sometimes a specific group) to take or continue to take some action.9 What is an Ad?_
  • 15. 15The Collapse & Rebirth of Advertising advertising. Display media, whether delivered on billboards or via an online banner, can be a mix of branding and direct response. Owned media where the advertiser actually creates their own advertisement or marketing messaging via a channel like Facebook or Twitter can function for both branding and direct response. A brand like Coca-Cola used owned social media for branding while a brand like Uber used owned social media for direct response via community engagement and offers. Earned media can be considered “free” advertising because it occurs as a result of both good and bad advertising. Take for example, the brand equity and direct donations that were a response to the Ice Bucket Challenge. Today’s Chief Marketing Officers and other marketing leaders constantly struggle to determine the best media mix for a given return on investment in terms of brand equity or direct response across the paid, owned, and earned media channels in which to advertise. Within the cosmos of advertising in the 21st Century it is no longer sufficient to only consider branding and direct response as the ad goal. Figure 1.1 shows how to consider message-centric and value-centric ads in the context of branding and direct response: Message-centric. To communicate a brand message or a message that leads to an immediately direct or latently direct response. Value-centric. To create value by giving the viewer something they find valuable - and as secondary benefit enhance the brand or cause direct response. or What is an Ad?_ Figure 1.1: The Goal and Centricity Matrix MESSAGE-CENTRIC Insert into content as interruptions in the experience in order to create a sum accumulation of perception about a product or service. TV ads are message-centric. Targeted within existing content causes a viewer to do something now, soon after exposure, or in the near future. Online banners, affiliate offers, and paid search are message- centric. BRAND AD DIRECT-RESPONSE AD VALUE-CENTRIC Create experiences that are valuable and relevant to an existing customer or prospect such that brand affinity and brand equity are created or maintained. Sponsored events or programs are value-centric. Provide experiences that customers or prospects find so valuable that the only logical step is to engage with and respond to the brand. Planned services that enhance product value are value-centric. Now is the time to think about advertising effectiveness across brand and response campaigns by considering whether the ad’s goal is also:
  • 16. Why Is It Hard For Agencies and Advertisers to Think About Message-Centric vs Value-Centric Advertising?
  • 17. 17The Collapse & Rebirth of Advertising Since the dawn of advertising, branded and direct response ads have largely been message-centric. Advertising agencies and marketing departments have created countless jingles, creative slogans, interesting catchphrases, trendy buzzwords, comedic copy, and all sorts of other compelling copy to communicate messages to audiences. These messages are then targeted to specific audiences through agency or marketing team activities like media planning, buying, and execution. The resulting data, such as reach, frequency, GRP’s, CTR, dwell time, “engagement,” and conversion rates, are all analyzed to quantify the effectiveness of advertising across the various channels in a media mix. Then the results of the advertising are presented to advertisers or the brand’s CMO who then make decisions on whether to extend the campaigns or renew the agency services. The message-centric approach creates billability, revenue, physical evidence and internal processes for planning, buying, executing, and analyzing data that support the effectiveness of the marketing team’s and agency’s services and ads. These organizations have been built and evolved over the years by attracting message-centric thinkers, hiring them and training them to effectively create, evaluate, present, sell, produce and place messages. Process, timetables, departments and people all built around making messages. Why would an agency or marketing organization risk changing what they think, or is perceived by clients or their managers, as working - messages - to focus on a value-centric approach? In most cases agencies and marketing teams do not and can’t change their ways of working - despite the consumer wanting something different and of value from ads. It is this self-sustaining, message-centric approach to advertising that is pretty much all most ad agencies know how to do because it is encoded in the “muscle memory” of the agency. “Muscle memory” means doing almost the same thing over and over again for different clients. In marketing organizations and agencies, muscle memory causes people to repeat existing behaviors. Every agency has such a muscle memory. It is created from explicit and tacit knowledge, data, and deliverables used to frame and deliver Why is it hard for agencies to think about message-centric vs value-centric advertising?_
  • 18. 18The Collapse & Rebirth of Advertising every client engagement. Muscle memory causes the agency to generally mostly always think in one way, or a small numbers of ways to deliver effective advertising: the media plan to support message- centric advertising. Now that isn’t to say that muscle memory is necessarily a bad thing. After all, the message- centric memory was reinforced because it worked. It’s risky to move away from what has worked - and it’s even riskier for an agency to completely forget what has succeeded in the past. As a result, message-centric agencies lock into their muscle memory of being message-centric and not encouraging creative experimentation into value- centric advertising, which is where the higher return on advertising spend (ROAS) can be found. Advertising has also reached a fundamental inflection point in that it is pervasive everywhere - and media dollars are being allocated to address this new, often digital, nature. Newer “digital agencies” have to deliver advertising where the ads are no longer delivered just on TV, radio, billboards, direct mail, and in print media. Digital technology has enabled message-centric ads to be displayed - and interacted with - in a multitude of formats with the same creative “scent” applied across channels to tie campaign themes together. Ads are on your phone. Ads are in your glasses. Ads are in the bathroom. Ads on are in your taxi. Ads are on your refrigerator. Ads are on your thermostat. Ads are in your music. Ads are everywhere. But do people actually respond to message-centric ads in digital advertising created by even the newest digital agencies? With the average click through rate of a message in a banner ad around 0.11% where only 1 click is recorded per 1000 impressions, it’s clear that message-centric digital advertising does not generate an effective response. Meanwhile, data shows that the rate for interaction with value- centric ads - at more than 2.4% - is nearly 20x the rate of message-centric ads. Does that mean that brands should expect their agency of record - who has, for years, managed their creative budgets - to simply evolve their message-centric ads to be more interactive across new and emerging formats? Can a staff that is used to executing message-centric programs adapt, evolve, and rapidly change to accommodate newer forms of advertising and use them to become value- centric? While message-centric agencies would like clients to answer “yes” and believe in their digital capabilities to transcend messaging, it is almost insane to think that these agencies can adapt. It’s unlikely even if some agencies have “Centers of Excellence” or have carved out new R&D or “digital” groups to explore new ways of advertising, such as value-centricity and creative experimentation. The emergence of some agencies creating a room where new and innovative technologies, like a GoPro or Why is it hard for agencies to think about message-centric vs value-centric advertising?_
  • 19. 19The Collapse & Rebirth of Advertising Samsung SmartTV, are on display is more and more common. But what does that really show? Oculus Rift and 3D printers in a room are just eye candy and something to talk about. Neither is sitting on an innovative advertising panel at SXSW or Advertising Week. They are not indicators of competence to think and act differently nor of the capability for forward-thinking, value-centric advertising innovation. These rooms, incarnations, and technology showcases may look good on paper, a Facebook post, in the office, and in marketing materials but isn’t it really just the same message-centric agency attempting to change its muscle-memory of doing the same thing over and over again: messaging via interruption? For an advertiser to expect different or new results from a message-centric agency model because they bought a GoPro or Oculus Rift to put on their Super Desk is in itself just a message instead of really being valuable to anyone. Figure 1.2 shows what consumers want from TV. It’s not message-centric ads created by most agencies. Why is it hard for agencies to think about message-centric vs value-centric advertising?_ Most Important Future TV/Video Services and Options % of respondents across 15 markets September 2013 Free from ads/commercials Excellent quality (HD quality) Time shift/on demand Usability, super simple interfaces À la carte TV-/content Extreme quality (4K/4xHD) Push to see the content best suited for you My TV/video content on all my devices Access internet on your traditional TV screen Theatrical releases directly in the TV One search, watch & pay interface for online Advanced online video search (actors, lines...) 3D TV Personalized TV-screen info Video telephony Access apps on your standard TV screen Accessing/watching different camera angles Interactive TV 10.7% 9.8% 9.1% 8.5% 7.7% 6.6% 6.2% 5.9% 5.7% 5.3% 4.7% 4.4% 3.3% 2.9% 2.7% 2.4% 2.1% 2.1%
  • 20. 20The Collapse & Rebirth of Advertising It’s obvious the times have changed; the media has changed; the needs of brands have changed; the demands of clients have changed; the requirements of consumers are different. Thus, the smart advertiser that wants the most effective ads will need to find partners who understand and emphasize value over messages. They will need to find partners who understand Godin’s unchartered territory of “alternative approaches.” Netflix, again, is a fantastic example because their app model is disrupting and ruining the message-centric programming model. Consumers don’t desire or care very much about the advertising output of message-centric agencies or marketing teams. They want value - and that value can only be created by newer agencies that execute much more than message-centric approaches to advertising. Facebook and Pinterest are being challenged by newcomers, like Ello. Why? Because Ello is about giving social networkers what they want. Ello provides an ad-free experience where value is created by selling features that people find valuable instead of selling member data to advertisers. Whereas Facebook and Pinterest are simply filling the message-centric network model by using and selling member data so little messages can interrupt the social experience or augment the targeting of message-centric ads served on other sites. In the process, they are ruining the purity of what made them great for consumers instead of advertisers. The only way advertising agencies and marketing teams can respond efficiently and successfully is to rethink, rearrange, reorient, and reengineer the way they think about and deliver advertising to move from not only being message- centric to being value-centric. Why is it hard for agencies to think about message-centric vs value-centric advertising?_
  • 21. Why is it Hard to Deliver Value-Centric Advertising?
  • 22. 22The Collapse & Rebirth of Advertising It is hard to create value-centric advertising because doing so requires agencies and marketing teams to change the way they think, operate, and innovate. McKinsey believes “these forces are making companies transform not just the marketing function but also everything from corporate affairs and product development to distribution and manufacturing models.” 10 Digital media and technology has massively disrupted message- centric advertising. The digital ecosystem is rapidly becoming the focal point of media planning and buying - and the formulaic network model that sells campaigns is hard to move away from. Today’s consumers; however, live in a world of “always-on” mobile devices that allow an audience to be reached in many different ways: from mobile apps to paid search to social media and more. Digital has created new ways to connect, changed the way consumers view and interact with ads, and has generated new methods and metrics for measuring effectiveness. It’s hard to keep up. It’s hard to compete when content creation is different. People have to think differently when ad distribution is programmatic. It’s important to consider consumption across “omnichannels” by known people and to specific cohorts and segments. New ad models and methods for monetization and attribution are available. Past preferences, previous behavior, and known interests can be analyzed for retargeting. Personalization on a one-to-one basis, based on past purchases and expressed interests, is possible with the right ad technology. As a result of all of this flux and constant change, clients can be aware of these current possibilities and opportunities in advertising and, as a result, have different expectations for agency services and outcomes. Clients don’t just want message-centric ads; they want ads that use new media and technology that deliver value in ways that build brand equity and encourage interaction and response. They want to produce ads that people talk about, but in a way that reaches the right audience and goes beyond the short-term yield of conversation caused by a popular Super Bowl ad. Oreo, was able to get into people’s feeds with their “dunk in the dark” post as part of the Daily Twist campaign. But this did not create conversation among consumers, instead the advertising world navel-gazed at their own innovation and talked about it among themselves; unfortunately, the majority of consumers were less intrigued by it. The value exchanged for this particular effort was more valuable to the marketer and the agency within the industry than true Why is it Hard to Deliver Value-Centric Advertising?_
  • 23. 23The Collapse & Rebirth of Advertising value for the consumer. It takes a different kind of focused, fearless and creative agency to create real value-centric advertising. Agencies also now have to deliver effective advertising globally. That’s hard when people just don’t typically believe a pure message-centric ad anymore. It doesn’t matter if the ad was seen on a street in Glasgow or delivered on a .com address. People all over the world can see it. And they want to know that the brand stands for what they, as people, are saying and doing. Travelers who may want to fly United Airlines aren’t going to simply believe United is “friendly” because an ad says so. It would be much more impactful if United did something to prove they were the friendliest airline for global travelers - and that demonstration of what it means to be friendly will differ by culture. Value-centric advertising provides what an audience needs regardless of location. It’s just as likely that a viral event in Glasgow will be seen in Germany or in Georgia. That is hard for global agencies who have offices that hardly talk to each other as they operate distributed, matrixed organizations autonomously across the world. Thinking globally about value- centric advertising means thinking locally. It means producing ads that give audiences what they desire localized to them regardless of country or culture where the ad was served or displayed. Social media has been another game changer for marketing departments and agencies focused on message-centric advertising, which is hard to keep pace with. Messages about brands aren’t what socially-enabled consumers want from advertisers. Social audiences want to be actively engaged, have conversations, learn what others similar to them like, buy, share, or find value in. It’s hard to participate in the community and create engagement and conversation if all an agency or marketing team knows are messages and the ways to create them. Delivering value and utility to brand advocates and influencers is not easy. It takes different thinking. Value-centric organizations understand social and its constant state of change. They know how to target highly-specific advertising to audiences who will find it worthwhile, differentiated, and valuable. The best social ads online are created by people who “get it” and aren’t just trying to fit message-centric ads into 140 characters as part of a media plan. Mobility has also changed the ways consumers are exposed to and interact with advertising. An ad that works on a smartphone may not work on a tablet, which may not work on TV. But a message- centric agency may show all three devices the same message. It’s just hard to change the muscle memory and be value-centric. Why is it Hard to Deliver Value-Centric Advertising?_
  • 24. 24The Collapse & Rebirth of Advertising According to Nielsen, nearly one in two smartphone users use their phones while watching TV. Users are social networking, shopping and researching products, and communicating to other people about the media they are watching - while mostly ignoring TV advertising altogether. Consider that 94% of TV viewers and 73% of online video viewers used “distraction” media like smartphones and tablets during ad breaks. 11 60% of ESPN’s traffic actually now comes via smartphones and tablets. Heineken recently went from zero awareness in a region of the US to 23% due to mobile efforts alone. 12 Value- centric efforts take advantage of these facts by becoming the focus of mobile attention instead of just surrounding it with ad messages meant for other forms of media. Advertising in traditional print media, such as magazines and newspapers, continues to decline precipitously. Message-centric ads aren’t just less effective, they just don’t have the same reach and frequency across all audience segments as they once did. That’s a hard market situation to be in. It’s an even harder position to be in as a message- centric agency that must replace lost revenue from losing channels. TV is being challenged for ad dollars - as advertisers realize that message-centric approaches have limited return on advertising spend (ROAS). Television advertising’s upfront volume fell by 6.1 percent to $18.1 billion. Cable went down for the first time in four years to $9.675 billion. 13 It appears that ad dollars are shifting from TV, which is highly message-centric, to advertising across content of all types, which can be value-centric. Remember Kraft Foods sees four-times the return on non-traditional media from their value-centric approach. Can a message-centric agency adapt or should the marketing department look elsewhere for agency partners that understand value- centricity? The answer is obvious. Message-centric agencies are having a hard time delivering the same level of excellence as newer value-centric agencies that are unburdened by rules of tradition. Why is it Hard to Deliver Value-Centric Advertising?_ Reasons for Watching TV Ads, by Genre % of online respondents in the US, UK, Germany and Brazil July 2013 Movies Sports Drama Entertainment/ reality Kids 29.8% 24.4% 23.4% 18.9% 13.6% 18.7% 13.0% 18.9% 18.1% 9.4% 7.2% 7.2% 7.7% 8.7% 8.9% I am really enjoying the show and I want to watch through the ad break It doesn’t seem worth it just to change the channel I find adverts entertaining
  • 25. What Does it Take to Be Effective with Value-Centric Advertising?
  • 26. 26The Collapse & Rebirth of Advertising Advertising must be effective in a world that Seth Godin describes as one where: ...most products are invisible. Over the past two decades, smart business writers have pointed out that the dynamic of marketing is changing. Marketers have read and talked about those ideas, and even used some of them, but have maintained the essence of their old marketing strategies. The traditional approaches are now obsolete, though. One hundred years of marketing thought are gone. Alternative approaches aren’t a novelty - they are all we’ve got left. 14 - Seth Godin, Purple Cow. What Does it Take to Be Effective with Value-Centric Advertising?_ This brave new world demands advertisers rethink what it means to create effective ads. It just isn’t logical to perpetuate message-centricity in ads when audiences want more. Advertising isn’t effective because it is bought and executed across multichannel or even omnichannel media plans. Instead, ads are considered effective because they deliver better return, often in unexpected and unusual ways, that contributes to expected and unexpected outcomes where value is exchanged or created. Yet most advertisers consider that an ad is effective because data analysis proves it succeeded in a single channel or perhaps within a small set of channels. The idea that a television commercial can drive a web search and then compel an in-store visit is necessarily lost on most advertisers. It’s just hard for organizations to create ads and campaigns that are focused on delivering value across the different media within a customer journey. Why? Because messages just say something. They don’t encourage or even ask people to do something in the way that a value-centric ad campaign can. If all one knows is how to create, plan, and distribute a message, then how can they be expected to instead create value-centric ads? Yet 78% of CMOs believe custom content is the future of marketing. 15 Exacerbating the limitations of message-centric ads are the way ad effectiveness is measured. Message-based agencies default to traditional formats and metrics that prove their success - at
  • 27. 27The Collapse & Rebirth of Advertising 0.11% average click-through rate (CTR). Thus agencies cobble together measurements from disconnected systems; make assumptions about the customer journey; and perhaps apply the attribution model that shows the most positive performance in order to prove value from messaging. This loose approach isn’t how value-centric ads are proven to be effective. Value-centric advertising is not solely measured by actions, it’s measured also by how the ad makes a consumer feel and includes qualitative measures such as positive sentiment, an increase in the likelihood to recommend, brand equity, and customer satisfaction. New technologies and techniques for advertising - from buying and selling intent, to programmatic and automated-algorithmic exchanges - are creating new distribution models that have no measurement precedent, which is why it’s even more important to understand and analyze how value-centric ads make an audience feel and react to those feelings about the brand. Even the measurement of television advertising is changing due to social TV, DVRs, and the multi-screen consumer. Advertisers are no longer satisfied with traditional data collection and fairly random reports about ad performance in one channel or even the overall performance of the media mix. Advertisers want deep analytics about how an ad contributes to an eventual purchase despite many of the challenges to measurement that “digital” has brought. They want to increase positive sentiment and promote positive feelings about the brand that promotes conversation offline and online. Thus proving advertising efficacy in new ways when you are trailblazing in Seth Godin’s “alternative approaches” is core to being effective with value-centric advertising. Advertising is pervasive everywhere. Being effective with a value-centric approach means understanding how to make pervasive advertising into persuasive advertising by creating “alternative” advertising ecosystems. No longer are advertisers sufficiently served by ads just in TV, radio, billboards, direct mail, and in print media. Digital technology has enabled ads to be displayed - and interacted with - in a multitude of formats. From touchscreens on floors in shopping malls to sending text messages to interactive billboards on highways to creating ad- based interactive experiences in your glasses. Ads are everywhere. The most effective agencies give consumers value by creating ads that utilize these new platforms to give audiences what they want. To be effective value-centric ads must use new and emerging technologies. Even agencies that have a “digital” team that can leverage new technology often don’t step outside of the realm of what they know: the channels and formats in the media plan. The skills to create effective value-centric advertising are in huge demand. Advertising agencies face huge gaps in the skill sets needed to What Does it Take to Be Effective with Value-Centric Advertising?_
  • 28. 28The Collapse & Rebirth of Advertising create effective ads. It is no wonder that most ads are not very effective nor are they value-centric. Over 80% of companies face significant challenges in consistently locating, hiring, and retaining top talent. The largest skill gaps are in mobile, analytics, and marketing automation - all of which are needed to create effective, alternative advertising. 74% of agencies surveyed believe mobile is a very important/important skill to have, but only 31% believe their talent is stronger/much stronger than competition—a gap of 43 percentage points. There are more open positions than available talent. 40% of companies have more projects and positions open than they can fill with qualified talent, and analytics is the most desirable skill. 16 Talent issues are not only staff-related, they also apply to leadership. Managers who understand value-centricity and can execute iterative value- centric programs are rare. Being value-centric takes leaders that understand how to manage people in order to get them to think and collaborate differently. Value centricity also caters to the intrinsic motivation of why people even want to work at an agency or on a marketing team. Agency staff don’t want to create message-centric ads that are ignored. They want to create something that impacts people’s lives and makes a difference. Value- centric ad creation can be considered a virtuous activity because it is aligned with audience goals, not opposed to them. Value-centricity is rewarding for agency staff and marketing teams to create because audiences care about it and it is valuable and meaningful to them. It’s rewarding work for staff to deliver in a way message-centric ad creation is not and never will be. With a dearth of talent across staff and leadership and different orientation toward employee motivation and job fulfillment, is it any wonder that it’s hard for companies to deliver effective value-centric ads from their resource- constrained, message-centric ways of working? In a world of fragmented media it can be more important to address a smaller audience of influencers and high-value customers than to reach a large number of people with a message. In this case general reach and frequency can be counterproductive to ad effectiveness. To figure out the right campaign strategy, the right segment to target, the best “creative,” and the best methods for delivery an advertiser must go to agencies that have both creative power and analytical talent to be effective with value-centricity. Technology and data are used to find out what the brand is about and then used to make content that is right for people and ladders-up the brand. Analysis has proven that traditional marketing communications just aren’t relevant anymore. 17 Effective advertising just isn’t as simple to deliver as it was in the 20th century. No longer can a brand What Does it Take to Be Effective with Value-Centric Advertising?_
  • 29. 29The Collapse & Rebirth of Advertising advertise in a limited number of media vehicles and placements - print, on the radio, or on TV - and then expect an ad-exposed customer to come into a store and buy. The number of possible touchpoints that influence brand perception are enormously larger and more complex than ever before due to “digital.” Advertisers just can’t expect ads to work in the same way as they did years ago because their journeys are so different. It takes an agency to understand how to use technology to weave value- centric ads into audience lifestyles. Today, when consumers are exposed to advertising in digital formats across multiple screens via an ad, they can then check out the product online and/ or read reviews and other people’s experiences. The social nature of advertising cannot be underestimated as a key component to effective, value-centric, brand-building ads. Audiences price compare, look at the brand’s website, read reviews, and even reach out to people who already own the product. They browse and “showroom” in-store, then buy the product online; or they buy online and pick up in the store. As Seth Godin said “as consumers, we’re too busy to pay attention to advertising, but we’re desperate to find good stuff that solves our problems.” 18 Advertisers need agencies that stop adding to a shopper’s deficit in attention via messages and instead concentrate on giving consumers what they need via value-based advertising that they notice and respond to. Getting noticed; however, requires value-centric ads that use alternative approaches to rise above the noise and saturation of all those messages- because many people simply block or ignore ads. 19 Adweek and Harris identify that 63% of people ignore all types online ads. 22.7% of Internet users use ad-blocking software, which is growing in usage at 43% per year. 20 The customer journey has changed so much that philosophies about where advertising fits or doesn’t fit historically just doesn’t work anymore. Message-centric ways of thinking about the customer, the path to purchase, and the shopper experience are no longer relevant nor effective. Advertisers must adapt to include value-centricity in their ads or suffer from underperforming and ineffective ads that get 0.11% response rates. What Does it Take to Be Effective with Value-Centric Advertising?_
  • 31. 31The Collapse & Rebirth of Advertising Effective, value-centric advertising is part of the new reality between advertisers, consumers, and agencies. Creative ideation, innovation, and the aesthetic qualities of effective value-centric ads require artistry, while the technology, programming, and analytics underlying these ads require science. Effective advertising balances an emotional quotient (EQ) and an intelligence quotient (IQ) in order to appeal to broad audience, engage them, and create efficacy. Art and science are intertwined and inextricably linked in value-centric advertising. By diving into the ever increasing amounts of available data, we now know more than ever before about what our audiences, want, dream, feel, and purchase. By applying this knowledge to the art of advertising we can conceive completely new methods of connecting to an audience by delivering what they want. Effective value-centric advertising creates an emotional connection that isn’t only nor simply a Understanding the Elements of Effective, Value-Centric Advertising_ message interrupting a user experience. The soap operas of yesteryear gave women who were at home programming they wanted to watch, which in turn helped to sell the brand of laundry soap - Ivory Snow - that sponsored the show. These soap operas were value-centric and they worked wonders for the brands involved. The original Netflix programming of today is more closely aligned to the soap opera model of long ago, than to the network model of ad interruption. Thus, the best value-centric ads of tomorrow also meet core emotional needs and become part of people’s lives like the programming of long ago. These value-centric ads are not differentiated based on the channel or media. Instead the form of the value-centric ad is more important than the format. Effective value-centric advertising: Orients around actions and “doing” not just messaging. It’s estimated that 37% of message-centric ads are ignored. 21 This active ignorance likely occurs because the ad messages interrupt the content, which is the main purpose and goal of the viewer. Traditional, message-based advertising can be strong enough to breakthrough to viewers - it’s hard to ignore ads that interrupt what you want to do, listen, or see - but it is suboptimal for producing the best return on ad spend. Instead of creating messages that are placed into content, effective advertising uses the power of creative
  • 32. 32The Collapse & Rebirth of Advertising content to reflect positively on the brand. Average website conversion for companies with defined content processes is more than twice that of companies without (5.9% vs. 3.8%). 22 Take for example, BitTorrent’s content-sustainability experiment “Children of the Machine” whose goal is to get people to use their Bundle product and its “paygates.” Or the case of Netflix that decided instead of putting little ads that says “Netflix has the best streaming content” to actually produce what some people consider the best content. The return in terms of viral brand equity and revenue from new account registrations has had a “very nice impact” according to Reed Hastings, the founder of Netflix. 23 Or take the example of Converse’s Rubber Tracks program that holds concerts with popular, edgy artists that brand advocates can attend for free - and who will soon allow for bands to book time, for free, at a recording studio in their soon-to-be- opened Boston headquarters. Gives people what they want in order to be effective. Advertising that provides what people are interested in and then gives them what they want is highly effective. That’s the core of being value-centric. 90% of consumers find custom content useful and 78% believe that organizations providing custom content are interested in building good relationships with them. 24 For example, it could be more effective for a credit card company to build its brand by assigning to a customer a live concierge to work with when they enroll for the card instead of saying “You can call us on the phone and talk to a live person.” Those advertisers that start providing what their consumers want create incredibly powerful brands and loyal audiences with high lifetime value and potentially lower cost of customer acquisition. Value-centric ads provide tangible value because they are a better and more “effective” way to meet the emotional needs of key audiences in a way that becomes part of people’s lives and truly shapes brand perception and affinity over the long-term. Actively engages the consumer via branded platforms. Participation and engagement with ad campaigns is a key attribute of effective, value-centric advertising. The premise that it is better to create something that engages the person via the brand than to deliver a message in a format where media is being consumed passively is key value-centricity. Value is created when a consumer is an active participant engaging with the brand. This fact doesn’t necessarily mean that social media, in the traditional sense of Facebook or Twitter, is required. Rather it means the most effective advertising causes people to touch, look, feel, experience, and share from within branded-platforms. Research shows that by using five hashtags on Instagram, brands can gain a 180% increase in likes on a post. Understanding the Elements of Effective, Value-Centric Advertising_
  • 33. 33The Collapse & Rebirth of Advertising Is customer-focused, brand-centric, and measurable. Ads targeted across new media formats in ways that deliver cohesive, branded experiences regardless of channel will resonate with audiences and the customer. These ads cause customers to engage with brands within their preferred modality, environment, and device. Research shows 90% of internet users say that watching a video about a product is helpful in the decision process. 25 Effective value-centric advertising creates narratives that compel customers to take the next steps in their journeys on the path to purchase. Value-centric measurement focus on the customer, their lifetime value, and can be evaluated against the cost of customer acquisition to ascertain ROAS. The impact of ads on brand equity and satisfaction are qualified, quantified, and reviewed with advertisers. Creates transcendent brand narratives that are channel agnostic and omnichannel. Effective, value-centric advertising in the future will come from ideas that transcend specific channels because they will be shared across channels. Again, the form is more important than format. Brand events will be streamed. Content about brands will be shared socially - just look at 2014’s Apple Watch and iPhone 6 event, which is nothing more than a big corporate product advertisement. It doesn’t feel that way to most people, but Apple’s events are just that: non-traditional, alternative approaches to value-centric advertising that are much more successful than buying only message-centric media. Apple proves that the channel in which the media was produced will be secondary to the creation of narratives that can be weaved across different media, such as the earned media that Apple received from countless journalists, socially- engaged consumers, and bloggers about the iPhone 6 or the free U2 album. Interruptive messaging has been replaced at Apple, not entirely, but for the most part by an alternative approach that work by giving people what they want. Apple has sold more than 10 million iPhones in one week by taking a value- centric approach supported by messaging. Focuses on experimentation and testing. Today’s ad testing and optimization technologies makes it possible to test multiple versions of ads - from AB to Multivariate. Advertisers can experiment with different media and media mixes to drive the highest possible levels of engagement, sharing, conversion, and revenue. The resulting data can be collected, measured, and analyzed to identify what has worked, predict what could work, and prescribe Understanding the Elements of Effective, Value-Centric Advertising_
  • 34. 34The Collapse & Rebirth of Advertising suggested approaches to optimize the advertising. Attribution models can be evaluated to understand which ads are the most effective at which point in the customer journey, and campaigns can be tuned and tested in near real-time. Testing content efforts propels ROI improvements: Companies who test are 75% more likely to show ROI for content marketing than those who fail to test their strategies. 26 Uses new and emerging technology. The best advertising can be experienced across mobile and wearable internet-connect devices in order to cater and appeal to “always on” audiences. The use of new technology for connecting to an audience is a top of mind concern - and forms a large part of the strategy - for delivering effective value-centric advertising. Take for example that Twitter drives amplification for brand messages. 78% of user engagement with a brand’s Tweets is in the form of retweets. 27 Uses analytics to eliminate the ambiguity of performance. While it is almost trite to say “you can’t manage what you can’t measure” or “50% of my marketing budget is being wasted, I just don’t know which 50%” it is truer than ever. Effective ads can be measured even when there are enormous volumes, velocity, and variety of data working within all the technologies used to deploy the ad. The emergence of newer data sciences, like prediction, optimization, and automation enables advertisers to measure cost, revenue, and profit of ads in order to determine their effective performance and quantify the financials behind being truly driven by value- centricity. Requires new agency processes, procedures, and organization. A value-centric agency looks and functions differently than a message-centric agency. In fact, one of the first attributes of a new agency is that it does not differentiate itself based on the channel or media on which it focused. Again the form of the ad is more important than the format. The people working at a value-centric agency are not necessarily defined by their titles, but rather by their skill sets. Hierarchy can still be an organizing principle, but client excellence is more important. Each team member must have a speciality, and must be skilled enough to understand and care about the roles and responsibilities of other team members. Management must know how to work with and across these disciplines - and be able to motivate and lead people to work together against common, shared goals. Management isn’t a checklist of executing campaign activities - but rather of making sure client value is created. Success instead will be understood as a team outcome. Understanding the Elements of Effective, Value-Centric Advertising_
  • 35. 35The Collapse & Rebirth of Advertising A value-centric agency will have thus less reliance on “departments.” People are the key. Instead of arranging an agency based on vertical competencies, like email or TV, the idea of “horizontality” will be more important. Horizontality means that team will be created to serve clients in a way where engineers work hand-in-hand with artists who work hand-in-hand with analytics. Research suggests that marketers work in very small teams: 81% of all content teams contain fewer than six people. 28 A value-centric agency will build teams that have all the right competencies to deliver client value over the long term. In many ways, the value-centric agency model can consist of client-specific miniature agencies that organize uniquely and collaborate differently based on the needs of each clients. Each miniature agency will have exactly the right team members and skill sets to deliver value to a unique client. The most effective advertising today and tomorrow will not be based on a philosophy of “digital first” or “mobile first” or even “TV first.” Instead the best performing advertising will be created by value-centric agencies that seek to create and deliver value via high-quality content that provides audiences with what they want in a way that compels the audience to take the desired action toward advertiser’s goal. Advertising will continue to evolve away from a focus on message-centricity to a core focus on value-centricity. Innovative content-based, alternative approaches for “giving” audiences what they want will eventually replace traditional media “buying.” Messaging will no longer be the primary thesis for advertisers nor agencies. Instead advertisers will create ads that are based on giving people value and utility in a way that helps audiences get what they want out of the brands as they journey on the path to purchase. Are your ads value-centric? Is your agency even ready to adopt today the value-centric approach that will succeed tomorrow? If not, it is now the right time to find a new agency and move to a value-centric approach to advertising that will yield the most effective ads of tomorrow. Understanding the Elements of Effective, Value-Centric Advertising_
  • 37. 37The Collapse & Rebirth of Advertising Advertising effectiveness is not simply a matter a reaching a targeted audience with a message and communicating that message frequently. Most ad messages interrupt whatever it is the audience was doing before the advertisement was shown, which results in the ad being passively noticed or ignored. Thus, brands that focus on alternative approaches to advertising that goes beyond messaging offer an opportunity to connect to an audience and achieve better advertising results. Advertising that delivers value and utility to an audience as opposed to communicating brand messages generates a better return on advertising spend. Brands such as Kraft, Red Bull Netflix, and Converse have advertising programs that focus on giving audiences something of value - whether that is high-quality programming, content marketing, custom events, or free music. The return from this approach to advertising is higher than only messaging. Ads are for branding, direct response, or a combination of both and are mostly message- centric. Being message-centric means that an ad, regardless of the goal, is inserted into another experience where a message is communicated often via interrupting the audience. This dated approach doesn’t work as well as a value-centric approach to advertising. Being value-centric means creating advertising that impacts the audience in positive ways by giving them something of value or utility that they want. Instead of saying something about the brand, a value-centric approach is action-based and can be interactive in doing something related to the brand. Most agencies do not operate with value-centricity as a primary goal for advertising because most agencies only create message-centric advertising. It is hard for these agencies to adapt to new technology, to globalize and localize advertising, and to take advantage of mobile and social channels. Advertisers that want to create value-centric advertisements must rethink what it means to create and deliver effective advertising to audiences. Advertisers need to move away from message-centric approaches to value-centric approaches, which likely involves using different, smaller agencies who are not encumbered by historic methodologies and models for delivering advertising. Value-centric advertising is about the form of the ad and not the format. Thus, creative ideation, innovation, and experimentation are necessary for producing value-centric advertising. Creativity mated with science and technology are necessary to create value-centric ads. Key Takeaways_ 1 2 3 4 5 6 7
  • 38. 38The Collapse & Rebirth of Advertising Value-centric advertising is oriented around actions and not just messaging. It is focused on experimentation and testing in order to give people what they want, and actively engage them via branded platforms that can exist both online and offline. Focused on the customer and the brand, value- centric advertising is measurable both qualitatively and quantitatively across omnichannels; yet, the channel where the ad was delivered is less important than what was delivered. Value-centric advertising uses new and emerging technology that enables data to be collected and analyzed to identify performance and reduce the ambiguity of media measurement. Creating value-centric advertising requires agencies to define, create, and execute new processes, procedures, and organizational structures. Value- centric agencies deliver client-value over the long- term. Advertisers who are not creating value-centric ads and working with agencies that understand value- centricity are missing opportunities to lower the cost of customer acquisition, build brand awareness and affinity, and increase engagement with and for the lifetime value of customers. Key Takeaways_ 8 9 10 11 12
  • 39. 39The Collapse & Rebirth of Advertising _End Notes “Ad Block Report” - ClarityRay, May 2012 “B2B Content Marketing 2014. Benchmarks, Budgets, and Trends - North America” - Content Marketing Institute, September 2013 Susie Schoppler, “Digital Advertising: Click-Through Rates” - COULL.com, February 2014 Mike Parkinson, “The Power of Visual Communication” - Billion Dollar Graphics Sarah Mincher, “25 Amazing Video Marketing Statistics” - Digital Sherpa, January 2014 Tom Pick, “83 Exceptional Social Media and Marketing Statistics for 2014” - Business 2 Community, April 2014 Courtney Seiter, “A Scientific Guide to Writing Great Tweets: How To Get More Clicks, Retweets and Reach” - Buffer Social, May 2014 Michael Brenner, “WTF Does Kevin Spacey Know About Content Marketing?” -B2B Marketing Insider, November 2004 “Advertising” -Wikipedia, http://en.wikipedia.org/wiki/Advertising David Court, “The evolving role of the CMO” -McKinsey Quarterly, August 2007 “The Effectiveness of Online and Televised Video Advertising” -IPG Media Lab & YuMe, May 2011 Christopher Heine, “8 Big, Fat Stats From Advertising Week” -AdWeek, October 2014 Sam Thielman, “Where Have All the Upfront Dollars Gone?” -AdWeek, August 2014 Seth Godin, “Purple Cow - Transform your Business by Being Remarkable” Thom Pick, “83 Exceptional Social Media and Marketing Statistics for 2014” -Business To Community, April 2014 “2014 State of Digital Marketing Talent” -Online Marketing Institute, November 2013 Bill Lee, “Marketing Is Dead” -Online Marketing Institute, November 2013 Seth Godin, “Purple Cow - Transform your Business by Being Remarkable” Adweek Media/Harris Interactive -2010 PageFair -2013 Chris Bell, “Why Are Online Ads Being Ignored?” -DidIt, March 2014 “Crossing the Chaos: Managing Content Marketing Transformation” -Aberdeen Group Julianne Pepitone, “Netflix stock surges 25% on solid subscriber growth” -CNN Money, April 2013 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 End Notes_
  • 40. 40The Collapse & Rebirth of Advertising “Better Lead Yield in the Content Marketing Field” -CMO Council, June 2013 Sarah Mincher, “25 Amazing Video Marketing Statistics” -Digital Sherpa, January 2014 “2013 State of Inbound Marketing” -Hubspot Courtney Seiter, “A Scientific Guide to Writing Great Tweets: How To Get More Clicks, Retweets and Reach” -Buffer Social, May 2014 “2013 State of Inbound Marketing” -Hubspot 24 25 26 27 28 End Notes_
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