Years ago we met a woman from The Institute for the Future (yes, there really is such a thing) who said, “the mistake people make is overestimating how much things will change 100 years from now, and underestimating how fast things will change tomorrow.” She was right — it’s 2011 and we’re not booking vacation trips to Mars, as 1950s sci-fi writers predicted, but we use tiny glass computers in our pockets to communicate to anyone around the globe. Message formats are immigrating to iPadonia, and unwanted marketing messages aren’t invited.
Tablets will proliferate because the most forceful change of our society in the past 50 years has not been in clunky technology shapes (no home-cooking robots or highway hovercars, alas) but in communication formats. Much of this is silly. The first decades of this century will be recounted by historians as a time of faddish media tweaks: we all watch video and read typography still, yet we’re obsessed with minor nuances in how we do it. 3D TV, streaming Netflix, Apple iTunes, Facebook and Twitter merely reformat text, sound and video. The innovation vectors converge around mobility, with portable glass pads the end point of mental input. Soon, we’ll have windowpanes that do everything, and that will be that.
For a hint of this future, check out Dynamics Inc.’s new smart cards — a type of credit card 2.0 that allows you to tap a button to switch between bank accounts, or hide the numbers on the card’s display until you input a keycode. They are rudimentary compared to today’s iPad, but show the technology of powering variable inputs and outputs now fits into a slender wafer. Compare a Nokia cell phone from 1999 (remember? the one with the little black-and-white screen that was as big as a remote control so you had to clip it on your belt?) to today’s iPhone, only a decade later, and now imagine what the next 10 years could do to Dynamics’ smart card format. Those tiny cards will be tablets connected to the web, pulling in any information you want.
The price for all this will fall, first by half and then one-hundredfold, until smartpads cost $10 and are given away by The New York Times in return for an annual subscription. Tablets will win because they are the end line of print communication format — from carved stone plates to paper to shape-shifting pixels in full color. Sure, producers like Apple will try to defend prices and margins by adding cameras and higher resolution screens in the next few years, perhaps 3D images by 2015, but eventually the tech tricks will run out. To modify a classic quote from Altimeter Group’s Charlene Li, in the future, tablets will be like air.
This unstoppable trend creates conflicts, of course, in business models hinged upon old paper formats. Some journalists and publishers still deny the shifts (magazines still have power! goes one campaign from The Association of Magazine Media), confusing their value as aggregators of news and opinion with what Clay Shirky calls the accident of our society printing words on crushed tree pulp. The medium is not the same thing as the message, and using fuzzy newsprint to read about a presidential speech has no more logic than a writer scratching the news report on the trunk of a tree in your yard. The emotional repulsion journalists feel toward electronic media really is fear driven by the dying pulp-paper advertising model, one where vast reams of impressions are wasted, where marketers pay $10,000 for a newspaper ad supposedly reaching 1 million people, but likely 95% of those readers skip the page B12 that carried the ad and only a fraction of the remainder glance away from editorial copy to read it. Tablets, like web pages, have reduced visual inventory of ads, and as the bloated paper boat of waste sinks, billions of ad dollars may disappear as well. Of course producers of web, tablet and mobile content should not feel smug, because approximately 90% of online ad inventory now goes unsold as well. Most ads are never seen, and much of today’s ad space is going away.
A society voting ‘No’ to advertising
TV is still the king of media, with U.S. consumers watching more than 5 hours each day — but its ads tell the future’s story. In the United States, viewers receive about 130 channels per home, and yet “tune” to only 18 channels each month (people no longer channel surf by turning dials, but instead hit “guide” on the remote or punch in 33 for CNN, leaping to the channels they know they wish to watch). Behind this 86% waste, DVRs are now in 1 of 4 homes helping consumers skip all TV commercials. Billions of dollars flow to those TV outlets, ignored by most people, and while pricing is supposedly based on audiences per channels, eye-tracking studies by Nielsen and Ball State University have found that when TV spots air most consumers look away to read a magazine or peck at a cell phone in their lap. Ad impressions are a currency that is being devalued, and real ad inventory will shrink further as consumers move to on-demand content.
Portable tablets will accelerate this ad skipping, because high-def print and video content on a pane of glass, connected to any provider and sendable to any friend, will trump old formats. Publishers had hoped that iPads would lure new revenue from consumers willing to buy subscriptions for finger-swiped enhanced content; Jason Ary has a nice dissection of the failure of this model. Consumer behavior isn’t really changing; just as your 2011 house still has shingles, in 2021 you will still read and watch video. But the power of marketers to intercept consumers will fade as screens become smaller and more mobile.
How to respond? Advertisers are left with three choices:
1. Notability. Create stories that are talk-worthy enough for consumers to want to pull them onto their shiny panes on the merit of the content. The brilliant 2010 ads for Nike and Old Spice by Wieden + Kennedy, for instance, created millions of conversations. The Mullen agency’s coopting of the Super Bowl into a “Brand Bowl” chatbox about ads lets consumers create a metabuzz about which marketing messages work best. The challenge, of course, is thousands of ads are brilliantly creative and yet society responds enthusiastically only to a handful each year. There’s a lot of randomness in turning a concept into a meme that resonates within cultural context; achieving viral success is like throwing dice in casino.
2. Targeting. The second option is for advertisers to use hyper-targeted media formats that make the remaining ad inventory work. Banner ads, online rich media, and online video are moving away from individual publisher sites — where 90% of ad inventory goes unsold — to ad exchanges, or biddable marketplaces, where the same banners can be targeted against specific audiences at huge cost savings. Tricks such as site retargeting and media-based retargeting chase individual consumers with repeated impressions. Media as stodgy as out-of-home is moving to demographic ratings by billboard location, trying to show they can target better as well. Experimentation in this space is key, and media planning has become a crucial science for getting advertising results.
3. Sponsored thoughts. Or, more darkly, advertisers can blur the lines between editorial and paid messaging. Publishers are toying with this, desperate to keep the ad dollars flowing; no less a publication than Forbes announced last week it would blend articles written by advertisers with its paid staff on the new Forbes.com website, potentially discoloring its authenticity. Sponsored posts and tweets, spammy Twitter direct messages, product placement in films are all what we call “sponsored thoughts” — attempts to trick consumers into believing a paid message came from the mind of the opinion leader or entertainment creator. This creates problems in ethics (is it right to blur the source of an idea?), in influence (consumers confused by the source of the message are uncertain how to process it), and in pollution (there is a tragedy-of-the-commons risk here, if overexploited, untrusted paid communications make the network they ride upon less valuable to users).
In the end, networks are self-correcting, and consumers vote with their feet. We’ve gone through this with telemarketing in the 1990s, in which consumers rebelled by signing up for the Do Not Call list, and email solicitations in the 2000s, which largely have been blocked by spam filters. Media is only as valuable as the audience — advertisers don’t buy ad space, they really buy eyeballs — and the audience migrates to the content it finds most useful, setting up filters around the content deemed an intrusion. Facebook is rising fast because consumers have more control and less marketing interruption. YouTube and Hulu have succeeded by offering immediate choice and minimal advertising. When the inputs and outputs converge into tiny glass screens, the trend of advertisers being squeezed out will continue.
So, pick your solution: Find a way to get more notable, get smarter about targeting, or disguise the source of your message. We recommend notability and targeting … but expect to see more of the third, paid content pollution, as marketers grapple with the shrinking tablet ad inventory held in the palm of your hand.