Google to consumers: Please don’t shut the window

The sky isn’t falling on advertising. At least, not yet.

But as our piece today in BusinessWeek points out, there are serious challenges ahead for Google, internet advertisers, and anyone really who is trying to market in this world of changing media. The challenges come down to three:

1. Accelerated channel fragmentation.
A lot has been written about this, ever since Al Ries and Jack Trout mentioned in the 1981 book Positioning that someday there might be scores of TV channels. Every forecaster has gotten it wrong; the trend has constantly moved faster than expected until Chris Anderson simply called it the Long Tail — where millions of niche content-sharing nodes replace traditional mass media. And that makes reaching the masses with advertising very difficult.

2. Changing customer modality.
Teens and young adults are morphing from passive content recipients into active creators — writing blogs, texting on Twitter, uploading photos, socializing on Facebook. Every hour spent immersed in socialization and content sharing is time spent in a “new mode” that shuts advertisers out. This trend is important for marketers to watch, because people take their media habits with them as they age. Senior citizens are heavy TV viewers, because TV was the medium of choice in the 1960s and 1970s. The average age of video gamers is now in the low 30s, because this demo learned to love video games back in the late 1980s when they were teens. Today, 35% of all teen girls blog and 54% have posted photos online. As today’s emerging generation learns to create, and not just watch, media, advertisers will face continued difficulty in getting their attention.

3. A reduction in visual inventory.
Simply put, cell phone screens are smaller than PC screens — and consumer adoption of mobile technology is about to tip big in the United States. Because tiny screens greatly reduce the “visual inventory” of ad space, tightened supply will create lower response rates for anyone who advertises online. This threatens the very nature of advertising itself, since most media has made money on the implicit bargain that we’ll give you content for almost free in exchange for you putting up with interruptive ads. What happens to magazines, newspapers, TV, radio and even major web sites if the preferred mode of receiving text and video becomes sexy glass screens only 2 inches wide? What happens to Google if it can only fit 2 ads, and not 10, on a search results page? In the curving universe of supply and demand, shrinking ad space means the costs of marketing will go up.

That’s the doom and gloom. Stay tuned in coming posts for steps we think advertisers should take today to get out of tomorrow’s shrinking ad box.

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