Category Archives: Do Not Call

iPadonia and the coming ad rebellion

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 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.

Flash Forward to results: ABC cuts back on commercials

One of the more interesting defenses against consumers tuning out advertising is when advertisers cut back on the ads themselves. A few years back, Clear Channel was forced to retrench on the minutes of radio commercials per hour after it realized consumers were aghast at spot overload so switched the dial, hurting ratings. More recently launched its online video format with a similar less-is-more ad structure, with minimal paid interruptions.

Now big broadcast boy ABC is cutting back as well, reducing television commercials in its premiere episodes and not starting most spots until 15 minutes into the show. Jeff Bader, ABC Entertainment’s scheduling chief, told the Los Angeles Times “you hope the longer you keep them at the start of the show, the more likely they are to stick to it.” The gripping “Flash Forward,” which premieres this Thursday night, may go as long as 18 minutes before a commercial break.

A history of polluted networks

The tragedy of the commons is something marketers typically fail to think about until it’s too late. Telemarketing was the first victim, becoming so obnoxious that consumers eventually rebelled with the Do Not Call lists, almost killing the industry. Email spam became a joke with filters blocking most messages and a response rate something like 1 in 12.5 million. Now social media risks the same network counter-reaction: paid messages in blogs and tweets — not advertising, but paid opinions in which people profess to write what they want about a brand while being paid to do it — are coming from companies such as Izea, and we predict new filters will arise to block out the confusion. If such fuzzy sponsorships go too far, the utility of the network will be diminished, and all users, including marketers, may suffer the consequences.

Want proof? Try to set up a telemarketing program today, and let us know how well it works.

What advertisers fail to realize is we all need a healthy ecosystem for any communication to work. It’s not easy showing restraint, because you’re betting the lost revenue of today will be replaced by more viewers, and more resulting ad sales, tomorrow. But if advertising is kept inside its box, clearly marked with limits on how much time it consumes, consumers in turn will be more likely to pay attention and respond. As media planners, we find the ABC strategy intriguing … because the marketing messages that do get included are likely to break through.

AOL and FTC may shut down online ads: Is this a good idea?

U.S. consumer-privacy groups yesterday asked the FTC to consider a “Do Not Track” list — an online equivalent of the telemarketing industry’s Do Not Call Registry. “Do Not Track” would allow consumers to opt-out of internet advertising programs that track their behavior online.

Behavioral targeting is one of the hottest forms of advertising on the Internet, second only to Google pay-per-click in matching advertising offers with consumer interests. With behavioral targeting, advertisers place cookies on a user’s computer, track which web sites that consumer goes to and what the consumer clicks on, and then offer up banner ads that hopefully are relevant. In our own tests, we’ve found click-through rates from behavioral-targeted banner ads are about 0.70%, five times higher than the average banner click-through rate of 0.14%.

The LA Times reports the Privacy Rights Clearinghouse, the World Privacy Forum and the Center for Democracy and Technology brought up the issue just as the FTC was preparing for workshops on behavioral targeting. Also yesterday, AOL announced it would offer consumers its own opt-out system by the end of the year. The impact could be huge — the Do Not Call registry pretty much destroyed the telemarketing industry.

Consumers may want to think twice before allowing online Do Not Track. Online banner ads are nowhere near as intrusive as phone calls that interrupt your 6 p.m. dinner — and those little colorful banners pay for most of the web content consumers see for free. U.S. internet ad revenues were almost $10 billion in the first six months of 2007, and that’s a lot of cash to make up if the ads no longer work.

If the rug gets pulled from effective online advertising, web sites may have to make money the old-fashioned way: by charging you admission.

Robocalls lose favor with voters, test our benevolence

Your phone rings and a recorded voice tells you that Politician A likes to crush small squirrels driving his SUV and he also, by the way, voted against your mother’s birthday. That’s a robocall.

Robocalls are falling out of favor with voters, probably because at least 64% of us got one last year. Seven states have banned recorded calls, and 12 more states are considering a prohibition. Yet politicians continue to use robocalls to try to conquer the world — $600,000 was spent in robocalls in the one week leading up to the 2006 elections. Robocalls remain the second-highest spending format for political advertising.

It’s an interesting example of the tragedy of the commons — all of us want peace on the phone lines, politicians as a whole are outlawing it, but each political candidate has a personal incentive to disrupt you at dinnertime. More than 90% of U.S. homes have signed up for Do Not Call, but the FTC DNC registry does not cover political organizations, charities, or phone surveyors. The media channel remains alive, as a whole despised, but probably still very effective. (Hmm. Can’t vote for HIM. He crushes small squirrels.)

We suggest the politicians take a poll on this media format, and then listen.