How today’s news with ESPN, Ai, and WPP is indicative of the death of “advertising.”
Sports entertainment goliath ESPN has laid off approximately 100 people, with about half of them being on-air talent. Amazon is introducing a new feature via their Echo that will help you choose your outfit of the day. Multinational advertising conglomerate WPP Group reports exceedingly slow revenue growth as clients “spend less.”
These three seemingly unrelated stories de jour actually are symptomatic of the new construct that is
disrupting rocking the advertising industry. And the foundation of this GAMECHANGING dynamic is something that we’ve been saying for some time: Consumers aren’t really consumers, anymore.
They are marketing partners. To remain viable, the advertising industry must treat them as such.
These three news items underscore why.
On Wednesday, 4/26 the buzz began to build that significant layoffs were imminent at ESPN. Watching Twitter in real time, it was apparent that phone calls were being made across the network. One moment a reporter tweets his best wishes for “the people being let go,” and the next minute returns to Twitter to reveal that he had just learned he is “one of those people.” The purge wasn’t confined to obscure analysts, either. Some fairly prominent names and former athletes were on the list.
Aside from the notoriety of some of the talent who were laid off, what makes this move interesting is that is was more proactive than reactive. Traditionally layoffs occur as a cost-cutting measure in the face of hard economic times. It has been recognized for sometime that ESPN has been “leaking subscribers.” But this is really misleading. As people cut the chord and ditch their cable packages, ESPN has been a victim of the bundle. The network is part of practically every basic cable subscription. The actual number of viewers of ESPN (versus subscribers) is far less than those who actually pay for the service as part of the bundle. The network’s penetration peaked at a little over 100 million households back in 2009/2010, and has fallen precipitously to under 90 million homes today. But again, that number is based on subscribers, not actual viewers. While it is true that its flagship TV properties like Sportscenter have experienced an actual decline in ratings, its other platforms – especially its digital and podcast properties – have grown.
This is no indicator of declining sports fandom. It says everything about trends in media consumption.
“ESPN has been actively engaged throughout its history in navigating changes in technology and fan behavior in order to continue to deliver quality, breakthrough content. Today, we are again focused on a strategic vision that will propel our vast array of networks and services forward.”
– ESPN president John Skipper in memo to company.
ESPN’s falling subscriber numbers have certainly hampered the stock price of parent company Disney. That being said, it remains one of the single most valuable properties owned by the entertainment giant, and generates tons of cash. The staffing shakeup isn’t a last-ditch effort to save a legacy brand. It is a move to intended to ensure the brand remains relevant in new media environment.
“Our content strategy… still needs to go further, faster… and as always, must be efficient and nimble.”
Here Skipper is specifically referring to digital offerings. And it is here that the advertising industry should taketh note. If a behemoth like ESPN is unable to shoehorn the old television construct into the digital age, you can sure as hell bet advertisers won’t be able to do it, either. It won’t be enough to pick up a thirty-second TV commercial and simply repurpose it as a thirty-second web ad. ESPN is changing their content model. Advertisers and advertising companies must change their content models, too.
And we’re not just talking “digital media,” either.
“In 2017, we are SO post-selling.”
The Ai genie is out of the bottle.
Channeling Alicia Silverstone’s fashion-tech from Clueless, Amazon is introducing a camera for Echo that, well, will help you tighten up that sloppy appearance. What does this have to do with the future of advertising? Everything. If Alexa tells you that your clothing selection for any given Wednesday is 50% outdated, it’s not that much of a leap to understand how Alexa can then suggest purchasing something more in-style from a featured fashion line. It fact, it’s not a leap at all. It’s likely the driving force behind the feature itself. How valuable it is to Ralph Lauren or DKNY or Adidas to be able to engage with their potential customers in their own closets??? Let me answer: UBER VALUABLE. The same dynamic works with food, hygiene products, electronics, cars….you name it. It is a whole new marketing doorway with Ai holding the golden key.
But again, simply porting over existing advertising executions to an Ai’s voice platform won’t work. That is selling. And in 2017, we as SO post-selling. Whatever engagement brands have through Ai platforms has to be just that – engaging. A resource for users. The construct isn’t a brand selling to a consumer anymore. It is a “consumer” (I hate that moniker) partnering with a brand, and vice versa. In first example from Echo, the partnership isn’t about selling a new jacket, it is about a brand partnering in a way that helps you look your best vis a vis your personal style and sensibility.
WHOA. That’s a seachange. We’re so very comfortable with the concept of “mass marketing.” You can largely throw that out the window as Ai becomes more prevalent and engrained in culture and commerce.
Which a part of other trends leading to a decrease in traditional “advertising.”
Consumers aren’t really consumers, anymore. They are marketing partners. To remain viable, the advertising industry must treat them as such.
Death of an advertising salesman
The WPP Group is to the advertising industry what ESPN is to sports media. It is the largest conglomerate of advertising companies in the world, counting the likes of J. Walter Thompson and Mindshare among its holdings. In it’s most recent earnings call, the company revised it’s annual revenue forecast downward. The reason is that clients just aren’t spending as much as they used to.
Why? See previous two stories above. Chord-cutting and on-demand platforms have put the squeeze on two of the main pillars of ad agency revenue: making ads and placing media. Traditional ads don’t function well on new platforms and jive with media consumption habits. Paid media placement hasn’t, and probably won’t be, totally supplanted by social media messaging, but digital ad buys are typically cheaper and thus the commission-model most agencies work on isn’t as lucrative. Plus digital media is highly accountable. Advertisers are able to review campaign performance by direct metrics – something that wasn’t possible in the age of newspapers and television. Therefore ineffective campaigns can be pulled more quickly, and effective spending levels can be more accurately determined. No over-spending means less revenue for ad agencies operating under a traditional model.
The train has left the station, and its not coming back. This is the new “advertising” paradigm. So what is the advertising industry to do?
First thing, stop thinking about “advertising.” “Advertising” is useful in a brand-selling-to-consumer construct. We are now in a brand-partnering-with-user construct. What are the kinds of executions that will solidify relationships between brands and users? I think the answer is creating useful content. Let’s face it, traditional advertising really isn’t that useful. Content that helps a user, or can be used as a resource, can also promote a product or brand. The Echo fashion camera is a great example of this.
I believe the most successful “advertising” companies of the near future will be those who morph into branded content creation studios. And “content” can’t be confined to video, either. Augmented and virtual reality are advancing at a breakneck pace. It appears that no less than Facebook is betting the farm that future ad revenue will be tied to augmented reality. The companies that figure out how to seamlessly yet effectively meld branded content into this augmented world of proliferated media platforms will be the winners.
Stop thinking about “advertising.” Partnership over salesmanship.
BOUNCE RATE . . .killer of web ROI. When we think of measuring effectiveness of our interactive campaigns we tend to focus on impressions and click-throughs, but the real underlying indicator is bounce rate. Regardless of your success in attracting eyeballs to your website, if you consistently maintain a high bounce rate, you’re actually likely doing more harm than good.
“Bounce Rate” can have a highly technical definition, but in layman’s terms let’s just say that a “bounce” is essentially a visitor that lands on your website doesn’t stay there any significant amount of time. Sometimes this is due to user error – clicking the wrong link, entering the wrong address, etc. However, more often a bounce comes as the result of a user not relatively immediately finding information that is relevant to their query, not interacting further with your site, and “bouncing” right off your URL.
Yes, it’s important. You can’t expect your audience to interact with your site if you don’t give them a reason to.
A decent bounce rate is less than 40% (4 out of 10 visitors to your site do not remain on a landing page or interact with the site). An average bounce rate is around 65%. Analytic services (e.g. Google) reads your site’s bounce rate and uses such as a metric when calculating site relevance, which is a determining factor in how highly (or not) search engines rank your site in search results.
As with all things digital, there are best practices that help you lower your bounce rate and increase your site’s relevance. A major factor is, of course, content. You can’t expect your audience to interact with your site if you don’t give them a reason it. So having content in place that users are looking for is one of the “no-duhs” (as the kids said when I was in school).
So if content is the “artistic” side of making your site relevant, the way in which the information is served to your audience would be the technical side. Traditionally, this has been the trickier aspect to get right. Even to the point of website best practices contradicting other website best practices.
Clearing the Digital Kudzu.
A cardinal rule of website design is to not overload the user with information on the homepage. Keep it clean, simple, and visually engaging. Problem is, how can your expect to serve relevant information for specific search queries if that’s the case? A solution to this problem came in the form of Micro-sites and custom landing pages. Search queries or other advertising would drive users to content-specific landing pages that would then link viewers back to your main website, or relevant sections on your website.
Technically, this worked. Practically, it was the digital equivalent of bringing in kudzu to control land erosion.
So the issue of serving relevancy was nominally solved, but landing pages and micro sites created more work. A lot more work (just ask your friendly neighborhood web developer). And from a branding standpoint, it often had the result of producing more brand confusion, and less awareness for the brand itself. No good. Throw into the mix the rapid proliferation of mobile devices – which necessitated the need for mobile versions of websites – and the problem was only compounded.
So to in order to maintain optimum user experience combined with effective brand promotion and organizational efficiency, we needed to find a way to clear the digital kudzu. The overgrowth of mobile sites, micro sites, and landing pages needed to go. The ability to reduce bounce rates need to stay.
Intelligent Responsive Content (IRC)
New technologies have emerged which seem to be a good solution that addresses each side of the problem. Collectively, I’ll call the approach “Intelligent Responsive Content,” or IRC. We’ve been implementing IRC solutions for clients now for several months, and have documented success with the approach.
In an IRC model, the technology addresses two aspects. The manner in which the content is served – particularly to the homepage – is dynamic and user-defined. Not to get too technical here, (you can contact me if you have further questions), but basically your website determines what content a user sees based on a series of “if/then” scenarios. The “if’s” can be derived from a series of factors – nature of search query (what did the user search for), manner in which they reached your site (display ad, facebook post, linked article, search engine, etc.), even aspects like geographic location, time of day, etc. One of more of these variables is then associated with a “then” that tells the site to service specific content.
For instance, let’s say you own a company that makes various products, including a Flux Capacitor. Let’s also pretend that the Flux Capacitor has a large profit margin, but represents a small portion of your overall business. It doesn’t make much sense to feature the product on your home page, but sales are still highly profitable to small group of people. You want to make sure that if someone if looking for a Flux Capacitor, they can find it on your site.
An IRC system can identify this person through their own actions – i.e. they search for Flux Capacitors on Google, or they read an article about Flux Capacitors, or they see a Facebook post that your company makes great Flux Capacitors. Then if that person comes inbound to your site, the technology behind IRC reads their intent, and “serves” information on your home – text, or visual – related to Flux Capacitors. Being hit with highly relevant information immediately will reduce bounce rate and also increase conversions.This system functions from code, with the content being served dynamically. Thus, you are able to have the effect of a custom landing page or micro site without having to maintain separate landing pages and microsites. One URL, multiple versions of the information on your site.
That’s the “I” component of IRC. The “R,” being “responsive,” is a relatively simple way of making your site mobile friendly without having to maintain separate mobile sites. Again, through a coding process, your site can recognize the browser window size of an inbound visitor, and re-order the information on your site for optimal viewing. So your information can be presented in customized layouts for smart phones, tablets, mini-tablets, and desktop screens.
A lot of Kudzu grew up around the Internet. IRC strategies can help to clear the vines.