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Don’t Fear the “Splintered Web”

Apple-iPad-001

It didn’t take long for Apple’s iPad announcement to be co-opted by industries that worry about how the iPad will upend their legacy businesses. You might assume this to be the book publishers, who might fear lower margins on e-books, or newspapers, who are struggling to figure out how to profit from companies that make it easier to enjoy their content at no cost. But actually the biggest voice against the iPad so far is my very own industry: Digital Advertising.

Late last week two of the leading voices of digital marketing emerged with very public warnings for the advertising world if “walled gardens” continue to proliferate. In his blog, Randall Rothenberg, President and CEO of the Interactive Advertising Bureau, claimed that the iPad is a “threat to advertising.” And Forrester’s Josh Bernoff, the co-author of Groundswell, wrote in Advertising Age and his blog about how this new technology and others “means the end of the Web’s golden age.” When these two people quickly jump to pull the fire alarm, we all should probably listen.

Their overall argument is that the rise of new devices with proprietary software such as the iPad, Kindle, Android, iPhone, Facebook, and TiVo is ushering in an era of a “closed” Web. Bernoff calls this “The Splinternet” to suggest that we are splintering off into many sub-Webs with their own rules and access privileges. Rothenberg calls these “attempts to semi-privatize the Internet.” What both men fear is that this will make the jobs of marketers and advertisers much, much more difficult because of the additional work needed to adapt advertising to multiple relationships, creative units, and measurement standards—among other limits to “scale.”

From the leader of the biggest representative of the digital advertising industry, Rothenberg’s words carry a lot of weight. He is fearful of how this proliferation of semi-private Web devices will significantly weaken his members’ businesses:

“Put simply, a company’s opportunity to create, sell and use advertising effectively and profitably will depend on its ability to deliver it seamlessly across multiple devices…. …The creative agencies on the IAB Agency Advisory Board have said categorically that their single greatest obstacle to advertising effectiveness and growth is their inability to deliver the same rich-media ads to tens of millions of households across multiple sites because, as they put it, ‘the rich media toolkit differs too much from site to site.’”

As a former client-side digital marketer and current leader of a digital advertising agency, I certainly appreciate Rothenberg’s representation and passionate focus on protecting and improving our industry. However, I humbly disagree that this “splintering” of the Web will kill digital advertising. It might kill mass, interruptive banner advertising, but it is already ushering in incredible new forms of meaningful marketing.

First, the reality of economics is that you often have to get some level of privatization for market economics to take hold. Apple has created a great deal of privatization in the music industry through the iPod. This has led to a real, thriving marketplace in which Apple has an incentive and ability to continually improve the user experience. The better it makes iTunes, the more music it sells. Further, consumers like that Apple is protecting them from porn and malware. Many real, thriving businesses and happy consumers have been spawned by Apple’s efforts so far. The old music industry (like the old advertising industry) did not like how this market opened up, but it was their own fault for not accepting the change and figuring out how to win.

Google has also privatized the Web in a way, too. It has a search engine that sets rules about the content that it crawls and ranks, filtering out the “open” Internet into a closed ranking system that it alone fully controls. Its algorithm treats some content better than others, and the company even decides which countries’ laws it does and doesn’t want to obey. The result: A fairly well-organized tool that has made consumers’ lives much better, and created billions in value for both shareholders and advertisers. Again, this has taken money away from old advertising players such as traditional agencies and the Yellow Pages. Sorry, guys.

At the end of the day, marketers were not put in their jobs to ensure that the mass banner-ad market keeps running well. Marketers want to sell their products and services. Interruptive advertising spread across many digital properties at once is but only one of many ways to achieve this goal. In fact, it is a marketing strategy that is looking worse and worse—both in the online and offline world—whether standardization exists or not. People pay decreasing attention and trust to the growing number of interruptive ads that we experience in our lives each day.

On the other hand, tools such as Google and the iPhone are allowing marketers to find and forge meaningful connections with their customers and add value to their lives. Tools such as Nike+ or Kraft’s iFood app are not “easy” for marketers to execute with the push of a single ad unit. But they are taking marketing to a much higher level both in terms of the impact on customers’ lives and the company’s bottom lines. Standardized banner ads are the absolute least interesting way to win in this exciting digital world. I think leaders such as Rothenberg and Bernoff can take the bar much higher by helping us adjust to where the marketplace—and society—wants us to go.

I believe it will be impossible for the advertising tail to wag the device/technology dog. One might argue that profit incentives will press device manufacturers such as Apple and Amazon to embrace standardized ad units. But frankly there is probably not enough incentive for them to do so. First, why adjust everything to make $.01 per viewer (or less) in ad revenue when the same viewer will pay $.99 (or more) for apps? The economic pressure is to dump the ad sales force and hire more software designers to keep upgrading the devices. Second, by embracing standardized units these companies are selling out their superior user experiences to the lowest-common CPM. Making all media and devices equal devalues the difference of an iPad.

As a digital advertising industry, we need to force ourselves to stop trying to dumb down our work to standardized banners and counting impressions. We must become more focused on making digital marketing work—especially in a way that has a positive impact on people’s lives. Instead of holding up a sword against the horde of change, our industry needs leaders who will help marketers understand the reality of societal change and start building what works next.

As I wrote in a guest post on the 1to1 Media blog recently, mass, interruptive scale might die—but meaningful, personal connections between marketers and their customers will rise.

2 Responses to “Don’t Fear the “Splintered Web””

  1. Marty says:

    Brilliant post. Love this. I especially appreciate understanding societal changes. There’s opportunities abound, but because they don’t look like something we imagine today doesn’t mean they don’t exist. Thanks for sharing.

  2. Very smart, very thoughtful piece, and I appreciate it. But let me clarify the blog posting I did that helped initiate this (http://www.randallrothenberg.com/2010/01/ipads-threat-to-advertising-im-less.html).

    It is very true that marketers, agencies, and media must adapt to a world in which classic formatted advertising will be more fragmented, and gradually will be complemented, and perhaps even supplanted by other forms of marketing communications and marketing services. IAB has done and continues to do a lot of work in this area, notably our 2007-2008 “Marketing-Media Ecosystem 2010″ research by Booz & Co., and our recent “Building Brands Online” study done in conjunction with Bain (both available on our Web site).

    But the fact is, the overwhelming bulk of brand advertising still takes the form of “mass, interruptive” display – whether that display is in print, television, outdoor, or online. Brand marketers, especially in CPG and other low-consideration categories that make up perhaps 60% or more of all above-the-line advertising expenditures in the US, depend on these forms of scalable advertising to get their messages in front of a consumer population that’s in-market all the time for their products. This was underscored by something the ~700 marketers responding to the IAB/Bain survey told us: They overwhelmingly prefer such metrics as awareness, recall, intent to purchase and likeability – “traditional” metrics they say correlate more closely to their need to drive continuous sales at brand-premium prices than do Web-centric metrics such as clickthroughs and pageviews. For brand advertisers, seamless scale is still the way to go.

    So anything that adds complexity and cost to the delivery of this type of scalable advertising will impede that medium’s growth, purely and simply. All of us in the interactive industry have heard this complexity and cost disadvantage raised time and again as a primary reason – perhaps THE primary reason – that interactive’s share of brand marketers’ budgets remains at roughly 7%, while consumer time spent with interactive media is as much as 30%.

    My point was and is: While the new device-based applications of Internet Protocol certainly contribute to consumer delight, to the degree they fragment the interactive advertising supply chain and contribute to continuing cost and complexity, they will hinder both the amount of scalable brand advertising that flows to the medium generally, and certainly add fulfillment cost to virtually any individual segment or player. Already, the cost of adapting rich media campaigns to different sites is impeding growth and adding cost to agencies and publishers alike.

    As a result, it’s very important that the industry work together with agencies and marketers to assure as much seamless scale across devices as possible. And at the same time, all players need to redouble their efforts to create new products and services that can fulfill marketers’ needs.

    Or to shorthand this into a sentence: If the supply chain doesn’t work, the stuff doesn’t get from Point A to Point B, and people don’t get paid.

    Hope this helps! Keep writing!

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