“Predicting the future is easy … getting it right is the hard part.” —Howard Frank
One of the monumentally wrong predictions in the early days of the Internet was that this new technology would lead to the end of advertising. The reasoning was that, since content would be widely available for free, advertising would be obsolete. Marketers would be forced to simply list their product attributes and pricing. The days of using emotive messages as a way into the hearts of customers would come to end. Brand loyalty would disappear. Consumers would benefit from lower prices and would make purely rational buying decisions.
As it turns out, not so much.
Which is not to say that advertising hasn’t been drastically changed by the Internet. It has. But there isn’t less of it. In fact, there is more than ever. Exhibit A: Google. The technology giant recently passed Apple as the most valuable company in the world. From where does Google derive 90 percent of its income? That’s right—advertising, from AdWords to AdSense to the video pre-roll spots you see on YouTube, Google has become, arguably, the most powerful media giant, offering eyeballs and attention by the click to the highest bidder. And don’t overlook Exhibit B: Facebook, now the fourth most valuable company in the world. They generate about 85 percent of their revenue from advertising, and they do it in an entirely different way from Google.
What the Internet idealists misunderstood or ignored about advertising is that quality content depends on it. Without advertising there would be virtually no traditional media forms such as TV, radio or magazines and newspapers. The same principle holds true for the Internet, where content is what draws people there. The better it is and the more entertaining or informative, the more people are likely to navigate there. And advertising pays for that content, just as it does in traditional media.
I’ve noted in the past that one of the brilliant aspects of Facebook is that its users supply the content in the form of their own lives documented post by post and then commented on, shared, liked and otherwise consumed. In the process,Facebook users are creating incredibly detailed profiles of themselves as consumers, which has advertisers clamoring to get their message in front of them. Presto! Facebook has made Mr. Zuckerberg about the 5th wealthiest guy on the planet. I think that’s the equivalent of around 10 billion likes.
Certainly there has been a shift in advertising dollars. Google AdWords and organic search have devastated the yellow pages industry. Newspapers have lost much of their bread and butter clients in real estate and classified ads. Radio stations have struggled to maintain revenue. TV, however, has remained a strong medium and continues to have the dominant share of the pie. Strategy Analytics estimated that, in 2015, TV advertising accounted for about $82 billion of a $187 billion pot, with all digital advertising coming in at $53 billion. Digital is the fastest growing category though, at around 10 percent per year.
But has the Internet substantially changed or diminished brands? I believe it has only changed the ways in which we learn about them and build brand loyalties. The Internet has certainly added transparency and shone a bright light on claims made by marketers. This may weaken some brands that make disputable claims about their products. And the path to learning about a brand is far more likely to start with a click on a basic ad or search result than in the past.
Yet, that click is still just the beginning. Brands are learning quickly how to use the digital world to build a better brand experience, with better web-based features, customer service, and social media. A consumer can be much more involved with a simple brand like Snickers or Coke than before the digital age, if they want to be. The depth of information available on complex products like a car is far greater. But you will still see TV spots devoted to shiny new cars driving into the sunset, fashionable role models drinking certain beer brands after work, or moms taking care of babies with certain brands of child care products.
So the Internet hasn’t replaced the concept of content driven by advertising, and it hasn’t replaced the concept of brands building emotional connections with their customers. It has simply changed the methods of delivery and enhanced the amount of information available to the consumer. In the course of doing this, it has produced two of the most valuable advertising brands in the universe. And you can Google that.
As published in the Central Penn Business Journal, the Reading Eagle, the Northeast Pennsylvania Business Journal and Lehigh Valley Business.