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Plus Report - By Thomas Baekdal - January 2012

The Future of Active Advertising

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Instead of just asking people to look, bring your shop into the advertisements. Give people the ability to act directly.

Just before Christmas I posted an analysis of the future of advertising. In it you can read how print advertising has already disappeared, and that digital advertising is not much better. With more and more sources, even if the overall advertising market grows, the ad revenue for each publisher is going to decline.

This report is a follow up on that article. While advertising in general is not going to be a primary source of income for publishers, nor a positive return on investment for brands, there is a new advertising revolution coming - and that is very interesting.

Call it the future of *active* advertising.

If we look at the world around us, what has happened in recent years is that we have moved from passive exposure to active connections. At the same time, the limitations of the physical world have been reduced to a simple click. Want to buy a pair of shoes? Click. Done!

Passive advertising doesn't really work in the new world. It reintroduces a delay and a cumbersome workflow compared to the *new normal* of being instantly connected.

So what does that mean?

Let's take a simple example. If you are reading a magazine on your iPad, you will find advertising like this; a completely standard print-ad.

Sure, they sometimes add a video, or maybe you click on something, but it is all 100% passive-look-at-this-but-don't-do-anything. It is almost like the brand knows you are not going to care about it.

It's pointless! There is no energy, you cannot do anything with it, you cannot connect with it, it's exposure only, and even the people in it look like they don't care - so why should you?

Compare the above advert to the one below (made-up concept, not a real ad):

Note: Model shots via ASOS

This is completely different. It is still focusing on exposure, but this is not a passive advert. It is a web shop.

Instead of just asking people to look, but don't touch. You bring the shop into the ad, giving people the ability to act on it directly.

We all know that every time you add an additional step, your conversion rate drops significantly. So by making the adverts active and by bringing the shop directly into the magazine, the banner, or anywhere else, you get a much better response.

You can see the product, spin it around to see different angles, select the size you want, and buy the product right there. And when you checkout, the payment system just pops up over the advert itself. Don't force people to leave where they are. Finish the transition right where people are.

And if this product isn't exactly what people want, they can browse around for other products, right from within the advert.

This was something you couldn't do with print, because print forces you to be passive. As such, most print campaigns are generalized, image-based showcases designed to look good from a graphic perspective.

With the digital world we have interactivity. Most brands don't get it and think interactivity means adding a video or a 360 degree image. But none of that changes the passivity of the advert. Real interactivity is about getting people to act directly to what the advert is about. Get people to connect, to comment, to share, and to buy - directly from the advertisement.

If you came across these two ads in an iPad magazine, which one do you think would have the highest conversion rate?

This is just a very simple example of active advertising. I illustrate the difference between changing your advertising from an image-based passive broadcast, to a product-based active web shop.

You change your message from "see this!" to "do this!"

Note: If you are really smart, you would change your web shop into something that looks really cool using a responsive layout, and then the ad could be any page from your shop ...no need to create separate outputs.

Another example is the poster shown in Microsoft's "Future Productivity Vision" video. At 1:20 in the video, a man is standing at a train station waiting for a train. He notices a poster from a "benefit concert" asking for donations. He takes out his phone, which scans the poster and brings him to a mobile donation page - where he donates $20.

 

In the past, the poster was passive media designed solely to inform. In the future, it is an active platform designed to get people to act.

Here is another example I have mentioned several times before. A South Korean grocery store moved their store into a local subway station. But instead of putting passive posters up informing people about their product, they changed it so the people could shop for their groceries directly via the posters.

 

It is so simple when you think about, but it is also brilliant.

Active + contextual

Making your advertisments active isn't just about changing the format from passive to active, it is also a shift in where and how you advertise. Ask yourself, where do people need this? Where do they think about it?

Take the example below. It is an active poster for a movie, which allows you to watch a movie directly from your phone (or synced to your home TV) just by placing your phone near it. In this example, we use near-field-communication and Google Wallet.

Note: Concept advert, not real.

The poster itself is active. It encourages you to do something with it. But where would you put it? In a magazine? A newspaper? On a billboard? Nah ...

If I were a movie executive I would contact one of the big grocery stores, and create an advertising deal that put this poster right into the store next to the cola, candy and popcorn. So when people shop for candy, they see this movie and can start watching it directly.

You need to link an activity to an action - in this case: buying cola, candy and popcorn = watch this movie!

Another example of the correct placement is one Avinash Kaushik mentioned in a recent podcast. He illustrated how locksmiths in San Jose are using mobile search ads to create active advertising.

Instead of posting a regular advert designed to trigger specific keywords, they also look at when people need their services. You need a locksmith when you are standing outside your apartment and you suddenly realize that you lost your keys. So you take out your phone, search for "locksmith".

What you get is brilliant. Your search is now linked to your location and your device. So the locksmith displays an advert highly relevant to you, and instead of providing a link, they give you a click-to-call directly.

It is an active advert, highly relevant to where people are and what device they are using, which is linked to the probably situation people are in.

You can watch other good examples in Avinash's great podcast here:

 

The post-conversion world

The examples, so far, are just the most basic form of active advertising. It is still focused primarily on creating exposure. The problem with traditional exposure is that it is the least efficient form of marketing possible. Even when you add active elements, exposure is what you do when you try to reach people who don't know who you are.

Traditional exposure is a pre-conversion activity. Something you do before people decide if they like your product. And in the past that was the only form of activity.

These days, the social world has introduced post-conversion activities, which are all far more powerful than any traditional marketing.

One example is sharing. Sharing is post-conversion activity. It is something people do *after* they have decided if they like your product - not before. It is the same with personal recommendations, that is only something people do when they have already used your product.

In fact, everything that happens in the social world is a post-conversion activity. It is a reaction to the customer experience you give people. Nobody decides to like a Facebook page just because you tell them to. You have to have build up momentum and a relationship with them. You have to do something to make you worthy of a connection.

This requires you to completely change how you think of advertising. You have to shift your focus from "how can I get more people to know me", to "how can I make what I do so valuable that people will share it?"

You have to think of advertising *after* people have purchased your product ...and how you can help people *use* your product.

Think about it this way:

In the past we focused on passive advertising, which was based on exposure and dominated by marketing.

In the digital world, we focus on active advertising, based on direct conversions and mostly dominated by sale.

In the social world, we focus on post-conversion advertising (sharing, linking, recommendations), which is based on the experience we have and is dominated by ...what? Marketing? No, we don't share something because of the exposure. Sale? No, the act of buying something doesn't automatically cause us to also recommend it.

The post conversion activity is based on what people think about your product, which in turn means that the post-conversion advertising is largely the result of the work your product team and designers are doing.

Apple, for instance, is a post-conversion company. People buy iPhones because of customer satisfaction they had with other Apple products before it. That means Jonathan Ive (Apple's designer) is more important than Apple's entire marketing department combined. He is the one who gives you a reason to share.

For instance, which one do you think caused more sales?

This TV commercial...or people being generally excited about the product itself.

 

This is what the social world is all about, post-conversion advertising. You create something that causes other people to *actively* share it with everyone around them.

The challenges of embracing active advertising

Shifting your focus from passive advertising to the future active form is not going to be easy. There are huge challenges that companies face ...and some simply don't have the right managers to make it happen.

Challenge: Organization

The first problem is the organizational structure of your company. Most companies have divided product, sales and marketing up into three completely different divisions and projects are internalized within each department.

In the past, where advertising in a magazine was a separate activity distanced from the actual sale in a shop, this was not a big problem. But today, when advertising is active and is more about getting a direct sale than exposure of a slogan, this organization structure simply doesn't work.

You need to bring sales and marketing together. Not just by having more meetings. They actually have to work as one.

It is the same with the product team, which is largely responsible for your real social effect. You can't have design do one thing, and sales and marketing do something else. Product, sales and marketing has to be completely in tune, because the message you have to bring is a combination of their expertise.

Most big companies, especially the big brands, can't do this because there are simply too many people involved. In which case you probably have to rethink how you organize your workforce.

Maybe you need to create a "Dream Team" ...one department where you combine the best people from design, sales and marketing into one group. And then reorganize the rest as a service division to support them.

But you need to change your traditional organizational structure.

Challenge: IT

In the past, marketing would call an external ad agency and ask them to make "something fancy" and then that was it. And it works great for traditional passive advertising that isn't connected to anything.

But once you start to create active advertising, like the example of turning a passive advertising into an active mini-web shop, you get into trouble with IT.

You cannot just outsource this to an agency because it needs to be tied directly into your backend product and sales systems. The payment systems have to work with your existing shop's systems so that people don't have to create two accounts.

Here is the problem. Most IT departments have for years focused on creating an IT system that optimizes internal workflows, with only limited access to the outside world (for, what they call, security concerns). As a result, your existing web shop was a $500,000 dollar project that took 6 months to a year to implement, and it works mostly by integrating one system to another through a closed connection.

This kind of thing doesn't work in a world of active advertising + sales. You cannot wait 6 months to a year, or invest $500,000 every time you get a new idea. And you cannot *not* have ideas.

One of the key elements of success in the future is your ability to adapt to a situation in real time. To be able to create a meaningful connection that leads to a positive return on investment at relatively short notice.

You need to change your entire IT system so that it is flexible and nimble. Not through expensive integration projects, but at its very core.

In my experience, forcing IT to change is probably the one thing that will prevent you from embracing the future world of advertising, but it is essential that you make it happen.

You can get part of the way by extending your product and sales system with an open API, because then the backend can remain rigid and closed, while the API provides the scale and flexibility you need. It is not perfect, but it is better than nothing.

Active advertising focused around your product is the future

The future of advertising will of course be a mix. It's not one thing or another. But there is no question that the future is more about active advertising than passive exposure. And it isn't just happening online. It is happening with every form of media.

Take TV, for example. Today's commercials are passive videos that you watch for 30 seconds. But when TV starts to become interactive, those commercials will instead be visualized web shops. If you see something you like, you just press the button on your remote and buy it.

All of this also degrades the monetary value for publishers, as I wrote about in "The Non-future of Advertising". With today's TV advertising, you have no idea how effective it is other than vague surveys that don't tell you anything.

But when the commercials are linked directly to a sale, you can instantly measure how many people bought something and exactly how much they spent. This is great for brands looking to get real return on investment. It's pretty bad for publishers and TV stations because the bulk of their profit today is based on brands losing money (only 18% of all TV commercials are estimated to generate a positive return on investment).

And don't forget the social world. It is active advertising through the experience of your products.

It is a big change, but it is worth it!

 
 
 

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Thomas Baekdal

Founder, media analyst, author, and publisher. Follow on Twitter

"Thomas Baekdal is one of Scandinavia's most sought-after experts in the digitization of media companies. He has made ​​himself known for his analysis of how digitization has changed the way we consume media."
Swedish business magazine, Resumé

 

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