Media companies are lagging consumers’ and advertisers’ embracement of digital formats, according to a new study.
Advertisers are aggressively spending marketing dollars on ever-more interactive and measurable formats, and consumers are happily embracing cutting edge technology, according to IBM, which conducted consumer surveys and interviews with advertising industry professionals as the basis of its research.
The results indicate that four trends are emerging: a shift in advertising spending; digital migration of platforms; the emergence of new capabilities due to moves by new entrants and existing players; and consumer adoption of new distribution formats.
The study indicated that 63% percent of global CMOs expect to increase interactive/online marketing spending while 65% expect to decrease traditional advertising. This shift will come at the expense of traditional marketing as advertisers follow their audience's migration to new channels. Digital online formats will enable advertisers the ability to more effectively measure and analyze campaign results to prove the value of their spending.
According to IBM, the migration to digital platforms -- such as social media, online video, mobile, gaming, branded entertainment and advanced TV -- blurs the distinction between advertising and marketing and allows advertisers to pursue both brand and transaction objectives simultaneously.
According to the study, today's suppliers (agencies, content networks and distributors) are not ready to meet the demands of the digital consumer and advertiser. Eighty percent of advertising industry participants interviewed for the study expect the industry to be at least five years away from being able to deliver cross-platform advertising (including sales, delivery, measurement and analysis).
For their part, consumers are accelerating their adoption of digital content services such as Twitter, YouTube, and Facebook with varying levels of engagement. Between 2007 and 2008, the adoption of social networking tools soared to 60% from 33%; online/portable music services more than doubled to 46% from 22%; mobile internet data plans nearly tripled to 41% from 15%; and access to mobile music and video quadrupled to 35% from 7%.
The study indicated that mass marketing faces many challenges as the audience becomes increasingly harder to target and fund from an integrated marketing perspective. Reaching diverse segments will require niche offerings and contextual search capabilities that are tailored for new platforms, new offerings and by geographic market.
"Media, entertainment and advertising agencies must realize consumers are open to sharing information under the right conditions," Bill Battino, managing partner of the global communications sector for IBM Global Business Services, and co-author of the study, said in a statement.
Battino continued, "Our research shows consumers are willing to trade knowledge about their usage and preferences for content and associated targeted marketing offers. Companies that excel in permission-based advertising will take share of marketing dollars."
The survey was conducted online during the third quarter of 2008, generating 2,800 responses from six countries: Australia, Germany, India, Japan, the UK and the U.S. The respondent group was split 50/50 male/female, proportionately reaching demographic and economic groups age 13 years and over. Additionally, more than 70 one-on-one sessions were conducted with global participants across the advertising value chain, representing the following types of organizations: Content owners, Media distributors, Agencies, Advertisers, Research organizations/analysts, Advertising enablers, Information providers, media networks and advertising.
