The Future of Advertising: How 3 Dimensions Boost and Flatten It

Advertisers are eagerly tapping into the opportunities presented by the explosive growth of mobile devices with different screen sizes, apps and social platforms, as well as increasing amounts of time spent on mobile and social. At the same time, many start-ups and existing businesses are adopting new business models that question industry fundamentals — and push some existing businesses onto thin ice.

New offerings across the following three dimensions are boosting and flattening the advertising industry by removing middle-men and inefficiencies — and driving performance based approaches.

Dimension 1: Direct value

Industries that mature with technology move from activity- to output- to outcome-based models, such as eyeballs to click-through rates to sale-based payment. Technology also shortens the original value creation-to-consumption path by eliminating middlemen who add little or no value in the turbocharged digital era.

Data driven outcome- and value-based models: Multiple devices owned by a single customer pose a challenge to advertisers in the form of inflated results. And delivering cross-device ads to mobile devices is a challenge because they don’t have cookies like desktop. So advertisers need a way to match multiple devices to a unique user — while protecting user privacy.

This is exactly what U.S.-based start-up Drawbridge is doing. Started in 2011 and backed by Google Ventures, Drawbridge is solving user identity issues by mapping different devices based on usage patterns to a unique user.

If you search for something on your desktop, later on you can receive a relevant retargeted advert on your mobile. Or if you see an ad on your mobile and then use your desktop to make the purchase, companies could discern the real source. Either way, companies can charge more for the advert that triggers a sale.

Shortening of original value to consumption path: Impacts of mobile across all channels are forcing companies to insource capabilities that were once offered by agencies.

Dimension 2: Cross-leverage across the virtual and physical world

Reaching across these two worlds enhances the value of individual advertisements, building on each other and improving retargeting and customer engagement.

Channel cross-leverage: Ninety-five percent of live TV conversations happen on Twitter, according to social TV analytics company Bluefin. Twitter can help brands match advertisements with viewer commentary. And brands can send timely content that amplifies the physical world experience, like tweeting video of a football goal during the football match.

Advertisers are also reaching people in games. Trialpay enables gamers earn extra premium virtual currency when they buy real items, such as clothing or coffee. And SocialVibe offers FarmVille, PetVille and Mafia players an opportunity to collect virtual currency by engaging with other adverts, such as Kia’s Super Bowl 2011 advert.

Data cross-leverage: Drawbridge is now working with eXelate, which collects demographic and other data from Nielsen and MasterCard. The company will determine when customers are most likely to make big purchases, and create relevant adverts.

Location cross-leverage: Most retail stores have mobile apps that can shift to in-store mode, helping you locate different products. But imagine the app taking note of where you linger, and then sending a relevant ad or promotion to you.

Ten percent of Walmart’s online sales through apps happen when a customer is in the store. So think about the impact of context specific ads based on the examples shared above in Dimension 1.

Dimension 3: Crowd-sourced advertising

The rise of mobile-first companies, such as WhatsApp, Kakao Talk and WeChat, has impacted the amount of time people spend on Web-first companies, such as Facebook and Google. Google is taking an integrated approach with Talk, Plus, Mail and Hangouts to increase user time on its platform, but the key issue is good timely interaction.

Imagine leveraging an ecosystem of interactions through crowd-sourced advertising. Customers/contributors are involved in some way, shape or form in advert creation, which could then dovetail into good interactions.

User-generated ads: Canadian microbrewery Big Rock has leveraged its customers to create Big Rock commercials for two decades. And athletic shoe maker Converse received more than 1,000 submissions after it asked customers in 2004 to produce 24-second shorts telling how much they loved the iconic Chuck Taylor sneaker — the best videos ran on TV.

Community-based creative agency: Harley Davidson produced this video in 2011 alongside Victor & Spoils, which may be the world’s first advertising agency built on crowd-sourcing principles.

Community of film-makers: Coca-Cola’s 2013 TV commercial Happiness in the Air was in response to the company’s brief for 2012 Cannes video contest hosted by Mofilm, which connects brands directly to film-makers.

Putting it all together

“Painting does what we cannot do,” said legendary animation director Chuck Jones. “It brings a three-dimensional world into a two-dimensional plane.”

In the digital era, crowdsourced advertising turns a two dimensional plane (advertiser, agency) into a 3D plane by adding the customer into the mix, boosting resonance and relevance. Imagine, direct value( Dimension 1) as the X axis, cross-leveraging as the Y axis and crowdsourcing as the Z axis.

Companies need to shift towards the top right corner and away from the 2 dimensional plane. Of course, the extent will vary across industries mainly in B2B, but innovative companies will find ways to get there.

How well companies and people work across these 3 dimensions will impact customer and prospect engagement, and in turn the company’s future.

Follow Ramesh Ramakrishnan on Twitter, on Linkedin or Google+, website www.futuristCMO.com. Like this story? Sign up for the SAP Business Trends newsletter here.