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Three Emerging Models for Advertising

Three Emerging Models for Advertising

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Published by SteveRappaport
Paper discusses the end of the "interrupt and repeat" model era characteristic of mass media, to new models ushered in by digital practices that are centered on relevance, relationship and engagement.
Paper discusses the end of the "interrupt and repeat" model era characteristic of mass media, to new models ushered in by digital practices that are centered on relevance, relationship and engagement.

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Published by: SteveRappaport on Apr 21, 2008
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There's advertising theory. And there's advertising practice. With
JAR 
you get the best of both worlds. A personal subscription gives easyaccess to expert learning that can help remove the guesswork from building brands.
Find out how
Journal of AdvertisingResearch
Vol. 47, No. 2, June 2007
Lessons from Online Practice: New Advertising Models
Stephen D. RappaportThe Advertising Research Foundation
The Online Advertising Playbook (Plummer et al., 2007) aggregates and synthesizes what has beenlearned about advertising online during its first 10 years. The book answers a challenge posed to TheAdvertising Research Foundation (ARF) by a number of marketers, and perhaps best clearly expressed by Gillette's Pat McGraw: "I really don't need another highly charged sales pitch on the power of internetadvertising. What I would like to know is how it works and why it works."The collection of over 1,200 academic studies, industry research, and professional articles we reviewed,studied, and learned from allowed us to develop strategic principles and guidelines for effective onlineadvertising, and to illustrate each one with case studies that spanned the full spectrum of marketingobjectives from lead generation to loyalty.We discovered traditional marketers like Procter & Gamble acting most untraditionally and successfullyfor Tide Coldwater. We witnessed youth brands, like Scion, taking full advantage of virtual role-playinggames or enabling consumers to interact with their brand through rich media that blurred the line between branding and direct response. We saw that the smartest marketers are not either/or when it comes to massmedia and online advertising-advertisers like McDonald's choose predominately online media for someitems, offline for others, or blend them as appropriate. We learned that online advertising contributesmost to brand performance when it is planned into the brand campaign from the outset, not used to"cover our bases" or as another experiment for the interactive team. There are many insights and principles for effective advertising in the book.If the Playbook were solely concerned with research on online advertising's first decade, that in itself would be sufficient for most purposes. Substantial value is gained from a comprehensive, analytical look  back. But from a brand building standpoint, that would fall short because it does not deal with the almostdaily innovations in online technology, or the changing relationships of online media and mass media,consumer behavior, and brands. Looking forward is especially important now because the industry iscrossing an inflection point, passing from the conventional mass media interrupt and repeat model for advertising to a family of advertising models centered on relevance.Why now? The first reason is obvious: consumers are spending more time online. JupiterResearch reportsthat the time online consumers spend with the internet roughly equals their television viewing time, about14 hours per week (Dawley,2006).High speed connections, of course, are a major reason why; nearly 80 percent of U.S. residential web users went online with broadband connections, and those broadbandusers spent about one-third more time online than dial-up users with their slower connection speeds(Nielsen//NetRatings, 2006). Broadband is ubiquitous and always on. It is commonplace at home andwork, and widely available in restaurants, airports, libraries, malls, schools, etc. and not limited to a
 
 particular device-laptops, mobile phones, and handheld devices of all types send and receive the internet.Faster speeds provide richer, more interactive consumer experiences, and access to and use of moreentertainment, information, and services-commercial and social, when consumers choose to do so.We should note that it is important for U.S. marketers to remember that broadband developments are globalin nature and not centered in America. While the United States leads in the number of broadbandsubscribers, the United States ranks 12th among Organization for Economic Cooperation andDevelopment countries in terms of broadband subscribers per 100 inhabitants (OECD,2005).Marketersshould be looking around the world for insights and innovation, and perhaps especially to countries inthe top 12, which include South Korea, Northern Europe, Japan, and Canada that may serve as bellwethers.A second reason is that broadband and new technologies encourage consumers to create, contribute, andshare their thoughts and experiences with others through written entries, sounds, and video, as well asengage with others around their content. Blog tracking service Technorati (2007) claims there are over 67 million blogs, with 175,000 created daily. Today every PC or Mac ships with video editing softwarethat can burn discs or easily convert video to a variety of distribution formats. Entire multitrack recordingstudios rivaling the most professional operations fit on a few discs and have done so for years. Image,music, and video sharing sites like Flickr, MySpace (originally), and YouTube abound. Studios, labels,advertisers, or conventional media no longer fully control content, nor do they have a lock on the meansof production and distribution. The "disruption" of these industries and their economic models is dailynews in the business section.Such disruption is nothing new, of course, and has established historical precedent. Political economistand pioneering communications theorist Harold A. Innis showed in the 1950s that change comes from themargins of society, and from the ability of people at the margins to develop or utilize new media thatchallenge the central social, political, economic, and cultural institutions of their day (Innis, 1964,1986).Just take the original Napster and peer-to-peer file sharing services as an example. The upshot isthat the recording industry, which was threatened by such developments from college students, has takensteps to protect its business model, but while doing so managed to oppose and alienate its consumer base.The recording industry has been trying to regain its footing ever since. Will other industries learn fromthis example or follow it? A final reason we will consider for the emergence of new advertising models isthat broadband penetration and consumer adoption of new technologies have encouraged advertisers toexperiment with and employ banners, search text advertisements, email, interactive rich media, andstreaming audio and video, and for consumers to learn about brands, participate with brands in new ways,and to create new brand meanings.At first marketers, quite naturally, considered online media as extensions of the space and time media-TV,radio, and print. Advertisements during most of online advertising's first 10 years filled measured spaceson webpages with variously sized banners, rectangles, buttons, or leaderboards. In fact, a good amount of early advertising industry work focused on defining such spaces, called Interactive Marketing Units, inorder to standardize practices for the sale and delivery of paid advertising.For a short while following the dot-com collapse, the internet was nearly written off owing to the failureof many highly touted website businesses, many of which were based on advertising-supported revenuemodels or assumptions about consumers. The problem, we know now, was not the internet, but in the business plans, management and in the unreasonable expectations for their success. Postcollapse, asconsumers and companies continued moving online, more practical business models emerged and started proving themselves, such as search advertising (now 40 percent of online advertising spending) and e-commerce. Along with these came refinements in targeting advertising, understanding how websites buildand hold audiences, and acquiring deeper insights into online consumers and their mediaand buying patterns. New technologies and broadband adoption enabled advertisers to make enormous
 
creative leaps and create landmark campaigns, such as that for BMW Films. These leaps are likely tocontinue as marketing and advertising are increasingly peopled with individuals for whom the internet,eBay, Amazon, Google, and YouTube were always there and which played some role in forming their worldviews, just as television, film, radio, and print did for prior generations.From the developments we described, we can see that the sine qua non for interrupt and repeat advertising-one-way communication from advertiser to consumer-is vanishing from online advertising. We learnedfrom expert contributions to the Playbook that marketers are moving to three new models of advertising.The first, the On Demand model, is based on consumers' abilities to select and choose their content andinteractions with brands. The second model is the permission-based (opt-in) model, centered onengagement, not exposure. The final model is one of advertising as service to consumers.
ON DEMAND MODEL
Central to this model is the consumer as content aggregator, filterer, scheduler, exposer, and disposer.From a marketer's viewpoint, consumers might be regarded as homo communicatus, "man thecommunications manager." The era of consumers reading, watching, or listening on the medias'schedules seems almost quaint; today nearly every media organization is promoting their ability to beseen or heard when consumers want to see or hear them. TiVO and DVRs, increasingly found in set top boxes, are emblematic of this trend. Even network television, which built its business on aggregatingviewers at specific times, is experimenting with On Demand models. Episodes of some programs, evenwildly popular ones, are sold on Apple's iTunes or made available from their own online distributionsystems like CBS' Innertube, or through the shows' own websites. While commuting this Monday morningon Metro North, my seatmate watched video podcasts of business news programs originally aired over theweekend. In fact, many media have enjoyed a serendipitous benefit from the on-demand trend: their archives have become hot properties because consumers seek access to materials from hours, days,weeks, or years ago. Storage, retrieval, and on-demand access have transformed the media business andincreased the value of its content.Broadly adopted information search tools are important developments supporting the On Demand model.Before search engines and good websites, consumers were at the mercy of manufacturers, retailers, anddistributors for brand information. If the store was closed or consumers missed an advertisement,consumers were out of luck. Capable search and websites optimized for search engines changed thatsituation. Today consumers routinely access, evaluate, and act on brand information on their schedules24/7.Another important aspect of the On Demand model is content personalization. In addition to producedcontent, consumers want to leverage and harness the knowledge power of brands by customizing content totheir interests, needs, and tastes. This takes the form of managing preferences: "I want to see the weather in the 10016 and 90210 zip codes on my home page," "Update me only when there's new informationabout Brand X."With choice comes responsibility. Professor Jeff Cole of the University of Southern California notes in thePlaybook that "people like choice, but not too much choice" (Cole, 2007). Too much choice can befrustrating, overwhelming, or immobilizing, and counterproductive from a brand viewpoint. Furnishingconsumers with tools to manage a reasonable number of choices is far better than giving them every possible option (Wagner,2007).These can take any number of forms, from reducing the number of entrees on a restaurant menu, to MyBrand preference centers, or implementing sophisticated businessrules that present the most relevant choices.This is probably a good time to address the notion of "consumer control" that is in vogue right now. The

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