Battle of the Titans
In the White Room, the debate is about ad exchanges - the TV and print equivalent of Google’s Adwords classified advertising model.
As many see it, Google and Microsoft’s tanks are squaring off against each other on media buying companies’ front lawn. Digital Armageddon is forecast.
But is it going to happen?
Google have revolutionized classified advertising with their Adwords. Search for a specific car component in conventional newspaper classified ads, and you’ll be searching for days. But type the name of that component into Google, and you will be surrounded by highly targeted ads offering that component within a second.
At first glance, it seems quite logical to extend this idea to TV and print.
At the moment, like classified ads, analog TV advertising is only weakly targeted. If you are a 35 year old man, most of the ads you see in a typical commercial break on television aren’t talking to you – they’re aimed at women, at kids, at men aged 18-24 or at older people.
Similarly if you are a 20 year old woman. Most of the food ads are aimed at women aged 25-45. If you don’t have three kids, the ads for people carriers aren’t talking to you either. Most TV advertising lands on the wrong people.
The Google/Microsoft models change all of this, by sending different ads to different people, even though they may be watching the same show on TV. Rich people get ads for investments and expensive cars. People who spend a lot on clothes get ads for clothes. It’s all perfectly possibly via a smart computer and a fast broadband connection.
The models clear up the inefficencies in TV advertising placement using cutting edge, 21st century use of computers. They aim to send ads only to the right people. And by reading consumer habits via behavioural targeting, they aim to send them only at the moment of truth, when those consumers are already about to buy.
But therein lies the problem.
They locate exactly the right prospects for the brand, and then they swoop in at them – and offer them a 30 second TV commercial – a fifty year old analog advertising format.
It’s a bit like building a cruise missile, and then welding a cannonball to the front of it as a warhead.
Wouldn’t they do better to use the awesome computing power to offer the prospect something more compelling? Or as Esther Dyson argued in the discussion, wouldn’t they use that opportunity at least to build a relationship with them?
The other issue with the ad exchange networks is that they extrapolate behaviour from the Google Adwords model, and that this extrapolation may be dangerous.
In the classified advertising world, because most people only need a central heating plumbing specialist once in a blue moon, they are happy to wait until their central heating blows up before they search Google for a solution.
But in many display advertising categories, this isn’t the behaviour.
If you are pregnant, you don’t wait until you give birth and then rush to your computer and type ‘baby’ into Google for information. You spend months learning up on your baby, and then you actively seek out information and advice from sources with a reputation. In the UK, one of the best is the Tesco Baby Club. And because babies are so important to their mothers, Tesco doesn’t need to spend money attracting them to the club, because half the mothers-to-be in the UK, and nearly all those who shop at Tesco, already sign up for it.
Similarly with airlines. They don’t need to talk to frequent business flyers via behavioural targeting because most of the frequent business flyers who use that airline actively seek out membership of that airline’s frequent flyer club.
An airline is so important to its frequent users that they actively seek out the frequent flyer relationship – because they know that they will otherwise be spending their working week seated in Row E.
Will advertising exchanges happen? Probably.
But as for how advertising will then develop, all bets are off.