Ad Tech – A Market Very Much In Transition

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BY TED NELSON
CEO, Mechanica

AD TECH PRESS – Just recently I had the opportunity of serving on Bostinno’s State of Innovation “Ad Tech vs. Advertising” panel. It was promoted as a debate between “new school” ad tech providers and advertising agencies. But despite best efforts from Anne Weiskopf, our enthusiastic moderator, it definitely never turned into a heated debate. This was both due to a couple of factors: the very polite nature of my co-panelists, as well as because it quickly became evident that ad tech is a field that’s very much in transition and nobody really knows what side they’re on.

The moment you pick a side, five minutes later, you wish you were on the other.

Ted Nelson

Ted Nelson is CEO of Mechanica

One point I feel strongly about that managed to garner a fair amount of retweeting action was: “Print isn’t dead, just bad print is dead. Print advertising is going to have a definite, very special future.” This was in response to a question concerning whether print media is going to disappear altogether. My point is that despite the fact that programmatic buying and the decline of print media are nearly unstoppable dual forces quickly transforming the content landscape…there will always be some print media and traditional, contextually crafted advertising that endures. History proves this.

No form of media or content is fully obsoleted by another; its significance and role in people’s lives simply shifts. Examples include the fact that Gutenberg didn’t put the church out of business. The advent of TV didn’t kill radio. And “vinyl” records are undergoing an unprecedented (and profitable) resurgence at the moment.

What in fact happens is that the surviving versions of “old media” tend to become limited, albeit very special experiences. And as a result they will become highly valuable brand building tools owing to the inherent specialness of the time readers choose to spend with these “rare earth” media minerals. My favorite personal example of this is the monthly New York Times Magazine “Style” edition. It’s a lushly produced print magazine that artfully blurs the line between content and advertising. The entire consumption experience, usually on a Sunday morning, is highly decadent, immersive and conversational. And after being thoroughly perused, the magazine enjoys a long life of pass along readership via the “distribution platform” of coffee tables and hotel nightstands around the world.  As a result, the inherent and lasting value of those advertising impressions is (and will always be) nearly incalculable.

The other much retweeted fact I shared had to do with a Millward Brown data-point conveniently released the day of the debate in which it was pointed out that “While almost 60% of digital advertising dollars this year have a direct response objective, by 2017, digital advertising dollars will be almost equally split between branding and direct response objectives.” And “Indeed, brand advertising spending growth will outpace direct response in each year of the forecast, with increases of 18.1% and 11.2% respectively this year and 10.5% and 3.6% respectively in 2017.” This is a significant shift, with a resultant major emphasis on finding brand appropriate digital content vehicles. I predict this shift in demand for inventory that doesn’t presently exist will create a number of freshly minted digital billionaires over the next several years.

Finally, it was pretty telling in my mind that the ad tech guys never touched on the extent to which outright fraud and “below the fold” irrelevance is an issue, some estimates claim nearly 50% of online ads are simply never seen. When you combine this with the nearly totally random nature of so much of the context an advertiser is supporting, you end up with a market that is still very much in transition. So choose your side…but be prepared to quickly jump to the other as this fascinating debate unfolds in real time.
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Ted is a very hands-on CEO, and one of the four founding partners who conceived and launched Mechanica. Prior to launching Mechanica, Ted spent eight years as the managing partner/brand strategy director at Mullen, the nation’s 19th largest integrated communications firm. Prior to joining Mullen, Ted honed his skills while working at Chiat/Day on both coasts, with strategic responsibilities for a diverse set of clients. Following Chiat/Day, he launched the brand strategy discipline within Anderson & Lembke, then the world’s largest business-to-business specialty agency.

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