IBM predicts the end of advertising "as we know it"

12 November 2007

Increasingly empowered consumers, more self-reliant advertisers and ever-evolving technologies are redefining how advertising is sold, created, consumed and tracked.

IBM''s research points to four evolving future scenarios, with the catalysts that will be driving them. Traditional advertising players, i.e. broadcasters, distributors and advertising agencies, may get squeezed unless they can successfully implement consumer, business model and business design innovation.

Based on IBM global surveys of more than 2,400 consumers and 80 advertising experts, the report see four change drivers shifting control within the industry:

- Attention - Consumers increasingly control how they view, interact with and filter advertising in a multi-channel world, as they continue to shift their attention away from linear TV and adopt ad-skipping, sharing and rating tools. IBM''s survey suggests that personal PC time now rivals TV time, with 71 per cent of respondents using the Internet more than two hours per day, versus just 48 per cent spending an equivalent amount of time watching TV.
- Creativity - Thanks to technology, the rising popularity of user-generated and peer-delivered content and new ad revenue-sharing models (e.g., YouTube, Crackle, Current TV), amateurs and semi-professionals are now creating lower-cost advertising content. IBM''s survey suggests the trend will continue, with user-generated content sites as the top destination for viewing online video content, attracting 39 percent of respondents. Further, established players like publishers and broadcasters are taking on traditional agency functions and broadening creative roles.
- Measurement - Advertisers are demanding more individual-specific and involvement-based measurements, pressurising the traditional mass-market model. Two-thirds of advertising experts polled by IBM expect 20 per cent of advertising revenue to shift from impression-based to impact-based formats within three years.
- Advertising inventories - New entrants are making ad space that once was proprietary available through open, efficient exchanges. Consequently, more than half the ad professionals polled expected open platforms, within the next five years, to take 30 per cent of the revenue currently flowing to proprietary incumbents such as broadcasters.

To envision four possible scenarios for the industry in 2012, the report says IBM juxtaposed two of the most uncertain change drivers

- the propensity for consumers to control marketing, and
- the openness of advertising inventories