See original post on Ed Montes’ LinkedIn Page.
When it comes to content consumption, the arrival of the Internet changed everything. The Internet and its related technologies made content plastic. And the plasticity of content powered the Internet with advertising fuel.
The Internet also changed content distribution. Contrary to alarmist headlines, content consumption isn’t decreasing. Cord-cutting and declining broadcast ratings are not about less viewership. These trends represent simple shifts in distribution. In fact, according to research firm Activate, total video viewing time among U.S. adults has continued to grow year-over-year. And while TV still accounts for the majority share of total viewing time, digital video’s share has steadily increased over time. These changes in distribution brought to the advertising industry are both complex and profound.
On the one hand, monetizing content today, through traditional methods such as TV, is becoming increasing difficult as the time consumers spend watching television declines. This decline is represented in advertising currency through drops in ratings and declines in the total number of U.S. cable subscribers. Regardless of subscriber numbers, however, the true input or content costs remain the same or increase each year. ESPN, for example, now pays over $3.3 billion annually just to broadcast NFL and NBA sports.
On the other hand, today’s new distribution system (i.e. mobile) does not yet provide the same economic return as traditional methods. And mobile does not represent a corresponding decline in input costs (neither for content nor subscribers) unless you happen to be Facebook, Google, Twitter or Snap Inc. and the bulk of the content served on your platform happens to cost your company… nothing. Lucky Facebook.
Historically, advertisers have been able to rely on content publishers to provide a very rich and stable environment for their messaging. To this day, television represents the single best combination of mass reach and storytelling that has ever existed. In the past, content consumers accepted the unstated quid pro quo of advertising in exchange for content. An inherent limit existed for the number of alternatives that could challenge the timeliness or impact of the format. But today everything has changed. The traditional quid pro quo of advertising in exchange for attention has been completely disrupted. And that’s not just according to me spinning my wheels. Undeniable evidence is mounting that consumers are rejecting today’s bargain for their attention.
Exhibit A: behold the growth of Netflix. In the first quarter of 2017, Netflix possessed 98.75 million streaming subscribers worldwide—a figure that represents growth of over 35 million subscribers in just two years. Netflix does not allow ad serving. Go figure. But if you think consumers’ rejection of advertising ends once you move beyond long-form video content, sadly you are dead wrong. According to Forrester Research, 38% of U.S. adults have installed some form of browser-based Ad Blocker. Consumer attitudes and habits towards advertising are changing. Clearly, marketers and their methods need to evolve—fast.
Yet, the recognition of this pattern is happening too slowly. Traditional businesses are suffering. The Association of National Advertisers (ANA) recently stated that “despite an astounding $200-plus billion in advertising and $1 trillion in total marketing spending, the growth rate of our collective industries is an anemic 2 percent.” Or in other words, if you are a Chief Marketing Officer today, you better hurry up and learn how to become a Chief Growth Officer tomorrow.
While the changes in mobility and content consumption have dislocated our traditional notions of advertising (perhaps most notably within the context of social media), the accompanying technologies that mobility has promoted within Big Data, cloud computing and machine learning will likely provide alternatives to marketers that represent real structural change within the marketing and advertising industries. That is the good news. The bad news, however, is that mobility and changing content consumption methods mean that some of a marketer’s entrenched legacy systems and investments need to be reconsidered…
Interested in reading more? Head over to Ed’s LinkedIn Page for the rest of the article.