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Convergence
Advertising In The New Millennium
by Kent Lewis

Advertising has evolved steadily over the years. From print to outdoor to broadcast, advertisers successfully adapted their messages to new media. The most recent milestone in advertising came with consumer acceptance of the Internet. Since the first Zima banner ad appeared on Wired.com in 1994, online spending has grown exponentially. Just when advertisers and publishers think they’ve got it right however, along comes the next revolution: convergence.

What is convergence and what does it mean to advertisers? In this context, convergence is the merger of technologies, media and mindset. Specifically, PC and TV, information and entertainment, active and passive interface are all coming together. What it means to advertisers is the potential for great success or ultimate failure. The trick is to understand the consumers’ desires and expectations when interacting with various devices.

Unlike television and radio, interfacing with a PC is an active experience, with a focus on information delivery. The benefit to advertisers with regards to PC and Internet usage is the ability to generate consumer profiles and associated data. The big promise thus far has been that companies will better be able to serve their customers and increase revenue with the aggregation and analysis of such data.

Few companies have fully realized the benefits of advertising on an interactive media, however. What’s worse is that few advertisers understand the medium well enough to know if it really works. Banners, the most prolific form of online advertising, are still largely misunderstood and misused (see A Banner Year For Advertising).

Assuming advertisers and publishers are able to agree on a relevant metrics, there are a few reasons convergence will dictate the future of advertising, as we know it:

-Convergence offers new channels for data and commerce
-Convergence creates a direct relationship between the consumer and the data provider
-The simplified relationship generates more value for both parties through regular interaction
-The quality of each interaction is improved, as is the data generated by the interaction
-Convergence offers greater efficiency and control
-Convergence enables commerce within context

As consumers get broadband (high speed) access to information (through their PC and TV), their habits will forever be changed. Through the same bandwidth provider, consumers may get digital cable TV, high speed Internet access and IP telephony services. This means that previously unconnected devices (PC, TV and telephone) will become integrated, increasing convenience and usability while offering new channels for advertisers.

Convergence will also simplify the relationship between the consumer and the data provider. No more will consumers have to pay multiple parties to receive the benefits of multiple services. Multiple infomediaries will be left out of the relationship. A single service provider can bring the data provider (if different from the service provider) one step closer to the consumer.

A direct relationship between consumer and data provider means better data flow, accuracy and efficiency. Most importantly, a direct relationship allows control for both parties, based on what information is shared. With that control comes trust, and with trust comes a valued relationship.

There are many profound challenges facing advertisers and data providers, however. Internet usage has generated terabytes of consumer data in a short amount of time, little of which is ever actually used. Convergence in the home will create exponential amounts of data, which will require even more analysis and action. Another challenge is addressing consumers’ privacy and security of personal information. Lastly, consumer data ownership will require legal and moral considerations.

In the recent past, advertisers and data providers have spent too much time focusing on content delivery, devices and display. The reality is that the focus should be put on content and consumer. As the adage goes, content is king, but in this case, the consumer is the ultimate judge. Content will create value for the consumer, as their information will create value for the advertiser or data provider.

Helping consumers understand who owns the data and what it is going to be used for will be a primary hurdle for advertisers and data providers alike. If the consumer owns their own data, they become the broker, rather than the data provider. The control will swing power to the consumer, allowing them to make empowered decisions.

Intelligent advertisers and data providers will license or lease data directly from the consumers. Intelligent consumers will be very selective about who they share their information with. When this process actually occurs, it will truly revolutionize the industry.

Convergence will turn the tides. Suddenly consumers will have new options for information and entertainment. If margins and conversion ratios allow, advertisers will be able to pay consumers to watch programming. Similar to today’s affiliate marketing programs, advertisers would pay small incentives (i.e. .50 or $1) to watch an infomercial. This type of programming would compliment free and premium (i.e. traditional broadcasting and cable) and will benefit all parties involved.

Of course, a few things have to happen first. Broadband to the home needs to become a reality for all consumers (especially in rural areas and small communities). Then various technologies need to mature (i.e. compression, micropayments and encryption). Laws, policies and procedures need to be implemented to protect consumers. Lastly, millions of dollars will need to be spent to educate consumers.

The technology may be here today, but convergence is still likely a few years away from reality. Regardless, advertisers and data providers need to prepare immediately.