- This is fairly “dense” point on the future of online advertising.
- The take-away for network hardware vendors is that will be a significant source of cash to pay for non-telco style networks
- Focussing solely on telco-style hardware could mean missing out on this future gravy train.
Following our piece yesterday about the continued growth of online advertising, let me add to Om’s practical perspective with my own take on where I believe the opportunity lies for those who are set on capturing some of those future ad dollars. What I’m about to say should be very obvious to most by now, but I believe it bears repeating.
Putting aside the issue of whether or not online ad spending will consistently grow unabated for the next 20 years, it’s safe to say that the total pie will be much bigger 10 to 20 years from now. That said, I firmly believe it is equally reasonable to assume that a big chunk, if not a majority, of future ad spending will go into online ad models & formats that do not yet exist. The big reason for this, in my mind, is due to the emergence of social media… and the fact that social media is not mass media.
As I have already written much about, social media is a new medium in its own right. As such, successful commercial exploitation of this new medium requires the development of new business/advertising models. This has been true for every other new medium that has been adopted at large scale throughout history. Yet, unlike mass media before it, social media introduces the very unique element of the previously passive audience becoming both producers and distributors of media. From a marketing perspective, this means that the people themselves will necessarily have to become an integral part of the brand communication strategies and processes.
Now, couple what I just mentioned with the prospect that the majority of future ad spending growth will come from traditional brand advertisers that, up until now, dominated traditional media budgets (e.g. TV & cable, radio, newspapers & magazines, etc.). But here’s the real quandary… while it’s easy to reallocate budgets, these brand advertisers face a problem because they cannot simply transport their traditional ad models (optimized for mass media) to the new world of social media. Further exacerbating the problem is the fact that even today’s dominant interactive ad platforms, like Google’s highly efficient AdWords/AdSense system, or Yahoo’s display ads, do not extend naturally into the social media space.
What this all boils down to is a growing and substantial market need for new ad models and platforms. Granted, there’s a good chance that the dominant players of today, like Google and Yahoo, will end up being the ones to develop the new models. But I’m an optimist, in the entrepreneurial sense… I believe it’s far more likely that new players will develop such innovative platforms. After all, 5 years ago, Google wasn’t even a player in online advertising.
Put another way… 10 years from now, my bet is that a substantial and material share of the huge online advertising pie will be captured by players we do not know of today. The real challenge, as famed author and management guru Geoffrey Moore points out, is to develop marketing solutions that are highly scalable for social media. I agree, and I also agree that such solutions are not in the marketplace today. But while Moore doubts there will ever be scalable solutions for social media, I on the other hand believe it’s a problem that actually has several fundamental solutions… many of which will start coming to market in 2007.