Remarks to the Marketing Communications Agency Network | "Advertising in the Future: The Time Is Now"

By Wally Snyder, President and CEO, American Advertising Federation
Friday, January 18, 2007 | Myrtle Beach Marriott Resort at Grande Dunes, South Carolina


Good afternoon and thank you for welcoming me. I am a grateful visitor and appreciate your hospitality. Thanks especially to Dave Wilson, who worked so hard to make this event successful.

It's clear the Marketing Communications Agency Network knows what to do and is doing it. And that's why I'm excited to be here this afternoon. I want to talk with you about three areas that I think need special attention.

First is the need for marketers to better integrate traditional and online media opportunities. Second is how we monetize advertising opportunities on the Internet, specifically on social networking sites. And the third is the often overlooked opportunities presented by advertising ethics. We'll also take a look at some numbers—research conducted by the AAF and others that points to where marketers want to go with respect to advertising—and talk about what may happen during 2008 and beyond.

That's a full plate, but luckily we have lots of time, and I want you to participate. I'll set up some discussion points, and then I want to hear about your ideas, experiences and plans.

I want to start by referring to a recent interview in which I was asked for my take on the biggest changes occurring in the advertising industry. Without a doubt, it's the media options available in the marketplace.

Not too long ago we were talking about the impact of creating online communities, products and services. Now, we're living it. And as the technology expands, so do the possibilities. Clients—from the United Kingdom to the United States, from Tokyo to Washington, D.C.—have more access and want more opportunities to connect with consumers. And it doesn't matter where you live and work-we're all connected.

So here's the bottom line: The future is now. The digital landscape is transforming everybody's business. The growing reality is there is no such thing as a noninteractive agency; client and consumer demands increasingly will not allow for agencies to operate under the "general" or "specialized" banners; there's no more "choose one or the other." The only real choice for viable businesses is do both—or risk extinction.

An ever-expanding array of media choices makes decision making tougher-for clients and agencies, account execs and creatives. The real opportunity is to create an extended plan that blends traditional and new media to enhance performance. If you're interested in running a profitable business (and who isn't?), you have to dig into the research, question your clients about their goals and expectations and realize that the future is here-and now. Integrated marketing and media plans maximize a bottom line that speaks to the needs, desires and cultures that are changing America's demographics.

The AAF is proud of what we like to call "Inclusive DNA," which means we love to bring everyone to the table to discuss challenges, solutions and goals. This special DNA means we have no fear of diversity. We believe it fosters unity, ideas and innovation. We believe a diverse and inclusive workforce may answer many questions posed by the evolving digital landscape.

    These changing demographics and emerging technologies prompt some very critical questions:
  • How will we monetize the varied and changing tastes of clients and customers?
  • How will creativity differ in traditional and experimental environments?
  • How will creativity unite advertising on traditional and online platforms?
  • How will accountability change?
  • And what customized metrics will be developed to measure effectiveness?

The successful "Ad Agency of the Future" will employ emerging technologies, traditional and new media in an integrated approach to reach more consumers; simply put, it will help clients connect better in a variety of ways and it will use new metrics to prove and improve accountability.

And as I've said before, all this is going on now. Technology is changing the digital landscape—for manufacturers, consumers and the advertising industry. None of us are exempt. We either jump in or stand on the sidelines.

More and more, consumers are in control of their media. They want information delivered to their devices—from their 50-inch high-def TVs to their iPods and smart phones; they want it in new and unique ways, and they want to decide how to interact with the information. And so begins what I'll call "the Digital Chain Reaction"—customers place demands for interactive products and services on our clients, then clients come to us for answers and solutions. Again, this development of the digital landscape is not a wrinkle or some short-lived oddity. It's reality.

According to recent statistics online advertising has grown nearly nineteen percent in the last year, making it the sixth largest media category.

Google gobbled YouTube and together will control sixty percent of the Web's video advertising market. Analysts say video advertising is one of the fastest-growing revenue streams in cyberspace and predict spending to triple by 2009—that's one-and-a-half billion dollars.

Keeping up with what's happening can be exhausting. Every week it seems there's a multi-billion-dollar deal involving a company that didn't exist a few years ago. That's the pace of change—fast and faster.

As the Unifying Voice for Advertising, the AAF is dedicated to providing top-notch information to members and our colleagues in advertising, marketing and communications.

That's what our Media Investment Survey 2007 is all about—an attempt to make sense of what's going on so that we can serve our clients more effectively, run our businesses more profitably and draw from the available talent pools more effectively. We conduct research to tell us where we stand. You can view this and other studies on our Web site at AAF.org. In order to get an accurate picture of what's going on and the thinking in and around the industry, the respondents to our Media Investment Survey 2007 came from all over-agency, media, advertiser/client, supplier and academia. A majority identified themselves as directors, owners and managers, and almost 90 percent were—to some degree—involved in the company or client's decision-making process for media investment.

    We started out with a simple question: During a time of unprecedented change, how are marketers navigating the tumultuous media landscape? A few major findings:
  • When asked about media planning in 2007, respondents ranked the following statement—"I am open to new ways to use traditional media"—highest at 78 percent; the next statement—"The right media mix almost always includes a balance of traditional and non-traditional media"—came in with 76 percent, and the final statement—"The search for new properties to grow my brand never stops"—garnered 58 percent. When it came to traditional media...
  • 51 percent of respondents said newspapers are the media category with the most opportunity for reinvention;
  • 34 percent said it was network TV.
  • And in the magazine sector, 46 percent said the business category is "most in need of a newcomer to shake things up."

When asked to rate their own performance at managing, adapting to, and getting out in front of significant changes in 2006, one-third of marketers give themselves high marks while one in five admit they have much room for improvement.

These results confirm our other findings about the general wariness among advertising executives about their own ability to keep pace with the changing digital environment.

In the recent AAF Survey of Industry Leaders on Digital Media Trends, a whopping 58 percent said they are—and I quote—"struggling simply to manage existing online efforts, let alone stay ahead of the curve."

Despite this trepidation, most advertising leaders are embracing new media as part of their arsenal. An overwhelming majority surveyed recognizes the effectiveness of digital marketing, with 91 percent citing the online media environment as "empowering to advertisers, allowing the ad industry to shape its own development." Digital media's high return-on-investment was also recognized, with 42 percent citing paid search as offering the highest ROI platform.

They also expect a significant portion of broadcast and cable TV ad dollars to shift to online video by 2010.

And regarding integrating traditional media with online media, the research shows broadcast TV offers the "most innovative" integration, while magazines are considered "most effective" for driving consumers online.

These challenging times represent opportunities for all of us. The wonderful thing about new media is the continuing evolution of niche markets. And there's always the age-old business concept of partnering—and because of new media and the Internet, you may be here in South Carolina, but your partners may be in or South Africa, Singapore or Spain.

It's a new world. Digital media are making new demands on our staffing, budgets and creativity. It's safe to say, the Internet is here to stay. A survey by the Pew Internet and American Life Project shows 71 percent of adults use the medium. The survey also found that Internet usage increase as household income and educational attainment rise.

In addition, the sheer numbers of consumers and cash traveling through cyberspace make a compelling argument to continue exploring the ever-changing digital landscape:

  • U.S. Online Ad Spending, which includes paid search, rich media/video, classified and e-mail, topped $16 billion in 2006; it's expected to hit almost $24 billion in 2008 and is projected to reach more than $36 billion in 2011. That's a 122 percent increase between 2006 and 2011.
  • U.S. online retail sales are up in every major category; the lowest reported increase was 7 percent in computer peripherals; the highest—40 percent in pet supplies. Other big gainers—consumer electronics, gift cards and certificates, movie tickets and home furnishings. Total retail spending online—a projected $243 billion for 2007.
  • Users are going to top portals and hanging out by the millions: on Yahoo sites, more than 128 million unique visitors a month spend an average 281 minutes; on Time Warner, about 118 million spend 270 minutes, and Google has about 115 million spending 80 minutes.

These figures confirm the findings of a recent IBM online survey of consumer digital media and entertainment habits:

  • Audiences are more in control than ever.
  • Personal Internet time rivals TV time.
  • And consumers want consolidated, trustworthy content, recognition and community while using their gadgets.

Nowhere is this desire for community played out more than in the Social Networking areas of cyberspace. Another Pew study revealed that 55 percent of online teens use social networks and 55 percent have created online profiles.

And consider this:

  • These sites—including MySpace, Classmates.com and Facebook—are doing boffo business, drawing a total U.S. audience of 173 million visitors.
  • The Social Network Ad Spend in 2007 is at $865 million, about 4.7 percent of all online ad spending; in 2011 that figure is projected to reach more than $2 billion, representing 8.5 percent of all online ad spending.

The figures are mind-boggling when you consider I've just been talking about the United States. There's even opportunity in the lowly e-mail, with a volume of personal and commercial messages exceeding two-and-a half trillion. Yes, trillion with a "T."

And there's so much more to consider:

  • Mobile Device Use and Content.
  • Mobile Phone Advertising.
  • Online games and in-game ads.
  • Digital Agencies.
  • Ad Networks.
  • Video viewing (By the way, news, movie previews and weather are top content).
  • And Podcast Ad spending.

How will you keep pace with this evolution of electronic technology and consumer demand? How will you keep clients pleased in this growing, specialized area of advertising and marketing?

The AAF has created a Media Planning Task Force with some of the best and brightest in the business. Discussions among this task force and our corporate board members are yielding areas of particular concern, resulting in the early development of principles to guide us in the new media frontier. They include:

  • Principle 1: Clients have to be exposed to all media options that will best showcase their products to consumers.
  • Principle 2: Clients need to be exposed to methodologies and metrics that work in this environment.

This mix must include a discussion of advertising ethics. Too little attention is paid to this topic, which is why I write a column on this very subject. It's published on AAF.org, and I invite your feedback. Basically, I want ethics considered during the planning process—a proactive activity—so that you don't have to be reactive when clients or the public feel your choices are in poor taste.

I believe ethics will play a huge role as the Internet continues its phenomenal growth because new media bring new opportunities, but also bring new challenges to ethical standards.

What does all this mean? That to best serve our clients, we must provide a broad, comprehensive plan that will incorporate the most effective media delivery systems for the product; we have to provide evidence that our plans are working, and we have to consider the ethical implications of our choices.

What's on tap for 2008?

  • More Widgets, downloadable applications such as the WeatherBug or the Southwest Airlines Ding.
  • More video and expanded video search.
  • And increasing challenges to remain relevant as media converge and technology offers clients and customers more choices.

This is not the time for the industry to be divisive, secular or individualist. Rather, it is a time for us to be inclusive, agnostic and communal. Above all, it's time to be imaginative, ingenious and open-minded.

Pablo Picasso said, "Computers are useless. They can only give you answers." While computers have changed since Picasso's day, the need for human innovation has not. If creative minds are not in charge of the hardware, software and delivery of messages, Picasso is right. New media means a new way of thinking. Implementing new media means going beyond answers and searching for new questions.

Ultimately, your future as industry professionals depends on what you do today.

Thank you.

Now, I want to hear from you. What trends do you see in your workplace? What are clients telling you? Do you consider advertising ethics a relevant part of future growth? Let's talk.

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