Facebook’s hiring of Sheryl Sandberg who helped build Adwords is another big step forward on the path of media buying automation and optimization. In two years everyone will be within reach for every brand and business large or small. It will all be about targeting.
Google, MSFT, FIM and Facebook, who between them touch just about every online user in the USA (and moving toward that globally) will take care of the targeting. Their core focus now is getting highly targeted quality impressions in every channel — search, contextual, display, TV, radio, games — because higher quality means higher spend.
Of course this rapid transformation of the current media structure into one of optimization and automation has tremendous implications. Technology and market forces have created incredible efficiencies for product (ad) distribution. In fact, these changes are starting to resemble that of another big industry. The music business.
Is it possible that Google et al are iTuning Madison Ave? Are the Big Dumb Agencies the new record labels and as such will meet they meet the same fate? The parallels present in consumption patterns give this theory even more credence.
No one’s buying albums anymore!
Services have fractured and are more distributed than ever. Display, SEO, SEM, Reputation Management, Creative, Testing, Targeting, Analytics. The BDA’s are trying to fix this by buying their way into being one-stop shops. The thought being that clients want the whole album. But as with most albums there’s always a lot of filler that you are paying for. Is that what clients really need? Is that what they really want?
If efficiencies and fragmentations are happening where are the opportunities to improve your ad services business? Again, I say look at the new paradigms in the music business. I see the same three core strategies to making money whether you are a record label or an advertising agency.
1) Merchandising: Sell, upsell, re-market those with an expressed interest and affinity.
In music that means t-shirts and fan clubs. In digital marketing it is called search, site optimization and email.
2) Distribution: Generate revenue from new distribution models.
In music it’s ringtones and soundtracks. In digital marketing it is called affiliate marketing and social media.
3) Experience: Add to the bottom line by creating new and improved experiences.
In music it’s VIP packages. In digital marketing the improved experiences will take root in new platforms & applications
What advertisers need to understand is that not only did the record labels get killed because they didn’t handle the new digital models with foresight, their clients, the artists also got the shaft. This lead to the artists taking more control. You can already get a whiff of that with the rise of in-house search.
How far and how fast? Seven years after its release Apple’s iTunes accounts for 70% of worldwide digital music sales and record labels are mostly irrelevant. At this late stage it looks the only thing that can save Madison Avenue is its own version of American Idol. Simon?
jonathanmendezblog.com 
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