Greg Hills

I’m attending the Right Media Open in Chicago and, no surprise, change is in the air. Although there is a general consensus on where the industry is headed, I am seeing a healthy debate around the timeline for that change.

While discussing the importance of indirect, bid-based sales to publishers, Dave Zinnman from Yahoo pumped on the brakes, saying that if you believe exchange-based inventory will become dominant in a “career-relevant timeframe”, you need to “step back from the punch bowl.” For me, “career-relevant timeframe” is the most important phrase I’ve heard today.

No matter what your business, its important to have a realistic understanding of how fast your market is changing. Just today, VMM founder Darren Herman retweeted his 2008 post comparing the rate of innovation with the rate of adoption, and reminding entrepreneurs to build for today’s market. That’s the relevant timeframe for a venture backed startup between rounds.

Here in Chicago, the question of the day is: what is the relevant timeframe for advertising-related companies evaluating the momentous shift toward automation?

Up until now, I think media decisionmakers have been very confident in their ability to influence the rate and direction of change. At the 2009 24/7 Real Media Summit, I was struck by GroupM CEO Irwin Gotlieb’s remark that he felt it was, in some part, his responsibility to manage change in this new media landscape on behalf of various stakeholders. Consolidated media buying firms exist for the sake of exerting this type of influence and the comment made me think a lot about how and when the industry would change.

Now that Google has turned its focus to display, they will radically shorten the relevant timeframe for considering change. Google has more clout than any single company and they have built their business on automation and bid-based buying. Whether or not you believe that audience is more important than content in valuing an impression, it is impossible to deny that a lot of client money is lost to the transaction costs of directly buying standardized display inventory. I began my career as a media planner and, like every planner, I spent plenty of time “guesstimating” and doing menial tasks in the current advertising operating system: phone, fax, Excel, email.

Its not necessary for agencies and publishers to surrender to Google — in fact, I think that’s a terrible idea. But it is necessary for agencies and publishers to recognize the economic imperatives that drive Google’s strategy. Without Google, media companies might have been able to defy gravity for a career-relevant timeframe, but that’s no longer the case.

Last week I attended a NextNY panel called “How to Make Advertising Not Suck” in a great space provided by Mike Dudda of Deutsch.

If you attend industry events and haven’t been to a NextNY meetup, I certainly recommend that you give it a try. You might need to buy your own drink, but it’s a great crowd and the community spirit along with the open conversational format make for a great experience.

I’ve listed the problems in descending order of importance to last weeks’ discussion.  Relevance and ROI, two deeply intertwined concerns, dominated the evening. Relevance is defined as the proper answer to the age-old advertising strategy question: “Who, What, When?” In the past 12 months, we as an industry have made tremendous strides in providing better answers to this question. Tech companies have built great new products, agencies have reworked their organizational structures to adopt these new technologies, and clients have literally “bought in.”

We still have a ways to go, however.

Event moderator and avid kayaker Charlie O’Donnell mentioned how recently he noticed a wetsuit sale on  fashion retail site Gilt Groupe. When he tried to buy the suit, it was sold out. Charlie has probably seen hundreds of display ads since his failed purchase attempt and not one of them had anything to do with wet suits.

We’re going to achieve amazing levels of relevance that will benefit consumers and companies throughout the value chain .  But should we, as digital marketers, be so bold as to aspire to achieve more than entirely unprecedented relevance in advertising?  Yes.

Brands demand that we go beyond relevance. Online advertising doesn’t suck in general, but it does receive disproportionately small budgets relative to other mediums such as television.  One reason is that digital is very good at harvesting purchase intent for products sold online, but other mediums, like TV, are better suited for purchase intent generation.  Online is a great complement to other mediums.  Online advertising is good where TV fails (relevance, for example) and struggles where TV excels (emotional connection and narrative, for example).

Since online ads exist in a non-linear, non-interruptive, consumer-controlled medium, it is difficult for them to pass what I call the “Nick Drake test,” in honor of my favorite TV ad of all time, below. You can rename the test after the ad which speaks to you personally with the deepest level of meaning.

This ad is not harvesting purchase intent.  I wouldn’t even say that it directly generates purchase intent.  Instead, it accesses involuntary memory, aka Proustian memory, to create an emotional experience that I still remember 10 years after first seeing this ad as a teenager.  This ad certainly does not suck for the consumer, brand, or publisher.

To be sure, digital advertising, specifically conversational media, is entirely capable of creating emotional connections. To take a personal example, I was impressed when I tweeted about wanting a Kindle and Amazon replied with extremely relevant sales information.  But I was truly amazed when a human responded thoughtfully to my sarcastic reply to what I assumed was a Twitter-bot.  This advertising interaction delivered both relevance and a personal connection.  Once TV ads are digitally served, this fusion of digital relevance and analog emotion will become even more scalable.

Many companies and individuals are now focused on numbers 1-3, and the winners will win big. But that is just one battle. The ability to pass the “the Nick Drake test” at scale will decide who wins the war.