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The Future of Advertising

TelevisionThe title may sound presumptuous since I am not an advertising expert. However, from a consumer point of view, I suspect my views may be shared by many of my friends, colleagues, and readers. Let’s start with television and then consider the web. There are very big differences.

The convergence of the PC and TV has been exaggerated — so far. Yes, there are some interesting ways to watch TV on your PC or surf the web on your TV but, at least for the immediate future, the PC is something we use at our desk or lap and the TV is more of an entertainment center. (Note: when not in the home, the handheld will be come dominant — that is another story). High definition TV is great for enjoying a DVD or a HD broadcast. The PC is the place I go to do email, do some research, make purchases, read or write, and read the news. Isn’t the TV our main for source for news? Increasingly not.

On days that I am not traveling to board meetings or conferences, I like to exercise. The recumbent bike and elliptical cross-trainer make good perches from which to watch cable TV news. If I am not watching a previously recorded news program — and I do record several per day — it is hard to get any news. The official data will show somewhere between 15 and 20 minutes per hour as being advertising. During the day it is closer to 20. That means one out of three minutes is advertising. You can flip between a half dozen news shows and find no news. If you subtract the news channel self-promotions, details on the latest deranged family member who has done something horrible, tabloid stories, and news about the news, then what you have left is a small fraction of an hour — some critics say slightly less than five minutes per hour of real news. Some people say CNN means "contains no news" and that when FOX says "your station for news" they really mean "your station for advertising". For years, Netflix has been my way to watch movies, but the other night I was watching a movie where there was no digital video recorder or DVD player. The movie was interrupted every ten minutes with 10-12 advertisements.

The advertisements are mostly insulting to one’s intelligence. There are no insights into anything and they grate on people’s nerves. Honestly, I have to say that most of the ads are obnoxious — as bad as spam. The shotgun blast ads aren’t fraudulent but they add no value to our lives. Zero. Do we need broadcast television to tell us the latest interest rate at ditech.com or to be reminded four times per hour that Scottrade is "all about value" or to be constantly told to ask our doctor about this pill or that pill? The bottom line is that most of us don’t rely on the TV as a source of ideas
for things we need. There may be some people that actually enjoy advertisements. That is ok, but the rest of us want to "opt out".

Digital video recorders such as TiVo are a step in the right direction. If you want to watch a 7:00 PM news program, you can record it and then start watching it at 7:20 and not miss a thing. When it comes to movies, some people say they use the ads for biological and nourishment breaks, but do we need that every ten minutes? Yes, the premium cable movie channels are expensive, but millions of people would rather pay the monthly fee and be able to watch a movie from beginning to end without irrelevant ads droning at them. The most watched TV show ever is "The Sopranos". I am not commenting on the content of the program — just on the business model. Although it’s available in only a third of American homes, approximately 10 million viewers per week actually paid to watch it. There was no advertising. This is why the percentage of time people spend in front of TV’s watching DVD’s and subscription based programming will continue to climb.

Meanwhile the Internet is giving us what we want — control over what we watch and when we watch it. Youtube is the tip of the iceberg. Search based advertising is booming because it is relevant to what we are searching for. It puts us in control. I have been using Weather Underground (the first Internet weather service) since 1995. The thing I like the most is that members — at a cost of $10 per year — get no ads. No banners, dancing bears, flashing action bars, or pop-ups that cover the weather. A weather site that has just weather. What a concept. When it comes to news, my source for years has been Google News. The headlines are based on what people are reading. Sometimes a top story is from the New York Times, sometimes it is from Al Jazeera, or a newspaper site in Houston, Philadelphia, or many other places. I feel like I am getting a wide variety of coverage and opinions and not just what the "local" paper has to say.

The Internet has always been about "Power to the People" and the people are sending lots of signals about advertising. They don’t like it. They want "options, preferences, no ads" built into their viewing experience. Meanwhile, content executives are looking for even more ways to get in our face, send text messages to our mobile phones, and get into our instant messages and blogs. They have the future of advertising all wrong. Companies have to market their goods and services, but the model has to change. Sponsoring sports events and getting products used by actors in movies are fine but most important is to build great web sites and customer support that surpass our expectations. That is where the investments should be made. The result will be that bloggers and good old fashioned word of mouth will spread the word about how great the company is. Companies that continue to spam us with their ads are going to get a very bad reputation and the media companies that run them are going to lose their readers and viewers.