Monday, February 06, 2012

Ad spend: Is Facebook Likely to Take Over Traditional Media in the Future?

In my humble opinion, yes. Here’s why:

Proctor & Gamble, the largest marketer in world, recently announced that it will be cutting 1600 non-manufacturing (mostly marketing related) jobs as the company re-evaluates its $10 billion ad spend and seeks to leverage the opportunities presented by digital advertising and social media. 

The announcement came after a late realization by the company that the return on investment on digital advertising and social media is much more efficient as compared to traditional media. P&G cited its recent Old Spice campaign as an example of social media’s effectiveness. The adverts went viral and received nearly 2 billion free impressions through Facebook, Youtube, and other social networks, resulting in a decision to fully exploit this untapped potential.

This change in advertising strategy, if successful, is likely to push rivals into following suit. Such is
the impact social media is having on the advertising industry.

Consumers worldwide have become adept at filtering out annoying promotional messages and focus purely on content. Be it TV advertisements or banners on the internet, advertisers and marketers have to come up with increasingly complex and innovative ways in order to capture those precious few moments of their target audience’s attention. Even then, with the introduction of Tivo and Youtube, most people can watch what they want without having to deal with too much advertising. 

The standard, impersonal advertisement banners and popups on websites are either blocked by software or are simply ignored by surfers. Furthermore, the sheer number of promotional messages that an average person is bombarded with daily is enough to overwhelm the normal functioning of the human brain. Insurmountable amounts of clutter and ever-decreasing attention spans make it very difficult to effectively reach out to a product’s intended target market.

Even the messages that get through to potential customers are subject to very close scrutiny and skepticism. People are well aware of the fact that claims and promises in advertisements often fall short of expectations and only serve to exaggerate the truth.

What is a marketer supposed to do in such a scenario? How can a promotional message break through the clutter and connect with its intended recipient in a way that is customized and tailored to the individual’s needs. The answer lies in social media, especially Facebook.

There are many companies that recognized the potential of advertising on Facebook much earlier than P&G. In 2010, one of the world’s biggest brands, Coca Cola, cut its traditional media advertising budget by 6.6% (which roughly amounts to $161 million) and redirected this money into its social media efforts. The company acknowledged the capabilities of content marketing and dialogue in terms of connecting with consumers in new ways on an ongoing, continuous basis, rather than the start and stop approach of traditional advertising.

Many companies that have realized the importance of social media make sure they display their Facebook and/or Twitter icons in their adverts on TV, newspapers, billboards, etc. A lot of traditional media advertising now serves to solely spark interest and curiosity in a brand’s message, and entices people to visit the brand’s Facebook and Twitter pages to interact, participate, discuss and find out more.

So, what makes advertising on Facebook so effective? The answer is simple. Facebook has forged advertising messages with personal connections. People don’t just see simple ads, they see which of their friends actually LIKE a certain offering. This makes the advertiser’s message credible and as a result, increases the likelihood of eliciting a response from the user in the form of a click. It doesn’t end here though. Facebook allows people to discuss products, services, brands and their offerings candidly. Word-of-mouth is king.

This is where the real difference lies when it comes to social vs traditional media advertising. Instead of biased, monotonous, and repetitive one-way communication, Facebook allows open interaction between consumers and brands, making it easier for people to decide whether they’d want to engage with a brand and associate with it.

Digital and social media advertising has also made it possible to track results and gauge ROI in a much more efficient manner. For example, it’s not possible for a marketer to find out who viewed an ad placed in a popular magazine on page 3. If the ad was indeed noticed, how long was it viewed for? Was it shown and referred to someone else by the same person? The answers to these questions only come when advertising goes digital. 

Facebook and Google are constantly working to improve their user tracking systems that pinpoint viewer statistics with ever-increasing accuracy, making the task of “targeting” the desired recipients much simpler. This is one of the biggest reasons why advertisers are focusing more on social media.

The future looks bright for digital advertising. People are now within the reach of brands on-the-move through cell phones. The advent of smartphones has given social media the kind of break that it needed. Constant breakthroughs in technology and increasing bandwidths might translate into online television on a massive scale. We probably wouldn’t need the idiot box in the future. Otherwise, the smart TVs of tomorrow will be synchronized with our social networks, delivering customized product offerings suitable to our tastes only.  Books and newspapers are all going online as well, taking advantage of the precise user tracking and site activity reports only possible to obtain through online channels.

On top of that, with plenty of statistics on personal likes and dislikes, status updates, relationship statuses, and even data on frequently visited locations, Facebook is sitting on a mountain of treasure that is probably worth the $100 billion valuation recently given to it. As people slowly but surely get used to the new Timeline, Facebook is likely to keep innovating, its users will keep on sharing their lives, and advertisers will be standing in line, ready with their paychecks.

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