Peering Into the Future of Advertising: eMarketer Interview with Jack Myers

Originally published November 2008eMarketer wwweMarketercom recently published an interview with Jack Myers reprinted here with permissioneMarketer Jack you39ve been looking into the future of advertising for several decades now Has it ever appeared so gloomyJack Myers No it hasn39t The signs have been there for several years that we were going to hit this wallamp8212but it39s come more quickly than expected The problem is that we are confusing the economic and financial downturn with the crisis we39re experiencing in advertising and media Many in the industry assume that as the economy turns around the advertising business will naturally turn around with it But that39s not necessarily the caseeMarketer Why do you think that is What39s the main differenceMr Myers Well the differences are pretty obvious when you look at the industry Over the next two to three years DVR penetration is going to expand exponentially TIVO has done deals with Direct TV and Comcast They won their patent battle which has been holding up their progress With HD HighDefinition moving into homes in a major way over the next couple of years digital settop boxes will come with DVRs Well over 50 of TV homes will have DVRs That radically alters TV viewing behavior and the value of traditional network televisionamp8212compounded by the erosion of network television and the loss of mass audiencesThen there39s the obvious impact of the Internet The growth of usergenerated content as a viable medium and the growth of social networks are refocusing consumer behavior All that underlies inherent change to the businessIn the media and advertising business we39ve had 50 years of demand exceeding supply in a supplydemand business That39s helped keep prices on an upward curve investor demand being significant for the advertising inventory and advertisers really not asking for effectiveness measures other than costefficiency against mass audience metricsThe next 50 years we39ve got supply exceeding demand which is a complete reversalamp8212downward pressure on pricing loss of investor confidence and advertisers and marketers looking for new ways to generate effectiveness measures that can help them refocus their ad spending and marketing spendSo we have both technologydriven changes as well as major changes to the inherent underpinnings of the industryeMarketer In light of all these changes what39s the number one thing you would advise marketers to do What should they focus onMr Myers In the next two years most marketers will be adjusting their budgets downward in response to the economy Even though there are arguments that say it39s a time to hold or increase ad spending they39ll be reducing So the number one thing I would recommend is to take a very hard look at your budget Much in the way that politicians are doing go through your budget on a linebyline basis and determine what is working hardest for you Then look at what percentage of your budget resources do you envision putting into new innovative more measurable types of marketing communicationseMarketer Well that gets us to one thing we39re very much interested in at eMarketer What is the outlook for onlineamp8212or digitalamp8212advertising compared to more traditional advertisingMr Myers That depends what part of the online business you39re looking at Display advertising traditional display advertising we expect to be flat in 2009 or down slightlyamp8212flat to down two to three percent in 2010 Search engine advertising will be up around 15 annually over the next couple of years But the big growth areas will be video social community social programming and usergenerated contentamp8212advertising widgets and new applications And I look at that as being up around 70 So that39s a very robust areaamp8212headed by videoeMarketer There39s been a lot of negative talk about social networking and some of the usergenerated content material because of the danger of putting advertising next to questionable materials or in an environment that might not be appropriate How do you think these problems can be overcomeMr Myers First of all if the ad community and marketing community with all of its creative and intelligent minds cannot find a solution for using effectively using social networks and usergenerated content it will be the greatest loss to the advertising and marketing business that we39ve ever experiencedThe solution is curated usergenerated contentamp8212where you have experts and trusted individuals sorting through aggregating and identifying appropriate and relevant usergenerated content for Websites and then advertisers depending on those trusted figures or brands to make sure that their advertising appears in a safe haveneMarketer What categories do you think will be most negatively affected by the economic downturnamp8212in the short runMr Myers Newspapers And not just in the short run It39s hard to develop a scenario in which newspapers rebuild their business models Although I do see on the longterm horizon opportunities for radio and magazines I do think magazines are in a shortterm downturn but they can make a transition to digital and video if they can sustain their brands They have to look at themselves more as communications brands as opposed to print vehicleseMarketer You mentioned really going through budgets line by line What marketing strategies would you advise employing in these times of tight money reduced budgetsamp8212in a recessionMr Myers Focus on brands Focus on strong brands that are relevant to your audience and find ways to use those brands across an expanded array of platformsLook for the media companies that are delivering their brands in experiential context events sales promotion components Look for ways to pull your sales promotion your event your consumer marketing your public relations your causerelated marketing all under a single umbrella with your advertisingamp8212and tie it into specific brands Use those brands to help build an environment for your advertising communicationsNumber two look for solutions in the TV landscape by working with companies like TiVo that are clearly representative of the home of the future and where you can generate learning experiences that will become relevant over the next few yearseMarketer Many ad agencies are advising clients to shift some of their budgets online because they say the Internet39s more trackable more accountable and provides a better ROI Do you agree with thatamp8212or is just sort of what ad sellers say to get money to come their wayMr Myers The Internet should be more trackable There should be more and better metrics But in fact online display advertising is built around costefficiency models that have been around for more than 50 yearsamp8212and have little relevance to the future Televisionamp8212along with the DVR and with the settop home and addressable opportunitiesamp8212can be as opportune as the Internet in terms of better metrics in the future But marketers have to be able to use the metrics they generate in a proactive way as opposed to just aggregating them And not using them to help make buying and planning decisionsamp8212which is what they39re doing noweMarketer There are going to be pullbacks in advertising expenditures But when will marketers know that it39s time to seriously reinvest in advertising Will there be signposts in the economy that say quotNow39s the time to get moving to stay out aheadquotMr Myers I think some marketers will cut their budgets across the board We39re projecting 4 decreases in advertising in 2009amp8212and that might be conservativeWhat the smart advertiser is going to do however is reallocate budgets in new and different ways over the next couple of yearsamp8212and then ramp up spending in those areas that are most proven and work harder for them I think we39re going to see marketers looking at how they can use their dollars more effectivelyamp8212and then spend accordingly We39re in for a lot of changes and it39s going to be four to six years before we see the real impact on our business economically In terms of a turnaroundamp8212and a real decision to start reinvesting in major waysamp8212I think we39re looking at five to six yearsamp1692008 eMarketer Inc All rights reservedJack Myers is available to present his vision for the future of media advertising and marketing at your corporate meetings and events Contact jmjackmyerscom and visit wwwJackMyerscom for more information

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