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

By Jack Myers Jack Myers ThinkTank Archives

Originally published November 2008

eMarketer (www.eMarketer.com) recently published an interview with Jack Myers, reprinted here with permission.

eMarketer: Jack, you've been looking into the future of advertising for several decades now. Has it ever appeared so gloomy?

Jack Myers: No, it hasn't. The signs have been there for several years that we were going to hit this wall—but it's come more quickly than expected. The problem is that we are confusing the economic and financial downturn with the crisis we're 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 that's not necessarily the case.

eMarketer: Why do you think that is? What's the main difference?

Mr. 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 [High-Definition] moving into homes in a major way over the next couple of years, digital set-top 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 television—compounded by the erosion of network television and the loss of mass audiences.

Then there's the obvious impact of the Internet. The growth of user-generated content as a viable medium and the growth of social networks are refocusing consumer behavior. All that underlies inherent change to the business.

In the media and advertising business, we've had 50 years of demand exceeding supply in a supply/demand business. That's 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 cost-efficiency against mass audience metrics.

The next 50 years, we've got supply exceeding demand, which is a complete reversal—downward 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 spend.

So we have both technology-driven changes as well as major changes to the inherent underpinnings of the industry.

eMarketer: In light of all these changes, what's the number one thing you would advise marketers to do? What should they focus on?

Mr. 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 it's a time to hold or increase ad spending, they'll 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 line-by-line 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 communications.

eMarketer: Well, that gets us to one thing we're very much interested in at eMarketer. What is the outlook for online—or digital—advertising compared to more traditional advertising?

Mr. Myers: That depends what part of the online business you're looking at. Display advertising, traditional display advertising, we expect to be flat in 2009 or down slightly—flat 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 user-generated content—advertising widgets and new applications. And I look at that as being up around 70%. So that's a very robust area—headed by video.

eMarketer: There's been a lot of negative talk about social networking and some of the user-generated 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 overcome?

Mr. 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 user-generated content, it will be the greatest loss to the advertising and marketing business that we've ever experienced.

The solution is curated user-generated content—where you have experts and trusted individuals sorting through, aggregating and identifying appropriate and relevant user-generated content for Websites, and then advertisers depending on those trusted figures or brands to make sure that their advertising appears in a safe haven.

eMarketer: What categories do you think will be most negatively affected by the economic downturn—in the short run?

Mr. Myers: Newspapers. And not just in the short run. It's hard to develop a scenario in which newspapers rebuild their business models. Although I do see on the long-term horizon opportunities for radio and magazines. I do think magazines are in a short-term 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 vehicles.

eMarketer: You mentioned really going through budgets line by line. What marketing strategies would you advise employing in these times of tight money, reduced budgets—in a recession?

Mr. 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 platforms.

Look 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 cause-related marketing, all under a single umbrella with your advertising—and tie it into specific brands. Use those brands to help build an environment for your advertising communications.

Number 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 years.

eMarketer: Many ad agencies are advising clients to shift some of their budgets online because they say the Internet's more trackable, more accountable and provides a better ROI. Do you agree with that—or is just sort of what ad sellers say to get money to come their way?

Mr. Myers: The Internet should be more trackable. There should be more and better metrics. But, in fact, online display advertising is built around cost-efficiency models that have been around for more than 50 years—and have little relevance to the future. Television—along with the DVR and with the set-top home and addressable opportunities—can 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 decisions—which is what they're doing now.

eMarketer: There are going to be pullbacks in advertising expenditures. But when will marketers know that it's time to seriously reinvest in advertising? Will there be signposts in the economy that say, "Now's the time to get moving to stay out ahead?"

Mr. Myers: I think some marketers will cut their budgets across the board. We're projecting 4% decreases in advertising in 2009—and that might be conservative.

What the smart advertiser is going to do, however, is reallocate budgets in new and different ways over the next couple of years—and then ramp up spending in those areas that are most proven and work harder for them. I think we're going to see marketers looking at how they can use their dollars more effectively—and then spend accordingly. We're in for a lot of changes and it's going to be four to six years before we see the real impact on our business economically. In terms of a turnaround—and a real decision to start reinvesting in major ways—I think we're looking at five to six years.

©2008 eMarketer Inc. All rights reserved

Jack Myers is available to present his vision for the future of media, advertising and marketing at your corporate meetings and events. Contact jm@jackmyers.com and visit www.JackMyers.com for more information.

Copyright ©2017 Media Village, Inc. All rights reserved. By using this site you agree to the Terms of Service and Privacy Policy.