IBM Global Business Services’ new report, "The End of Advertising as We Know It," forecasts greater disruption for the advertising industry in the next five years than occurred in the previous 50.
To examine the factors influencing advertising and explore future scenarios, IBM surveyed more than 2,400 consumers and 80 advertising executives globally. The IBM report shows increasingly empowered consumers, more self-reliant advertisers and ever-evolving technologies are redefining how advertising is sold, created, consumed and tracked.
Traditional advertising players risk major revenue declines as budgets shift rapidly to new, interactive formats, which are expected to grow at nearly five times that of traditional advertising.
IBM's research found that advertising experts recognize the changing nature of consumers and also anticipate dramatic changes on the horizon. More than half of ad professionals polled by IBM expect that in the next five years open advertising exchanges (currently led by companies like Google, Yahoo, AOL) will take 30 percent of current revenues now commanded by traditional broadcasters and media.
The report indicates by 2012, the landscape of the industry will change so profoundly that to survive, advertising industry players need to take aggressive steps to innovate in three key areas:
· Consumers: making micro-segmentation and personalization paramount in marketing;
· Business models: how and where advertising inventory is sold, the structure and forms of partnerships, revenue models and advertising formats;
· Business design and infrastructure: All players need to redesign organizational and operating capabilities across the advertising lifecycle to support consumer and business model innovation: consumer analytics, channel planning, buying/selling, creation, delivery and impact reporting.
IBM believes that all players will need to invest heavily in consumer analytics and automation to gain more insights about the consumer and how to reach them. For example, interactive advertising paired with consumer analytics provides compelling knowledge of who viewed and acted on an ad rather than estimates of impressions, allowing advertisers to maximize revenue and yield management. Industry players will also need to examine if they have right resources and capacity to handle increased marketing promotions and integrated advertising sales.
Finally, IBM observes that the dramatic increase in both the number and variety of promotions is leading to greater investment in tools to digitally transform and reduce the cost of companies' workflows including content management, creative development, production and sign-off processes.
More information can be found at www.CRMindustry.com