The End of Advertising

One of the first casualties of the global financial crisis was advertising – companies the world over responded to the threat of shrinking business and therein budgets by gutting marketing departments.

Some of the out workings of this were interesting – profits for newspapers and free to air television plummeted (you can now buy a share in one of Australia’s premier media companies, Fairfax, for less than the cover price of their flagship financial newspaper). While stickier media – Pay TV – thrived as people kept their cable subscriptions and settled for more thrifty evenings in at home.

The other outworking has been that marketing departments, particularly in businesses like financial services, where the relationship between manufacturers (banks, life insurers and fund managers) and the consumer tends to be disaggregated due the sales role played by intermediaries, have started to question the value of traditional advertising.

Traditional advertising – print, radio and TV advertising – is an interruption competing for the attention of customers, even when filtered through the relatively blunt instrument of the media.

But now that the green shoots of growth are appearing in the market – is the money simply going to flow back into pay and display advertising, or is the financial services world slowly waking up to the fact the way consumers gather information has changed fundamentally.

There are subtle signs that the world is changing – newspaper sales are down, free-to-air television consumption is down and internet activity is up. Up so much that online activities today matches the time people spend in front of the television.

However the internet is fundamentally different from television. TV, radio, magazines and trade media are essentially a push medium that is – data and advertising is pushed to consumers – the internet despite all the efforts of business like YouTube and the like is that it is a pull medium – that is people go there to search out the information they want.

Consumers are applying their own filters, choosing the information and the sources they want.

This means there is fundamental change afoot and each step forward is another quiet step on the road to oblivion for traditional advertising – here are five of the things that we think are going to change the way in which financial services companies engage their markets.

1. The Concept Of Paying Attention

One of the more scarce elements in the relationship between a service provider and the customer is attention and focus.

When a consumer is searching for a product or a service on the internet, or even browsing the internet casually, they are exercising control – they are going through an active process – they are paying attention to the product and that’s the time when a company needs to start paying attention to them.

Businesses need to be able to capture this attention and effectively turn these active customers into their own live customers.

2. The Concept Of Influence

One of the fast growing elements of the internet is the rise and rise of social media – where like minded people form loose relationships with hundreds of people through sites like Twitter.

Within these loose virtual communities influencers soon arise – individuals that are able to express their opinions and are able to filter information and engage their audience and soon begin to lead them.

The example of people who have been able to build a business on the back of this are too numerous to mention, but the most spectacular of these is a man called Martin Lewis (The UK’s self-titled money saving expert) who’s reputation is such that he has more than a million followers and can quickly make or break a financial services product.

The corollary to this in Australia are sites such as InfoChoice, Mozo and Canstar Cannex, but what little data we have about these business is that consumers don’t yet value them extensively.

This is a position in the minds of the Australian public that remains open – though there are no shortages of businesses and individuals competing to fill the space.

3. The Concept Of Measurement

The effectiveness of traditional advertising is difficult to measure – it’s even difficult to measure exactly how many people see an ad, let alone how many people make a decision after seeing it.

This isn’t true of online and other direct forms of advertising – companies will be able immediately to see the effect of what they are doing – they will get a stream of data about who is viewing the media, what they do when they see the media and how much they new product they are selling.

This new stream of data will lead to element 4. Creativity.

4. The Concept Of Creativity

With companies able to see and measure the effect of what they are doing it means that they will be able to cycle through ideas, messages, channels, media and tools quickly until they find out what works. Is it video? Is it social networking?  Targeted blogging?

This type of development is going to make life for advertising creative and marketing managers hell, essentially they are now going to be operating in a world where all their activities are completely measurable.

5. The Concept Of Open Exchange

One of the emerging trends, which companies are slowly embracing is the idea that they can start to have a conversation with the market place.

Tools like feedback forms, discussion boards, twitter feeds allow businesses for the first time not just to speak to their consumers but to listen to them, which is leading to the ability for businesses to build their own picture of what customers want, which means that advertising may not even be necessary.

A scary thought for those ad men.