Online advertising meets 'The User Revolution'

Online advertising meets The User Revolution"
Written by Donna Bogatin, Contributor
“There is no mass in mass media,” was the opening salvo in “The User Revolution” put forth by Safa Rashtchy, Piper Jaffray senior research analyst, at the first keynote of the Kelsey “Drilling Down on Local” conference this morning in Santa Clara.

The advertising world is changing, Rashtchy warned. To survive in the new media world, “we must look from the consumers’ viewpoint,“ he advised.

How so?

“We never know where the consumer will be at anytime, so we have to be everywhere; Ubiquity is the new exclusivity,” Rashtchy noted a P & G exec recently mused.

Moreover, “consumers today know what they want and they know how to get it,“ Rashtchy underscored.

In the post World War II period, advertising blossomed because it aided in the consumer decision making process. Now, however, consumers already interact with the “brands they love” and advertising is deemed an intrusion. What’s more, all consumers need to do is “Google-it,” search is becoming a branding tool, Rashtchy indicated.

Rashtchy discussed the findings of a new Piper Jaffray & Co. Internet Media and Marketing research report, "The User Revolution," analyzing the changing advertising ecosystem and the rise of the Internet as a mass medium.

Global online advertising revenue will reach $81.1 billion by 2011, representing a 21 percent compound-annual-growth-rate (2006-2011), according to Piper Jaffray projections.

How is the “User Revolution” defined?

A major trend that is happening primarily with consumers, who are taking control of content consumption and branding. The historically passive consumer is changing rapidly, not only becoming more informed and confident about purchase decisions, but also increasingly taking control of the consumption of information and content that used to be distributed by networks, studios, publishers and retailers. This will cause a significant rise in prominence of the Internet as a major content consumption and marketing medium.

The emergence of “Communitainment“ is a fundamental paradigm of the “User Revolution” announced by Rashtchy and Piper Jaffray:

The Internet has increasingly become a principal medium for community, communication and entertainment -- three areas that have collided and are impacting each other's growth, generating a new type of activity: communitainment. Communitainment is taking time away from other, traditional, types of content consumption on the Internet.

Additional conclusions of the Piper Jaffray report:

Usites, the increasing popular category of user generated sites, are driving traffic away from other destinations and pose a challenge to the advertisers and publishers,

The Internet is now a mainstream medium: The web is the leading medium at work and the second leading medium at home behind television,

Internet usage patterns are changing, favoring Usites, communitainment sites, search, and away from traditional portals,

User Generated Brands. The consumers are taking control of content consumption and branding,

Media Fragmentation: Advertisers increasingly will need to buy more inventory, from nearly all types of media, especially the Internet, to have the desired impact,

Video ads will be the driver of the next major growth in brand advertising and getting additional dollars shifted from traditional media to online,

Ad networks are experiencing increased demand due to increasing Internet fragmentation, desire for more targeted inventory, increasing usage of networks for branding and increased site visibility,

Agencies are rapidly evolving into more sophisticated, technology-savvy entities that combine best of breed offerings.

Rashtchy believes Google is a power within this “User Revolution”:

The Golden Search: Search has become the new portal. Google's dominance is likely to expand, partly fueled by a wide variety of non-search related products that create a virtuous cycle of brand affinity for Google.

Rashtchy offered that “Viacom is suing its own customers.”

No Q & A opportunity was available following Rashtchy’s remarks. Nevertheless, below is is the question I would have posed:

Who needs newspapers, who needs TV is suggested by a declining usage of traditional media. Content produced by traditional media, however, is still preferred over user generated content. How will traditional media be compensated for their content?

If Viacom is “suing their own customers,” they are non-paying ones.


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