Consumption habits have become increasingly fragmented, with more people watching programming, including television shows and live sports, on different online platforms. As a result, traditional television, with its 30-second commercials, is losing its commanding share of advertising dollars. Digital media is expected to pass TV as the biggest advertising category in the United States this year, with roughly $68 billion in ad sales compared with $66 billion for TV, according to the Interpublic Group’s Magna Global.
With online ad spending growing, finding ways to stand out among the onslaught of other online ads has become more important for advertisers. And therein lies a possible conundrum: Advertisers want their ads to look less like ads even as they are fighting harder for attention.
Question 1.
Based on our brief class discussion (see slide 33 Lecture Notes from July 11, 2016) and an earlier post on this blog, use the 10X Change diagram to map ad-related business models mentioned in class. Briefly explain parameters for each model.
(a ppt version of the 10X Change diagram is available for download here).
Question 2 (bonus).
What major technology developments enabled key ("disruptive") business model transitions?
Question 3 (bonus). Use the 10X Change diagram to map potential ad-related business models that are now available with augmented reality games like Nintendo Go. What technologies (existing or new) can further improve such models?
6 comments:
Hi Eugene,
I'm trying to "break the ice" here, as I don't see many discussions online after class. I've been trying to remember the new ad type you mentioned in the class, but my golden fish memory keeps me at the bay. I've done quick research (googling) and came to some interesting pages for someone that is not familiar with the subject: http://www.wordstream.com/online-ads and http://www.wordstream.com/blog/ws/2014/04/28/user-generated-content. The former is a good reference for different types of ads and the latter is closer to what I was looking for, but not exactly. Would you mind to remember me and give me examples of the mentioned type of ad in the class?
It was called 'native ads'. But this term is overloaded, so it could be used in other context slightly differently.
Answer from Evgeny Pasenyants:
First TV ads: Country, Price 1M, Time: Day - Week
Radio ads: City, Price 100K, Hour - Day
Cable TV: Community, 100K, Hour - Day
Banner internet ads: Family / Person — 1K/100, Minute
Search ads: Person, Price 0.1/100, Seconds
Ads with all sort of targeting techologies: Person, 0.1, Seconds
(continue)
Q2:
Technology development enabled this business model transition are:
- Hardware Improvements
- BigData
- Deep integration of ads technology with other internet services
Q3:
Obvious augmented reality ad model is:
- Ads integrated with information of the objects you're pointing to
Technologies that can improve this model:
- New VR or AR devices. Existing devices are not developed enough and phone is just the best device we have for it.
- VR improvements within existing mobile devices
- Ad management solutions: something has to create ads and measure performance
- Maps adaptation to VR technologies
Based on our brief class discussion (see slide 33 Lecture Notes from July 11, 2016) and an earlier post on this blog, use the 10X Change diagram to map ad-related business models mentioned in class. Briefly explain parameters for each model.
Traditional television advertising: Between 1B and 100B on money scale in U.S., time is between c and min (to consumer) and either monthly or quarterly (for businesses), scale = large business (advertiser and network) and a community (consumers watching the same television program).
Digital television advertising: Money scale has now surpassed traditional television advertising, time for consumer is even shorter than 30 seconds (often a mere 5 or 10 seconds on interstitials on YouTube), scale = large business (advertiser and content network, e.g. YouTube, Hulu) and person (consumer)
Branded content and native solutions doesn’t really change the game much. This is just another form of advertising that doesn’t create a 10x change to the above models (B2B advertising targeting individual consumers).
What I believe will create a 10X change to this model is being able to tailor television advertising down to the individual consumer level based on individual traits and characteristics. There will still be a market for digital television advertising (branded content or native solutions), though that still paints a broad brush when it comes to segmenting customers. Once segmenting can get down to an individual level, where consumers are served video advertisements that are specific to them, will this industry model really get turned on its head.
What major technology developments enabled key ("disruptive") business model transitions?
A real-time exchange of digital video advertising inventory could really change the game here. This could potentially cut out the networks and content platforms and connect consumers with advertisers directly. E.g. based on my browsing history and other key demographics, I’m shown a different video ad from another consumer to the point where every viewer or a particular television program is served up a different advertisement based on their preferences.
We are just starting in on ways that augmented and virtual reality can also disrupt this market, particularly as it relates to live television content (shows, sports, etc.). This could potentially create a whole new medium for television advertising.
Question 3 (bonus). Use the 10X Change diagram to map potential ad-related business models that are now available with augmented reality games like Nintendo Go. What technologies (existing or new) can further improve such models?
Money scale is much smaller increments. Ads served to consumers on the second to minute range. Advertisers can get down to the person/individual level and don’t have to work with network or content providers; instead working with Nintendo directly. Advertising assets no longer have to be tied to physical assets, e.g. a Pokemon stop could be sponsored by a company or Nintendo could offer up augmented reality inventory to physical businesses to drive walk-up sales and foot traffic.
- Brian Favat
Base on the business models on slide 33, they would be mapped like the following, in my opinion:
• TV ads:
Scale: family (I guess you can't help to relate TV as a family tool for media, since it is hard to make sure the real demographics of your audience)
Time: minute (30 seconds ads)
Money: $66 billion (according to the post above)
• Yahoo banner ads
Scale: person (focused to draw people attention, but not always that related to what he is looking for)
Time: seconds
Money: $450 million
• Google text ads
Scale: person (focused to relate exactly on what the person is searching for)
Time: seconds
Money: billions
• Facebook social media ads
Scale: organ (brain: ads related to your interests and even your mood)
Time: seconds
Money: billions
• YouTube ads
Scale: organs (eyes and brain: one step ahead from other on line ads, by drawing the eyes to the ad and relating to the topic the person is looking for. However, it is curiously the most similar to TV ads, with the advantage on the possibility to focus a specific demographic, thanks to cookies and browsing experience)
Time: seconds
Money: billions
In my opinion, the trend line is not being followed exactly in this market, since the scale and the time are not decreasing in the same pace as the money is increasing. However, is interesting to observe how medias are being replaced, showing a possibility of a cycle insted of a regular trend line.
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