Advertising, as we know it, is undergoing a sea change even as we sit and discuss it. Conventional advertising wisdom is being thrown out of the windows into garbage cans and new ways are being tried out by companies to understand the ever elusive “customer”. But why, all of a sudden, do we wish to upend years of advertising wisdom and try something different? Conventional ad campaigns have yielded very delighted stock holders along with a bonus of a huge amount of money, fame and popularity for companies. So why, do we say that there is a sea change in advertising?
The problem, many people believe, is the Internet. That evil, malignant, ever changing ephemeral ‘thing’, which we can’t live
without. Advertising, at its core, is built on an STP analysis. And the Internet has made the conventional STP analysis not worth the paper it is printed on. For years, decades even, media houses and advertising agencies have had very rigid, well defined segmenting labels like age, race, gender etc. In predicting the tastes of the pre-Internet era consumer, these have proven to be quite successful and the advertising houses reasoned, the modern consumer should be no different. The assumption is of course that people of a similar demographic variable i.e., of a similar age, gender, race, etc. will behave in a similar fashion. And that is where the problem starts. Firstly, these variable are often not updated enough to accurately depict the population. Age demographics, for instance, long been among the most powerful segmenting criterion, do not even consider the tastes of people over the age of 54 when they are used to calculate TV ratings, at least as Neilsen interprets it. It’s as if these people don’t even exist. However it is the second and far more serious problem that threatens conventional advertising. Research from the Norman Lear Center at USC indicates that while the people participating in the social media networks belong to the same demographic categories as before, but those categories have almost no meaning now given that online networking tools have made it so easy to escape our demographic boxes and redefine ourselves. An 80 year old can like MTV and a 20 year old can be interested in spirituality. Demographic segmentation, dear readers, if not dead, is at the very least dying.
This brings up the concept of the behavioral segment, the upstart which might one day take over the spot left vacant by demographics. Since people wish to bond over their likes and dislikes and network over shared preferences, behavioral segmentation tries to predict their behavior based on exactly that. Vast databases spanning thousands and in some cases millions of people are used to create profiles with certain preferences which evolve and change along with the people they represent. These ‘Actionable User Profiles’, as Yahoo calls them, are highly dynamic and the subject of a lot of ongoing academic as well as commercial research. Companies are hoping, not only to be able to do an analysis of these dynamically changing customers and hence come out with more relevant advertisements targeted at them, but even generating the advertisements themselves in an automated manner which points to an absolutely unbelievable amount of customization of advertisements based on personal preferences in the near future. And of course there are roadblocks. As cynics would probably say, isn’t it impossible to have such a high degree of customization for an area where the target segments are so varied and so many and the products usually too low context. Aren’t you, normally looking for brand recall in such situations rather than any loyalty?
And yet, despite all opposition, mass customization is being applied quite successfully in marketing, has been for quite some time in fact. “Relevant” advertisements have been a feature of Gmail now for so long that many of us don’t even remember Relevant ads Examplethat the small text message on top of the mail is not a part of the mail. Of course there is a question of how relevant are these “relevant” advertisements. Quite, as it turns out! So relevant, that there have been privacy concerns where people were actually afraid that people at Google are reading our private mails to ensure the continued relevance of advertisements. Despite this so called relevance, I still feel that there is a huge distance to be covered still by these relevant advertisements. Indeed, an advertisement is relevant if I fit into its audience. But how do you decide what the audience is going to be. Manually, as yet, but what does the future hold?
The day is not far when we have a highly customized ad program which creates advertisements based on user profiles, when the advertisement in question is created exclusively for an individual user or at most a handful of other people and I see this coming in a wide area spanning impulse buys and the FMCG sector, not to mention more expensive, high involvement products. One possible problem in this is the cost involved. Maintaining vast databases is not cheap. And the high degree of customization proposed is definitely going to be much more expensive and difficult, but then most companies have still not realized that people have definitely given the thumbs up to relevant advertisements and these companies are usually not
giving them enough importance in their advertizing outlay. However, what is really going to help companies justify the added cost, is a better bottom-line and hence better sales. And given behavioral segmentation’s very nature, the chances of converting a potential customer to a real customer should be much higher. By its very nature, we should get a much higher bang per buck for investing in products which enable such advertising. On the flip side, pricing these advertisements is going to be a herculean task in itself needing a mountain of research. Another interesting area would be how such advertising channels would compare with the mass-advertising channels such as the evergreen TV and print media.
Indeed the limitless future in advertising is exactly that, limitless.
5. Pine II, J. (1992). Mass Customization: The New Frontier in Business Competition. Boston,
Mass.: Harvard Business School. ISBN 0-87584-946-6.