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IBM: Beyond Advertising 2009

The IBM Institute for Business Value has published a very interesting report titled “Beyond Advertising – Choosing A Path To The Digital Consumer“.

The report is a survey of 2,800 marketing professionals across six countries with conclusions about how ‘digitally-savvy’ consumers have become in a short space of time. It discusses how the traditional distinctions between advertising and marketing have blurred, and how companies must move beyond traditional advertising to combine granularity of targeting and measurement with cross-platform integration. (available for download)

This paper lays out 4 major trends that are acting to blur the boundaries between traditional brand-building advertising and ROI-driven direct marketing:

• Consumer adoption of new distribution formats – Consumer behavior has changed forever: They are more digital-savvy, willing to provide personal information in return for perceived value, and increasingly ready for permission-based advertising.

• A shift in advertiser spend – Spending is moving from traditional advertising toward measurable, interactive marketing. Combined with spending contraction in the new economic environment, this requires smarter advertising, and doing more with less. (see chart below)

• Digital migration of platforms – Traditional boundaries are fading, creating opportunities for innovative business models for content platforms.

• Emergence of new capabilities – Game-changing moves, by both new entrants and existing players, are driving new types of industry innovation, challenging existing business models and accelerating the pace of change.

These trends will bring big changes for the media and advertising industries. Yet, according to this study, content owners, media distributors and agencies have yet responded not sufficiently. This may be due to uncertainties about new media, lack of standards for formats, processes, and metrics.

IBM believes that because of these trends, media and entertainment companies need to move beyond traditional advertising to “Consumer Centric Marketing“, which requires a combination of granularity – the ability to target desired consumers while measuring results – with cross-platform integration.

Another point raised is that despite privacy concerns, a sizable number of consumers are willing to provide personal information in exchange for something of perceived value, whether it be free content, air time

minutes or travel/discount points.

Jouko Ahvenainen, co-founder and VP at Xtract expanded on this point: “At Xtract we have been working towards this together with mobile operators and online companies for the past two years. Most people are willing to trade what they consider minor details of their personal tastes and interests in exchange for receiving more relevant marketing messages. The best outcome of this is that people wind up receiving less advertising overall and the ads they receive are more relevant and useful to them.”

(Xtract is a provider of social intelligence solutions for web and mobile operators, see MobiAD article: Flirtomatic To Start Social Network Profiling)