I have been working with the Communications Sector at Microsoft for about 4 years. My role has traditionally been somewhat of a demo show-off… show our customers in some interesting way how to use our technology. It wasn’t until recently that I got where all the shift in business has gone to.
The reasons that companies exist is to make money. Increase revenue, decrease cost. What I didn’t foresee or recognize is how advertising plays such a huge role in that goal. As I work with the largest telco and media companies, the conversations are changing. It used to be “show me why I should look at WPF or ASP.NET.” Now, it’s “show me how I deliver ads effectively.”
There’s a lot behind ads. How do you target individuals, track them, provide relevant ads, etc. If you have a website that shows authored content with a story predicting a horrible hurricane season, you most likely want to run the ads for insurance companies rather than an ad for a discount vacation package to Orlando. You also want to try to show ads that are relevant to a user. They sign into your site and provide profile data, and the types of stories they read over time help you provide better targeted content and ads to them.
Did that last part sound a little scary? Really? Think about it… that’s what you are doing for Google every day. You surf a search engine, and sure that’s a nice service to you. What you get out of it is the information you were searching for. What they get in return is data, data about your interests, data about combinations of interests, data about you. When you use your Google ID, they track you and your behaviors and interests and figure out new ways to sell that information to the people who want to sell you something. This is what most sites are about now… creating a community in order to gain your profile and better target you with advertising.
The focus used to be on consumers trying to get away from advertising. When the first VCR came out that skipped commercials, people rushed to buy it. I still remember watching the MTV awards on a VCR tape where a friend recorded it without the commercials, and thinking “tis is teh greatest evar!1!” Now that we have DVRs that allow us to record shows and skip the commercials, most people readily admit they prefer this to live TV. I can’t remember the last time I watched a show without skipping the commercials, including a lot of sports events.
Here’s a bit of an eye-opener: the broadcasters put your favorite shows on the air as wrappers around advertising. While you may view Law and Order or CSI as the content and the commercials as a nuisance, the broadcasters view the show simply as a delivery mechanism for the commercials. The way that the broadcasters make money is through advertising. The broadcasters and content producers are focused on delivering content that draws you into their network so that they can advertise to you. If a show has more viewers, then they can sell advertising space at a higher rate.
The whole concept of wrapping shows around ads worked great 20 years ago. Think back to watching TV in the ’80’s, what that experience was like. At the end of Knight Rider and the A-Team or Dallas or Knots Landing, an announcer voice would say “This epsisode of Knight Rider was brought to you by Tide… Tide, for the really tough stains.” You would see a little more of the show’s content, then skip to a Tide commercial. When the commercial is woven into the content, it greatly reduces your ability to opt out of the ad. When the ad is part of the content, we are more accepting and willing to watch. Contrast that to today’s ad models and how the DVR has changed your viewing habits.
The ability to skip the ads puts the advertisers in a weird spot… how do they continue to reach you? Instead of injecting ads into the middle of shows, we see ads popping up in the lower third of the screen. Product placement is a huge business, injecting ads into popular video games and making sure that the actors on 24 or CSI are holding the latest and greatest cell phone, showing video and GPS capabilities to the hilt. Company logos are now superimposed virtually onto the widescreen shots of the football field, on the hockey ice, in the baseball outfield. The top of the backboard in an NBA game is prime real-estate for a company logo. A buddy told me last night at a hockey game that there have been considerations to put ads on the back of the goalie’s jersies… they’re the only player guaranteed to be on the ice and on camera frequently throughout the game. When you sit in the American Airlines center watching the Dallas Stars, nearly every possible interesting location is covered with ads. The boards, the center ice, the scoreboard, the walls, the entrances, the exits, there are ads everywhere. When you watch the game on TV, you see those ads.
The advertisers are always trying to find new and interesting ways to reach us. This is how soap operas on TV were started: the commercials were for soap. In fact, some of the TV shows that are shown were designed specifically to drive a specific consumer behavior. Is it just coincidence that the popularity of Friends (where most of the scenes were filmed in a coffee shop) and the explosion of Starbucks happened at the same time?
You may be thinking, “what’s so eye-opening about this?” The fact is that we are getting more and more used to ad-supported services. A remember that there was an uproar awhile back about the thought of ISPs being able to inject ad content into your daily browsing. What if you got high-speed internet for free with some non-intrusive manner of delivering ads, something like lower-third advertising on TV? If I give you a cellphone where you gain minutes by watching ad content, would you use it? Heck yeah! Nobody likes paying $100+ per month to talk on the telephone. If I can get a Windows Mobile 6 device with free service just for watching some entertaining commercials, sign me up.
Here was something that was surprising to me. A recent study shows that people would prefer ad-supported on-demand TV with non-skippable ads, as long as the content was free. I would happily sign up for an ad-supported TiVo unit, but if and only if I didn’t have to pay monthly fees. I would opt into more advertising if it didn’t hinder the experience.
The fact is that we are becoming more and more accepting of ads, and would opt into more services if they were free. We are opposed paying for a service and getting bombarded with ads: if you rent a movie from Netflix, you want to be able to watch the movie and not have to watch the 20 previews on the disc because you paid for the rental. If I was up-front and said you can watch the movies for free but you have to watch a few non-skippable previews, that’s a much different story.
If you want to see the future of communications and media, it’s advertising.