After a few meetings today & rereading this Techcrunch musing about local advertising and newspapers, I had a moment of clarity regarding the advertising industry... where it's been... and where it's headed. Random thoughts in no particular order:
- People consume media and ads from thousands of sources today. Consumption is ridiculously fragmented, perhaps permanently, although for all the fragmentation there are a lot of efforts to centralize as well.
- There are so many media outlets, it's arguable that people have media/advertising fatigue. Hence, they perhaps trust friends/colleagues and a "personal touch" more than ever before.
- Small, local businesses that achieved success in the "Age of Retail" (i.e. until the mid-80s or so) either became chains or went out of business in the succeeding generation.
- Despite the relative lack of local businesses, there is still a need for advertising at the local level... and that need bridges online and offline methods. Sophistication in online models is largely non-existent even in 2009 while it's extreme in offline advertising. This will change but only after a lot of experiments take place.
- Web entrepreneurs smell blood in the water when large, successful offline advertising companies fail to move quickly enough to play the game with the "new rules". Most Web entrepreneurs underestimate the power of existing brands, but managers of most large, successful offline advertising companies also aren't empowered to be bold enough to compete as well as they perhaps should.
- Chains, large and small, spent the better part of the last 10 years optimizing operations, data mining activities, etc. but they have not yet undergone the same optimization of advertising spend. I suspect this is an anomaly and large agencies will struggle with the realities of deflation sooner or later.
- Consumer behavior, overnight delivery services, and the efficiency of the Internet combine to make ads from other parts of the country or perhaps the World more relevant than an ad for a store right around the corner.
I don't know what this all means just yet... I'm rolling around on a few ideas that I'll share in more detail over coming weeks.