The Disintermediation Of the Ad Industry and Other Wisdom

Went to a breakfast today for the NYMIEG group of media and entertainment executives. Michael Kelley, one of the very smart people watching media at PriceWaterhouse Coopers, talked about how more and more companies are finding themselves in direct contact with their consumers – 300,000 or 1.2 million "hits" per day on their Websites. "Many many companies have access to their consumers like never before," he said. He talked about how the industry is moving from "impressions" to engagement and to transaction. Yet another person I've seen observing that companies are going "direct-to-consumer" with their media, and obviating the need for a traditional ad buy.

Of course, they can still use media professionals to help them do what they need to do :) . I wonder, though, as they bring more media operations in house what other typical media issues they'll find themselves confronting: Everything from managing audience flow, to deciding whether to take ads from others (imagine the disruption there – if, say, the Coca Cola site found it had a great audience for some non-competing product, and was able to get ads from that product on its site, perhaps taking those dollars away from traditional media … and by traditional media I mean any media, from the evening news to blogs … that's media for media's sake), to managing privacy issues, an archive of content and more. Sure, they've had to do some aspect of all of these things already. Companies do have their own intellectual property they have to carefully manage. But as a company that's not in the media business becomes a media business, it will need a different mindset, perhaps a different way of measuring success. If Coke sells ads to, I dunno, GM, will Coke then need an inside ad sales department to handle GM's ads? You may protest that Coke will say it's not in that business and won't sell ads. But if some company starts to see significant revenue from selling ads, or producing content, or having an archive, it could happen.

Kelley also posited that the level of audience the company Web sites are attracting will give them leverage to launch whole new brands. Fascinating idea. Other intriguing factoids he gave:

- Mobile device users will grow from 2.2 billion to 3.3 billion in the next three years. He pointed out that Rim, Apple and Google are all pushing forward, that AT&T had bought a company that gave them access to air bandwidth over which to send video, and that anyone who says a screen is too small to watch video doesn't know that audiences will tolerate any size screen. Think of the iPod Nano, he said.
- During the Depression, one of the few industries that grew was entertainment, at 7 percent per year.
- 50% of audiences will skip a video with a pre-roll ad, and they won't tolerate interstitials or popups, either.

No comments: