Smart targeting meets dumb advertising: the Internet opened marketers' eyes to the power of networks outside the broadcast ones. But it turns out the web is not the only marvelous distribution system

Communication World, March-April, 2005 by Angelo Fernando

What impact could something called "zoom-tones," a trend called "podcasting" and a 10-minute ad embedded in an adult movie web site have on the future of advertising? They are just three examples of marketers' latest attempts to create and distribute content in the digital environment. Conventional advertising never used to deal with content creation outside of ads and marketing collateral, but it does now. Ad agencies didn't worry about inventing new media channels, but they cannot survive today if they don't. Most important, they never had to worry about micro-targeting, since advertising was stuck in the mass communication model with an intravenous tube hooked up to the media. Now, micro-thinking is all they do.

I don't need to tell you that people hate ads. They will do anything to skip, block or bypass them altogether. But the truth is that advertising pays for most of the communication we consume, and there is a very slim chance that ads--at least in the mainstream media--will simply go away. However, there are several indications that ads will begin to look less like the insulting pitches for cars and beer that we skip over or mute. Translated: Advertising is under repair. And the reason? Think of it as the Internet dividend. The Internet opened marketers' eyes to the power of networks outside the broadcast ones. But it turns out the web is not the only marvelous distribution system.

New distribution networks

Advertisers today are looking for other networks and discovering there are quite a few good ones around. Think ATMs, cellular networks, TV set-top boxes, video game consoles and even cars. When marketers start looking for narrower distribution systems for their ads and content, they find interesting environments that give them two huge benefits: They can micro-target--something they couldn't dream of in the mass media--at a reduced cost. And they get great feedback and measurement--the ROI pot at the end of the advertising rainbow.

You probably wouldn't think of micro-targeting in this way. Who would ever consider that LodgeNet, the pay-per-view in-hotel network available in thousands of cities, could be an ad network? The new-age ad agency Crispin, Porter and Bogusky is the kind of agency that dreams up alternative content for alternative media environments. For its client Virgin Atlantic Airways, the agency wrote and produced a 10-minute short film--charitably described as an innuendo-laden commercial--and placed it on LodgeNet.

Never mind the content--think of the intent. The micro-targeted audience (businessmen who travel in business class) has a good chance of getting to know the luxury of Virgin's "upper class." It's the opposite of broadcasting. It's narrowcasting.

Now that the Apple iPod is the must-have MP3 player, a flood of accessories has created what many are calling an "iPod economy." Not surprising, the iPod is a perfect receptacle for marketers seeking to target those tech-savvy users. Someone has found a way to record audio clips that can be downloaded just like music, in effect allowing marketers to narrowcast a message to that captive audience. Podcasting, like webcasting before it, might be the next frontier in niche advertising.

(Speaking of the web, remember "zoom-zoom-zoom," the tagline in the Mazda ads that you probably ignored? Mazda has launched a web site that offers free downloads of the zoomtones, the "zoom-zoom" song/jingle.)

Pushing the envelope

As for measurement, digital networks offer it, almost in real time. Remember the old Internet joke about how tedious driving would be if Microsoft designed operating systems for cars? Today, Microsoft is considering designing a sort of operating system for the auto industry. While it wouldn't power the vehicle, a simple Windows-based navigation and entertainment system could deliver "services" to passengers--the perfect (and captive) target audience. Think about the potential to fine-tune the demographics: grandparents, single moms, NASCAR dads, news junkies, salespeople, teenagers, kids in the back of the minivan playing video games on on-board entertainment systems, and those in the front who are fixated on the other "toys" such as the in-dash GPS panel.

If all the devices one could use in a car--cell phones, game consoles, TV sets, video players, PDAs, and the built-in stereo and navigation system--were suddenly able to "report back" the amount of time being spent on them, advertisers would pay a lot of money for the data. As intrusive as it may sound, remember that that's how TiVo was able to precisely report on the number of times the Janet Jackson "wardrobe malfunction" was replayed during Super Bowl XXXVIII! Measurement is so intricately linked to smart targeting that cable channels are already beginning to roll out what's being referred to as "addressable advertising"--basically, the ability to serve up different ads to different ZIP codes. It's not a perfect science, but theoretically, your neighbor across the street could be seeing a different batch of ads than the ones you are seeing while watching the same program.