Advertising smaller than we thought? It's all about relationships.

Despite the little hiccup (be nice) we are experiencing in online advertising, experts widely agree that the market is set to grow a ton over the next several years.  Given the rise in Social Media, however, I have been thinking that maybe – just maybe – advertising (specifically) might be a bit smaller an opportunity.  Before you go crazy, I am not saying it will be smaller than today.  What I am saying, is that it is smaller than we project. Why? Because dollars traditionally spent today on advertising will shift to Customer Relationship Management.

Advertising as it exists today is simple.  A brand – let’s say Sonar Studios – wants to promote a new cool movie.  Let’s call that movie 2013.  The guy in charge of running the show (let’s call him DC), has a fixed budget and his job is to fill seats by using those dollars to reach users and convince them to go.  So what does he do?  Well, to simplify and risk making this process simpler than it is, he buys a lot of freaking ad impressions as smartly as possible.  The next movie comes along and he does it again.  Lather, rinse, repeat.  That’s today.

This approach, however, assumes that, once you reach a customer that first time the relationship is over.  Guess what?  That’s just isn’t the case anymore.  Widgets, Apps, fan channels, twitter accounts, and email (yes email) are all ways that you can now connect with a user and keep the user.  Why is that important?  Because once you land a user, you can call him again with the next one!  Let’s take an example.  DC is a smart cat and bought lots of fans from facebook for 2013.  The movie is a raving success, DC smiles, and gets ready for the next movie – Killer Mutants from Mars (I made this up).  He get’s his dollars ready, sits down with the agency to buy lots of fun ads and then asks a question – ‘wait, can’t I just send a notification to the fans of the previous movie to start?’  This question is followed with the natural next question, ‘…and that mean’s your budget for ads is smaller.’

In short, if you believe that – over time – ads will result in relationships then by definition, budget and effort should shift from advertising to customer relationship management services.  Not sure how big this is yet, but playing with the concept.  Let me know what you think.

Special thanks to Margaret for her sage wisdom on this line of thinking.

hoomanradfar Written by:

  • Kevin Chou

    Smart analysis.

  • Hooman Radfar

    Kevin, thanks for the comment. Hope all is well with your biz.

  • Dwight Caines

    Bearing only a slight resemblance to your made up executive, I do have a point of view. The hope (at least mine) is that even though we will use ad dollars to cultivate fans from one killer space mutant project to the next, we won't necessarily reduce ad spending. The goal is always to grow budget responsibly – so if I have a real community of users that I can activate again and again, my question is, how could my ad dollars be used to engage a more casual, less committed user base? Catering to the impulse buyer is still an important aspect of entertainment marketing. What's more, the advent of micro blogging makes it critical that we make enough noise that we control the – dare I say it – trending topics. Spending will continue to grow as long as we demonstrate that we can grow mindshare and influence WOM.

  • Hooman Radfar

    DC! 🙂 that is a really good set up points. Appreciate the insight.

  • David Pylyp

    Marvel wisdom and articulate posting
    Micro attention to a dedicated base of targeted clientelle

    David Pylyp
    Living in Toronto

  • jonathan

    Heh, glad you've had the time to think more about it 😉