Is Advertising Worth Saving?

Advertising, as an industry is going to get hit very hard in 2009 as it’s caught in a perfect storm. A combination of the economic downturn combined the massive shift in how people, formerly known as consumers, interact with and experience media, is going to put enormous pressure on an industry already in trouble. Look at the industries that support traditional advertising, retail, auto industry, financial services, you see where I’m going with this. WPP is rumored to be cutting ’several thousand’ jobs and Omnicom is letting 3,500 people go.

Now the problem advertising has is very similar to the challenges of the record companies have had over the last few years, not so much that people are stealing their content, but the shift in culture is disrupting their business model. The music business thought it was in the distribution and promotion business, and a large part of it’s business model was built around that. Suddenly distribution and promotion was solved by peer to peer and the music business had to change how it ‘added value’ and it’s slowly figuring that out.

A large part of the advertising industry is IMHO in the awareness building business, and if you think about it the internet is very quickly solving the awareness problem much faster than advertisers can. Right now with my personal network I hear about products I might want even before they are built. Not only that, if it’s a really interesting product I might even get connected with the founders of the company and give them immediate feedback via twitter, facebook, or their blog. Now, as Renny Gleeson of W+K points out one of the problems ad agencies have is the investment they have in current ways of doing things:

“it irked me recently at the DLX Summit to hear interactive media agencies and publishers focused on teasing efficiencies out of their systems – “oh, we need a streamlined IO process”, “oh, we need a streamlined RFP process”, “oh, we need a GRP equivalent”.

Bullpuckey.

That’s navelgazing incrementalism.
…
But it’s hard for media and creative agencies to imagine a landscape that doesn’t look like the one they just spent all this time and money building. Frankly, they aren’t incented to. They’ve invested as heavily in the communication delivery systems and techniques as brands are in the pseudo-science of “brand management” perched precariously atop reams of best guesstimates about media effectiveness.”

So the question is if advertising needs to reinvent it’s business and business model, what is the business it should be in?

I think the answer to that question depends on where you think the future of business is going. IMHO I believe the future of all business will be based on what Lawrence Lessig calls a Hybrid Economy, where a business co-creates value with it’s customers, and the businesses that win in that case will be the ones that not only have a system to capture and share that value, but inspire their customers to create more and more valuable things and ideas. Sounds quite utopian I know, but look at Yelp, Threadless, Etsy, Amazon, Ikea, South West, Dell and TechCrunch; these are organizations that engage their customers in co-creating value, these are the pioneers of this hybrid economy. Now, I don’t just believe that’s the future of business because the internet is allowing it, I believe that people are ready to step up, ready to be led toward something more valuable and more meaningful. As Clay Shirky says there is a cognitive surplus ready to be used, in one weekend Americans watch enough commercials to build a complete wikipedia. So I believe that’s the future of business, so what is the role of advertising in that?

First of all I think advertising has a massive role in the future of business but, as the best agencies do, it needs to get back to the job of inspiring people, inspiring them to be part of something bigger, helping them understand how they can participate in increasingly valuable ways with companies and organizations. This also has nothing to do with the medium, they can use TV, the web, facebook, twitter, whatever, but the important thing is ‘what’ they are doing, as opposed to ‘how’ they are doing it. Now, one important dependency here is the businesses themselves, they have to shift their strategy from just shipping products, to stand for something bigger, something more important, something that customers can believe in. They should look at companies like Patagonia who get 36,000 resumes for every open position, that’s a company that is inspiring action above and beyond the act of consumption.

Related to this post is a couple of others I put together recently so if you want some background:
The Future of Business and Social Media inspired by Lawrence Lessig interview on Charlie Rose

Advice about Social Media for CEO/CMO and other Senior Executives

My 2009 Prediction on Social Media and Beyond – The Flight from Growth to Value