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Let's Tear Down the Advertising-Industrial Complex and Rebuild for a Digital Age

Three New Rules to Break From Your Father's Media Plan

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I was asked to speak at next week's Ad Age Digital Conference on "The Future of Advertising" – a daunting task, but fortunately not one that requires me to be Nostradamus. The fact is, the future is already here, and it's being driven by consumer behavior that is disrupting the marketing model. Like it or not, we're in an attention economy – and have been for more than a decade, mind you – where consumers are increasingly in control of media they consume and how brands are perceived.

Yet our industry is operating at its core much the same as it was in the pre-digital era. Sure there have been changes, but it's more like a paint job or landscaping, rather than a gutting of the house that is so badly needed.

Like Eisenhower's warning in 1961 of the military-industrial complex creating self-sustaining programs and power that were hard to unravel, today's "advertising industrial complex" has erected an ecosystem with ingrained systems, relationships and methodologies that are ill-equipped to fighting the challenges of the digital era. This inertia is our enemy.

Right now business leaders are looking for digital leadership. A recent Forrester report surveyed 1,200+ global business executives and uncovered some eye-opening findings. While 74% of global businesses have a digital strategy, only 33% believe it's the right strategy, and beyond that, only 21% – or less than one-fourth – believe they have the right people setting the strategy.

This is a formula ripe for disruption and disintermediation, which poses a huge threat to some of the world's leading brands and the rest of the ecosystem. Unconventional approaches are causing disruption in all sorts of industries, from entertainment to retail to beverages, and inflicting business pain on many category leaders in the process.

We all must now operate like disruptors, and to do this, we must rethink our approach to marketing in a post-digital era. The industry can move a long way towards reinventing itself by making three structural reforms to the way we budget, measure success and deploy marketing assets in digital age:

Zero-based budgeting
Rather than looking at last year's marketing budget line items and making incremental changes, marketers need to evaluate the landscape just like a new entrant would do, without creating artificial buckets between paid, earned and owned, traditional or digital. Starting from scratch will liberate marketers to focus solely on how the brand's organizing idea can be best supported by a content and connections strategy to best achieve its objectives.

Re-architecting success metrics
We can't optimize for the digital age when we're measuring success based on rear view mirror assumptions of how advertising affects consumer behavior. There are a lot of issues with measurement, but the most prominent one is that we continue to ignore the impact of earned media. For instance, many major marketers are still using marketing mix ROI models that exclude earned media and are using working vs. non-working media ratios as measurement of efficiency. These old formulas serve as counter-incentives to investing in compelling content and experiences that work so well in the digital era.

Right time marketing
Real time marketing became fashionable in the aftermath of the Oreo Moment during the 2013 Super Bowl. While real time can be an important tactic, Right time marketing is now an essential strategy. And it's not always the right time to be real time. Right time marketers must have teams that are integrated, multi-dimensional and nimble, as well as open technology platforms that enable these teams to transform data into insights into action in near real-time.

The future is here. It's not hard to see where we are going, but it's going to dramatically affect our industry. It looks like it's evolutionary but it's not. Industry resistance - and the advertising-industrial complex - are just making it feel that way. The time is now to rebuild our industry with new budgets, success metrics and deployment plans built for the digital age.

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