November 5, 2013

This Is Not Your Father's Internet, by Rob Norman, Chief Digital Officer GroupM Global

Each year my colleagues and I write a paper for our clients on the now and next of digital development as it effects advertising, marketing and media. This is a broad ranging piece; what follows is a summary of "Interaction 2014" and its central theme of disruption that starts with a major imminent anniversary.


In just a few months 25 years will have passed since March 1989 when Sir Tim Berners-Lee, a Fellow at CERN, wrote a paper that proposed connecting "the hypertext idea to the transmission control protocol and domain name system ideas." The quote finishes "...ta da." The "ta da" became the World Wide Web.


What today's Web enables for consumers and for businesses may not have been fully foreseen by its creator. The ability to do everything from consuming media on interconnected devices to purchasing an infinite variety of goods when and where one likes while self-administering a stress test with a cell phone is reality for many and will be for much of the world's economically active population by the time the Web hits 30.


To paraphrase an Oldsmobile ad of similar vintage, "this is not your father's Internet".


The Internet experience is now dominated by giant platforms that have commercially re-wired the Web and in many cases, particularly in the app ecosystem, hidden that wiring from view. In many ways, through ubiquitous data and commercial disruption, society is becoming re-wired as well.



At the same time as technology is hollowing out white and blue collar middle class employment, our uses of that same technology creates a data footprint that defines us commercially and personally to those with whom we interact. The "Internet of things" means this footprint becomes bigger for richer and for poorer. We spent years talking about a new social stratification resulting from access to technology. Now it may be as appropriate to think about a new level of economic determination informed by data that is reported and unreported. This will be utopian for some and, inevitably, dystopian for others. For those willing to share data, the world may become cheaper and more efficient to live in. For the unwilling, the opposite may be true. 


We live in a world of dynamic everything – from access to content to the pricing of goods and services. Disruption has touched every corner of business. Amazon and Alibaba have upended retail; Google, information and advertising; Apple, music and telephony; and, perhaps less famously, Uber, the taxi business; and Airbnb, parts of the hotel industry. No one sees the imminent recovery of the record store and the classified ad pages as both have been supplanted by a better and sometimes cheaper way.


The same is becoming true of entertainment. Companies like Machinima, Full Screen, Vevo, Vice, Buzzfeed, Netflix and both YouTube and Amazon (again) are challenging and fragmenting an entertainment economic model funded by advertising and subscription bundles. We are at an inflection point that may expose the current paradigm as a house of cards (pun intended) as we discover who will pay how much for what.


If corporations started this revolution consumers will ensure it continues. It is estimated that by 2020 Millennials will represent 50% of the West’s population. Half the world’s population will be under the age of 30 by the same date. The consumption of apps, of YouTube, Facebook, Twitter and the rest is dominated by this group.


The question is: Will the current behaviors characterized by on demand media snacking, multitasking, and often unfiltered social blurt survive entry into the workplace and the life stage demands of housing and family? It seems more likely than ever that these behaviors are the new normal.


The Center for the Digital Future at the Annenberg School at USC led by Dr. Jeffrey Cole has, in 2013, examined the behavior of college students transitioning from school to their first home. This is the West's first cordless generation. These people don’t subscribe to land line phone services (or read newspapers) and increasingly neither do they subscribe to cable or satellite services; if they do, it's for broadband. For them, broadcast and cable are indistinct concepts, shows are separated from channels and channels are separated from bundles.


Dr. Cole believes it inevitable that one or more of the anchors of the bundling model like HBO or Showtime will go over the top (in some markets they already have) and bet their future on direct relationships with individuals. This represents a threat to the business models of the mighty such as ESPN, which will need to increase advertiser funded revenues if carriage fees decline; and of the meek, those channels that fatten bundles without attracting committed audiences or advertisers.


For advertisers the world gets more complex as they address hyper-fragmentation and attention deficit. As a counter, the promise of the cloud and of big data implies an information adjacency and with it the ability to deliver content to the customer that promises super-precision in segmentation and targeting. This infers better value in an increasingly granular, dynamic and data-informed media environment.


It is, however, less clear that precision and efficiency are the same thing. It is at least possible that the dividend of reduced wastage is being matched or offset by the costs of customization, personalization, ad avoidance and ad blindness. It also true that awareness remains critical to brand health and the creation of demand which, in turn, depends on a strong mass media. This is far from assured.


For the consumer, particularly the healthy, wealthy, safe-driving and economically active, the future is bright. For everyone else, we advise you to keep your seat belt fastened; there will be turbulence ahead.

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