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The Death of Digital Advertising

  |  April 26, 2011   |  Comments   |  

It's time the industry paid attention to these six signs.

The writing was always on the wall, and seems so obvious in hindsight.

At the turn of the millennium when it seemed that digital would take over the world, we were all blinded to the warning signs that were sown in the early days, but has taken decades to take root and change the landscape.

It was hard to imagine in 2011 that digital advertising would be dead by 2032. In piecing together the threads, there were six clear trends that led to its downfall:

1. Talent

From the very earliest days of the Internet, finding good digital talent was always the biggest challenge. Event after industry event, digital agency heads cited this as the number one problem. And like most industry problems, the easiest solution was to poach talent (thereby making it someone else's problem).

The problem of course, was that it turned into a vicious circle that resulted in over-inflated job titles and expectations, without the benefit of experience. The decline in quality of work became more apparent over the years as ever increasingly complex projects were led and managed by ever decreasingly qualified teams.

2. The economics of the Internet

The early fatalities of the Internet era were the music and movie industries. Travel agencies were next; newspapers followed shortly, then book stores, then department stores. In fact, entire Middle Eastern governments were brought down and made obsolete virtually overnight.

It was hubris to think that digital advertising would be immune to its effects. Yet, the economic forces that forced prices down to zero eventually overcame the ivory towers of the agency world. Why would clients pay premiums for digital creativity when harnessing the power of the Internet via crowdsourcing could produce better results? And likewise, why would people aspire to work in an advertising agency when they could easily create their own ads and be paid for it by brands?

3. Obsolescence

Before the Internet, there were many skilled jobs that people thought would always be around. Travel agents. Typing pools. Video rental stores.

But the increasingly fast pace of technological progress replaced each one of them through automation. Likewise, digital marketing became a pure numbers game – something computers and programs were very well suited to. There soon became little room for creativity, as all decisions became based on statistically modeled inputs and outputs. Like chess before it, the genius and creativity of the game became a set of rules (albeit complex ones!) and algorithms best managed by a computer.

4. Business models and metrics

John Wanamaker's famous lament - that half his advertising budget was wasted, but he didn't know which half – had a particular irony in the digital world. With click-through rates for banners well below the 0.1 percent mark, he would now be certain that 99.9 percent of his online budget was wasted.

Metrics is a double-edged sword. As any statistician would tell you, there are lies, damn lies, and statistics. The numbers themselves don't mean anything without context. And in the incredibly complex consumer work with its infinite variety of interactions – providing context proved to be more time consuming and less interesting for marketers than they were prepared for.

With shallow understanding, it became harder and harder to justify investments in digital, adding a further nail in the coffin.

5. Social media paralysis

Businesses crave certainty. The bigger the investment, the surer the bet must be. So the world of social media became the most feared business concern – not just for marketers, but also for chief executives.

All the millions invested year on year in building brands and consistent messages could be destroyed overnight. And worse, it could be triggered by the merest whisper of untrue rumours that could come from anywhere. Twitter alone was a biggest influencer of stock price than all the financial papers combined.

The companies that kept their head in the sand found that they lacked the ability to react quickly to these rumours (leading to their eventual downfall), and those that invested found that it soon overtook their marketing budgets, at the expense of their more traditional, digital marketing activities.

6. The death of fun

Perhaps the most telling of all signs though, was that advertising was no longer an attractive occupation. Exacerbated by all the problems above, and making the talent shortage even more severe, many of the best and brightest left to pursue careers in other industries.

Digital advertising became mechanical, even more stressful, with ever tighter deadlines and ever higher expectations – yet ever lower costs. Agencies could no longer afford the salaries that attracted the skills needed, so one by one they folded. They could no longer provide the promise of fun and creativity. The world had changed, and digital was the dinosaur as a giant asteroid hit the landscape.

Could the world have been different? Looking back with the benefit of hindsight – there is so much that could have been done, if only the industry paid attention to the signs.

If only it nurtured talent. If only it could harness that talent to command a price premium. If only agencies innovated with business models faster. If only we made sure that advertising was a passion that stayed fun.

If only we had the hindsight in 2011 to change our course for the better.

If only.

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ABOUT THE AUTHOR

Eric Phu

Eric has over a decade of digital marketing experience on both agency and client side. Before joining Tribal DDB, Eric held various roles at Euro RSCG in Sydney for six years, including business development and operations director, head of digital and more recently, head of engagement strategy. Based in Hong Kong, Eric is responsible for overseeing the digital operations of Tribal DDB across Greater China. He has worked with clients such as Sony, Dell, IBM, McDonalds, Unilever, Reckitt Benckiser, Jaguar, Volvo, Tourism Australia, Philips and Intel to take full advantage of the digital space. Eric's passion for technology and marketing meant he also was head lecturer for the AdSchool Digital Strategy course at the University of Technology in Sydney. Connect with Eric on Google+.

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