The recession-fueled advertising downturn underlines the urgency of using the Web to glean data and target consumers directly, rather than blasting them with a barrage of TV-style ads, media executives say.
At the Fortune Brainstorm: TECH conference in Pasadena last week, Walt Disney Co Chief Executive Robert Iger opened a discussion about new ways to market to consumers, when he described himself as, pretty bullish about what technology is going to allow in terms of behavioral tracking.
Executives from AOL, a division of Time Warner Inc, News Corp and IAC/InterActiveCorp echoed similar hopes about the potential to reach consumers online.
As advertising dollars grow ever more scarce, companies have been forced to rethink how they reach consumers and have moved away from the traditional 30-second spot to the kinds of targeted, Internet-driven marketing campaigns that have been talked about for years.
Internet advertising in the United States -- a $23.4 billion market in 2008 -- was down 5 percent in the first quarter of this year and Iger and other executives say the sector may not return to the historic growth trajectory seen before the recession.
Jonathan Miller, head of News Corp's Digital Media Group, believes advertising is undergoing, fundamental changes ... and you have to tease them out of the recession effects.
Marketing is on an arc to become more efficient. My dollar should go further. And that says the advertising pool may not grow at the rate that it's traditionally grown at, even out of this recession.
HITTING THE TARGET
Targeting consumers via demographics, profiling, and their social networks, you learn a lot about people and you can identify them, Miller added.
The thinking among these media executives is that advances in technology is enabling them to build more detailed profiles of consumers -- which can then either be sold as a commodity or employed in their own marketing campaigns.
AOL Chief Executive Tim Armstrong, former sales chief at Google Inc, also sees new marketing opportunities from consumer referrals and tracking.
Where people actually go, what they do, how they do it, he said. It's not just about data, it's about the insight. If you're Procter & Gamble, or Kellogg's, or Coke or whatever, forget all the data. What is the insight you get out of it? How does that actually change your perception?
But Ed Moran, director of product innovation for Deloitte, said tracking tastes and developing profiles is fine, as long as advertisers do not make the old media mistake of finding their optimum consumers, only to show them a commercial.
Moran said next-generation advertising will be driven by the tastes and habits of 14 to 24 year-old millennials whose lives center on social networks and Internet-enabled handsets.
A more effective way of reaching these young folks ... is to use their social networks as influencers, rather than bombarding them with ads, Moran said.
To that end, Barry Diller, chief executive of Web giant IAC/InterActiveCorp, said Internet advertising must evolve from displays and become integrated into the content of websites.
Even actor and media producer Ashton Kutcher chimed in at the conference, saying the billboard-style display ad is already outdated.
People who have grown up on the Internet have trained themselves not to see it, he added.
(Reporting by Gina Keating and Alex Dobuzinskis; editing by Edwin Chan and Andre Grenon))