Copyright Ian Pearson, BT Futurologist

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The future of advertising

Jan 01

The building of virtual cities and virtual communities on the net is an indication of the attraction of cyberspace as a place where people can socialise and satisfy the urge to create. There are already over two million homesteaders in geocities.com. These people are there because they enjoy being part of the net community, and they want other people to see things that they have created. Many virtual communities such as those at Geocities.com exist, but only some make virtual buildings. Others are simple chat rooms, but still instil a sense of community among the regulars. The hosts generally spend a lot of money, giving free space to these homesteaders and providing them with tools and materials for their construction. However, they make even more by advertising. Since many people are community residents so visit regularly and many others come to explore the many sites available, advertising rates are high. Adverts by every visitor to the front pages and to the resident's pages, most don't mind 'paying' for the 'free' space by allowing these adverts and of course, advertisers are very willing to pay handsomely to target audiences who are generally well educated and affluent. There are many such sites.

Ultimately, only so much of a product price can be spent on such blatant 'banner' advertising. But advertising can obviously absorb some of the revenue substitution from sales, since other sales overheads should be lower, potentially allowing a greater advertising budget. Also, as we move into the 'storyteller economy', there is a fuzzy boundary between the story (the street image being pushed) and the advert. In some products, most of the production cost could be in creating the product image so that it sells well. In others, only a small fraction of the sales price could be spent advertising. This means that for some appropriate products, creating an appropriate image in virtual environments could cost in if this spills over into the real world sales. This form of advertising could be much more subtle, much less in your face, utilising techniques rather like product placement in films. However, in films, the viewer has no direct interaction with the products. In cyberspace, some will be an active part of the environment and their operation may exactly mimic the real world operation. People using these in cyberspace and finding them suitable may be more likely to buy in real life. Other products may be used by other inhabitants of the environment.

Of course, today, many of the adverts that we see on TV are more fun to watch than the programmes that they interrupt. Manufacturers who produce well designed web sites are already proving that a similar trend exists on the web. By providing attractive or useful sites, often with services, games or chat areas unrelated to the product, manufacturers can gain a few short term sales, but more importantly, change the user's longer term perception in their favour.

Sometimes, the cyberspace is purpose made to allow shoppers to find what they need. Already, people can buy furnishings after seeing over the internet how their living room will look with the products, with obvious opportunities for automatic interior design services too. Although the shopper may be looking for one particular item, the opportunity exists to show many others in a favourable light, encouraging the shopper to buy more. This need not only apply in the same room, the environment or computer may remember the other things the user has bought over a period and may sometimes allow product suppliers to illustrate or demonstrate their products in suitable situations, having held the 'advert' in memory until then. This is in line with the notion of advertising on demand rather than pushing advertising at the user. Sometimes people want to see particular adverts. The key here is that the user stays firmly in control.

Of course, we already have lifestyle advertising. In the future, your computer will get to know you, what you do, who you talk to, what you buy, in fact it will build up such a good picture of your everyday activities that we are already speculating about agents that can substitute for you when you are away. With this level of knowledge digitised and potentially available to the outside world in certain situations, advertising again can make good use of this. Again, it will probably be pulled rather than pushed but this time the computer is the initial target, even though the human is the ultimate target. The computer may thus be able to suggest potential purchases to the human operator. Eventually, when a high degree of trust exists between the human and his machine, it may even have a budget to buy some things automatically. The notion of brands in such a world will take a severe beating and there will be substantial changes in market structure.

Finally because of the dumb broadcast nature of conventional media, advertising misses out on a key market, time-flexible purchasing. As an example, I am currently thinking of buying a home PC. I already have two and am under no time pressure. Yet the adverts in the papers all tell me what is available now and try to pressurise me into a quick decision with 'offer expires soon' notices. But I wasn't born yesterday. I know in the home PC market that the next offer will be even better, with a faster chip, more memory, superior sound card or a better printer or something, for the same price. It will always be better next month but I don't want to wait for ever. So what I need to know is what can I get, when, for what price? Then I could make up my mind and buy. There is no means of doing this. The adverts won't say and the staff won't even admit that they will have a better offer next month, let alone tell me the details. They probably think they are forcing me to buy the current offer and gain an earlier sale. In fact, they have managed to postpone my purchase for well over a year through this fear, uncertainty and doubt that is so prevalent in the PC industry. I want to make a bid, £1500 some time in the next 3 months - what will you offer me? Advertising on the web could easily cope with this, executing algorithms or using look up tables. Why doesn't it? Probably partly because the web site designers don't understand the customer's needs, but not just that. I think the problem really is that they are stuck in the same mental trap that has caught out most of the people deploying IT. They just take yesterday's paper systems and make an electronic equivalent, instead of thinking through from scratch how the problem should be tackled using the available new technology. If they would use a little more imagination, they would be a lot richer.