Marketing in the Era of Creative Destruction

Dave Newmark, CEO and Founder of the radio advertising inventory auction agency Bid4Spots, is our guest blogger today!  More about Dave at the end of the article….now on with the show….

In a recent article in Atlantic Magazine, author Richard Florida, talks about opportunities that can come about in the current recession. He says that these times are not so much recessions or depressions – words that carry unnecessary emotional baggage – but “resets” of our economy. What he explains is that in conference rooms and boardrooms of today’s companies, we are looking for ways to reset our companies and industries. These are eras where new technologies come about and entire industries are restructured during what the economist Joseph Schumpeter called “Creative Destruction”.

In the traditional media world, just such a reset is now taking place and forward-thinking marketers will reap amazing rewards by understanding and testing them. I’m not referring to online advertising generally and search marketing particularly which has certainly seen the fastest growth in recent years. What I am referring to is the beginning of creative destruction in the traditional buyer-seller relationships that have driven traditional media sales for about a hundred years.

When traditional media, namely newspapers, radio and television were confined to relatively few properties, the negotiation of the advertising space or time purchase played a less central role than the idea. Watch an episode of AMC Television’s show “Mad Men” and you know that during these times the central discussions were about the campaign theme or concept. Today, marketers face a different challenge: what we now call “media” has proliferated beyond imagination. Think about it. In addition to Search advertising, there are myriad choices within online marketing (text links, banner ads, streaming video and much more across millions of properties and online ad networks), plus cable television, once comprised of a few networks is now a 400+ channel universe. Radio used to be AM and FM. Today, there is Satellite (for now, anyway), HD Radio and Internet Radio. Even Out-of-Home has exploded with digital signage in elevators, restaurants and every imaginable place where people congregate. At the same time, with a need to become ever-more efficient, advertisers are squeezing their ad agencies to make all those ad buys on a smaller commission or fee, so the amount of people available to negotiate with this plethora of media companies has gone down, not up. So, the economics of running a traditional, full-service ad agency has made them largely extinct. But companies need to market their products or services, so they must, in many cases, do it themselves, also with fewer people.

Today, therefore, there are more media choices than ever and fewer people available to make those ad buys and fewer people at the media properties to facilitate the sale – headlines abound about layoffs of sales staffs at all traditional media properties.

How can a forward-thinking marketer make any headway in such an era of creative destruction? I believe the answer is to explore and use newly-developed online tools for accessing Traditional Media. We are now at the very beginning, I believe, of a huge growth period for such ad exchanges. Traditional Media is still crucial for marketers to generate demand for their products or services beyond Search. How can a marketer plant an idea into the head of a potential customer if they rely just on Search? They cannot. Such exchanges will help time-strapped, efficiency-seeking marketers generate maximum value out of their traditional media buys. This value will be generated by companies like Google which is seeking to help advertisers target consumers by making ads relate more to the content or by companies like the one I founded, Bid4Spots.com, which turns live media auctions upside down to drive rates lower. The cable TV industry with their Project Canoe and SpotRunner’s new Malibu system will attempt to battle Google for dominance in the field of ad relevancy.

At the moment, the biggest challenge for many of these exchanges is getting access to inventory. Google has struggled with it (today, the big TV networks have shut them out) and the eBay Media Marketplace was also shut out of this television inventory. We have not had this problem because our platform is restricted only to “last minute” purchases which do not interfere with regular ad buys. Still, ad exchanges with the right formula will emerge and the smart marketer will try test them all, measure their cost effectiveness and scale with the ones that work.

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Dave Newmark is president and CEO of Bid4Spots, an online marketplace for unsold radio ad inventory; and is owner, president and CEO of Newmark Advertising, considered by both direct response and brand advertisers to be the leading agency for endorsement radio. He has been innovating in the radio advertising business for more than 26 years, making him uniquely qualified to design a system that makes radio advertising work well for advertisers, while helping stations capitalize on their inventory.

One Response to “Marketing in the Era of Creative Destruction”

1. Jeff Atkinson on February 25th, 2009:

   Hello.

   I like your site and wanted to know if you would be interested in exchanging blogroll links.

   Thanks in advance