The end of advertising

Profile picture for user pwainewright By Phil Wainewright August 27, 2013
Summary:
In a connected world, traditional advertising is taking a back seat to more contextual forms of 'in-digital' promotion that harness our smart devices and data footprints.

Ebusiness Concept
In a connected world, traditional advertising is taking a back seat to more contextual forms of promotion. As more and more of our interactions move within the ambit of the intelligent, connected devices we carry around with us, promotion can harness those smarts to become more relevant and meaningful than was ever conceivable in the pre-Internet, pre-iPhone world.

This is a change I've been thinking about for a long time but it was brought front-of-mind last week when B2B commerce player Deem reminded me of Wells Fargo analyst Jason Maynard's paper on syndicated commerce, which I'll come back to in a moment.

This is how I framed my thoughts on this topic back in 2006:

Advertising is the creation of a disconnected era when businesses needed some way to get a message out to prospective customers that they couldn't reach directly. The purpose of an ad is to motivate the prospect to get in touch. The Web, as we all know, puts us all in direct, real-time contact with each other, wherever we are in the world. Instead of advertising a message and waiting haplessly for a response, businesses can proactively connect directly with their prospects, reaching out to them in contexts where they're ready to buy. What counts on the Web is product placement, merchandising and other forms of direct promotion.

Back then I was searching for the right phrase to describe the way that promotion works in a connected world. Today I think the term 'in-app purchasing', a notion that grew out of the trend towards selling virtual goods to gamers in the midst of play, expresses it best. It's a big break with the disconnected 'call to action' of traditional advertising. Today promotion can be embedded in the day-to-day routine of our connected lives as a contextual link that leads directly to purchase.

Syndicated commerce

Fulfilling this notion depends on an extensive infrastructure of technology that brings together the context and operates the ordering, billing and fulfilment mechanisms to complete purchases. Publishing ads is a much simpler technology proposition, which is why advertising is still a big part of our day-to-day Internet experience, while in-app purchasing (perhaps a more evocative term would be in-digital) is far less prevalent.

This is where Maynard's concept of syndicated commerce (PDF) comes in. This from the executive summary:

Syndicated commerce extends the buying experience by fusing advertising, marketing, and sales into a multi-channel, multi-platform network model that links purchase intent to conversion across any computing surface. In our view, the syndicated commerce model solves the problem of attribution by directly linking advertising efforts to actual commerce transactions.

Much as brands syndicate content to increase their audience, we think merchants will syndicate commerce across all touch points to grow sales. Under the traditional model, marketers have crafted compelling ad units to attract customers. Going forward, we think they will build new 'commerce units' that deliver commerce opportunities directly to customers. Commerce units include digitized offers, promotions, up-sells and cross sells and could be distributed across a wide array of surfaces to target the most receptive audiences in the most appropriate way.

We think syndicated commerce represents a powerful step forward that delivers true performance based advertising by closing the gap between advertising dollars at the top of the funnel and each customer at the bottom. Syndicated commerce is a natural extension to the digital marketing software tsunami that is changing front office technology. We see this evolution as radically reshaping the commerce landscape by improving optimization and conversion through unprecedented relevancy. The proliferation of mobile devices, increasing urgency surrounding measurable advertising and the growing encroachment of Amazon on every commerce segment means the time is now for syndicated commerce.

Market quest

Maynard's paper lists a roster of vendors with products and infrastructure that can play a part in these capabilities. Deem gets a detailed mention but others are included, ranging from Amazon, eBay, Google and Square to BazaarVoice, eXelate, NetSuite, ATG (owned by Oracle), Hybris (recently bought by SAP) and Concur. If syndicated commerce and in-digital purchasing really do take off, then we can expect a much larger number of vendors to get involved as the market is potentially huge — the underlying network infrastructure is monetized by taking a cut out of every transaction it enables.

Maynard might also have mentioned (but didn't) some of the marketing automation players who are increasingly tying into social media and for whom the next step would be to link up with infrastructure that can take buyers from 'like' to 'buy'.

The end of advertising? Not in the sense of its demise but merely its purpose. Firms advertise in a quest to convert intention into completed purchase. Technology is now beginning to provide the tools not only to monitor and measure that quest but also to deliver the end result.

This presages a huge change for the advertising industry — even more disruption than the current embrace of social and marketing automation — but the good news for enterprises is that it holds the promise of more measurable, targetted and effective promotion.

Disclosure: Oracle and SAP are diginomica premium partners.

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