Tuesday, May 22, 2007

Madison Ave. 2.0: Conquering the New Mad Ave (P. 1)

There are a few ways to look at the mad rush of acquisitions on Madison Ave. but I can give a very simple guiding definition that will make it all luminously clear. It came out of our 2006 Local Ad World Conference (you can even watch the video highlights below).

Making AdSense of it All
The definition, which came from Nick Grouf, co-founder of Spot Runner, puts into focus all the significant changes portended by these acquisitions on Madison Ave: the Google, Yahoo, Microsoft and WPP acquisitions and the way the advertising will get done is the no. 1 topic of discussion at our June 14, Madison Ave 2.0 Summit, the sister conference to our Web 2.0 NY Summit (and new version of our very successful Local Ad World.)

The concept, as Nick put it, also explains why he started Spot Runner - he liked Adsense so much, he thought all the advertising world should look like that. So, what we are looking at is an under-automated, underpaid industry (expect for a few creative stars) ripe for the picking.

With that in mind, here’s how we look at the changes on Madison Ave, which will come up at the Madison Ave 2.0 Summit on June 14.


1. Cash-laden, mature tech/internet companies that have learned to prosper from highly measurable online marketing are buying up the relatively poorly paid gatekeepers to massive ad budgets. These budgets were once closed to online. Now they are ripe. It follows then, as any good lobbyist will tell you, “why woo when you can buy.”

2. Automating Media Placement.
Does every newspaper, magazine, radio and TV station need their own salesforce? Maybe, for the premium placements but not for the run-of-the-mill spots. Likewise, does every agency need scads of lit grads doing media planning on an entry-level paycheck?

3. Open Creative Market: Goodbye Donny Deutsch
Does every business need a custom ad? Can your agency be counted on to come up with a good idea every time? Why not trade in tested ideas from around the world that you can customize? Donny can still sell his ideas on the open market and keep his TV show instead of showing up to the office every day.


Now for some Big Ideas - the kind of thing that careers and great fortunes are made of:

(You’ll see more if these as our www.bigideajournal.com takes shape)

Advertising is no longer the sales lubricant of the Industrial Age. It IS the Industrial Age of our time. We have long gone from figuring how to sell what we already manufacture to finding what the customer really wants and then figuring out how to manufacture it.

This is just-in-time manufacturing and the factory now is really the commodity.(Remember fab-less chip companies etc. - similar idea.)

Since we will continue moving to Research and Development while outsourcing manufacturing, our ability to reach consumers, detect their tastes and meet their expectations is more valuable than the product itself. That’s really what Madison Ave is all about, except that it doesn’t really understand that or, more to the point, allow that. That’s because they were organized to serve the guy with the factory who says “go figure how to sell my junk.”

Internet companies on the other hand, not only understand this issue but they own the vehicle of idea manufacture and distribution so they actually fuse these two properties that has kept Madison Ave. in the support business - and they are moving in. The Internet guys just need gatekeeper access to corporate budgets and marketing creativity to move this up to the next level. They have piles of cash and more interestingly, will invest in the ideas they like, not just take a fee from a client.

To be fair, every ad guy I ever met has fantasized about advertising as incubator of new business ideas but manufacturing and distribution was their barrier. Now that the internet has made manufacturing a commodity and turned the UPS/FedEx into your distribution system, much is possible.

Bottom line: tech companies are NOT just buying themselves ad networks and ways to deliver ad dollars to their properties, they are buying the future of the economy.

Could this principle apply elsewhere? High tech companies taking on other industries stuck with declining growth that high tech could reverse. Energy, Autos, Transportation, Entertainment Studios, Real Estate, Banking, Rocketry. Actually, in each case, they already have or they are energizing a movement that’s already taking place. After all, who thought of Apple as a music company or Microsoft as an advertising company…eTrade as a bank, Paypal as a fund transfer system or their founders as racketeers. Then there’s Google’s quest for a new internal combustion engine and the Tesla, that battery powered sports car half of Silicon Valley seems to be betting on.

If you can dabble in HTML, Ajax, RSS, MySQL or sell the product thereof……or if you understand the use of social engines and “Collaboratition” (our admittedly unwieldy phrase to describe the state of competing while collaborating with just about everyone – customers, suppliers and actual competitors) - you have a future. Otherwise, Madison Ave. (and a few other industries we’ll discuss in the Big Idea Journal) will undergo dramatic change. 5 years from now, the ad world will not be recognizable to anyone in the business today..

You can see the Future at Madison Ave 2.0 on June 14 in NYC.

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