The Dependent vs. The Independent Web: Signal SF

Today at Federated Media’s Signal Conference in San Francisco, I sat down with John Battelle to discuss some important trends that the digital advertising industry is experiencing and how we see those changes impacting marketers and agencies.

The conference theme was “the dependent vs. the independent web,” which is a euphemism for how people are dividing time between major portals like MSN and Yahoo -- and web properties that are customized for individual interests.

We are spending a good deal of time at Microsoft Advertising shaping and responding to this dynamic because it has important implications for companies that want to build brand awareness and drive sales in an increasingly fluid environment.

As I was preparing for my conversation with John, it gave me an opportunity to crystallize some of my own thinking on this topic. Here are a few top-line observations:

Embrace fragmentation

Consumers are everywhere and anywhere. They’re not just multi-tasking, they’re omni-tasking. Up until now, I believe the predominant feeling in the industry -- certainly among advertisers – has been that this fragmentation is a bad thing…it adds complexity to an already complex ecosystem and implies a loss of control.

I have a different take. At Microsoft Advertising, we are able to stitch together unique consumer experiences across a myriad of devices, which means advertising (and advertisers) can literally become a part of person’s day, preferably as a valuable addition and not an annoying distraction. We are uniquely equipped to do this for marketers -- working to bring custom experiences (like polymorphic ads) across devices to millions of people every day. We need to embrace fragmentation as opposed to run away from it.

Long live the Purchase Circle

People today have the world at their fingertips – portals and search engines are now matched with mobile, social networks, e-commerce sites and apps. For a long time, the purchase funnel was linear and primarily influenced by brands and professional “reviewers,” but we know differently today.

Today’s reality is not about moving a potential customer from point A to point B to drive a sale. It’s about engaging that person wherever they are during their purchase journey. They might go from Point C to Point X, then to Points G and R. The job is to provide people with messages and solutions that make sense wherever they happen to be in the purchase circle. There is beauty in this disorder.

The Purchase Funnel served its purpose: it told us what people did or were about to do. The Purchase Circle tells us why people do what they do, and provides marketers with more options to connect with consumers than ever before.

Whither the Ad Agency

Ad agencies control much of the marketing spend today, but their influence is being challenged as consumers move toward the independent web and seek out more direct relationships with brands. This is causing some agencies to pause and reconsider where they focus, while others are doubling down on building their digital capabilities. Agencies that see this change in consumer behavior as a threat will have a hard time competing in the future. Conversely, agencies that embrace this shift as an opportunity to create value for their clients will succeed.

Providing a more relevant ad may not be a sufficient value exchange anymore for consumers. We need to up-level our thinking and deliver experiences and solutions that people will embrace, not continue to throw ads at consumers that “get in the way” of their digital journey.

The new executive: CIMO

Lines between CIO and CMO are blurring. Today’s CMO needs to view technology as both a delivery tool and as an analytics/measurement tool. The CIO needs to think about building-out Big Data and actionable analytics capabilities to support marketing. Technology is the bridge between the two functions – hence a new title: Chief Information Marketing Officer (CIMO).

Microsoft sees clearly the pain and opportunity in this confluence and can help companies navigate it. Our efforts in this regard are early, but important. We are delivering added value to SharePoint enterprise customers by showing them how they can attach Atlas to their enterprise stack and deliver faster, more actionable insights about their marketing campaigns. We are also moving toward a cloud-sourced “marketing system of engagement.” More on that in the months to come.

It’s the Experience, Stupid!

The digital marketing industry still operates on an antiquated system of media buying and selling, where “ads” are currency. But the independent web will require more highly refined systems of engagement. We must shift from delivering just ads and impressions to delivering experiences that connect consumers with brands.

Optimizing for lifetime value and relationships with consumers versus simply making a transaction will be of critical importance. This consumer centric philosophy translates to being in front of consumers, with value, when they want us to be there, and not being there when they don’t. This means that sometimes the best way to advertise to a consumer is to not serve them an ad all, but instead enhance their overall digital experience.

Bill Clinton won the presidency in 1992 by focusing on a single internal mantra: It’s the economy, stupid! Regardless of your political leaning, we would do well to follow a similarly simple mantra: It’s the experience, stupid! If we build compelling experiences, consumers will come and advertising ROI will follow.

All of these thoughts have something in common. Keeping consumers at the center and bringing relevant experiences to them. Instead of seeing the “consumerization” of the web as an obstacle, I think smart marketers can seize it as an opportunity to build greater brand awareness and drive sales. I am excited about the prospects that are unfolding in front of us, and I hope our customers and partners feel the same way.

Rik van der Kooi – Microsoft Advertising