IBM says that advertising as we know it is dead – most of us just haven’t realized it yet.
IBM’s report, The End of Advertising as We Know It, forecasts greater disruption for the advertising industry in the next five years than occurred in the previous 50.

IBM surveyed more than 2,400 consumers and 80 advertising executives globally. They found that:

• Increasingly empowered consumers, more self-reliant advertisers and evolving technologies are redefining how advertising is sold, created, consumed and tracked.
• Traditional advertising players risk major revenue declines, as budgets shift rapidly to new, interactive formats.
• Interactive advertising is expected to grow at nearly five times that of traditional advertising.

“Digital entertainment is experiencing faster adoption than anyone had previously anticipated. The advertising community needs to dramatically re-orient its business to serve consumers who increasingly access content in non-linear formats,” said Bill Battino, Communications Sector managing partner, IBM Global Business Services. “Companies must re-look at how they serve content to consumers with business models based much more on engaging consumers in a relationship.”

IBM says that the industry needs to rapidly adapt to survive:

• Broadcasters must change their mass audience mind-set to cater to niche consumer segments.
• Distributors need to deliver targeted, interactive advertising for a range of multimedia devices.
• Advertising agencies must experiment creatively, become brokers of consumer insights, and guide allocation of advertising dollars amid exploding choices.
• All players must adapt to a world where advertising inventory is increasingly bought and sold in open exchanges vs. traditional channels.

The report observes four change drivers tipping the advertising industry balance of power: control of attention, creativity, measurement, and advertising inventories.

Other report highlights:

• People’s attention has shifted, with personal Internet time rivaling TV time.
• People are tired of interruption advertising, and are increasingly in control of how they interact, filter, distribute, and consume their content, and associated advertising messages.
• Half of DVR owners watch 50 percent or more of programming on re-play.
• Traditional video advertising doesn’t translate online: 40 percent of respondents found ads during an online video segment more annoying than any other format.
• Amateurs and semi-professionals are increasingly creating low cost advertising content that threatens to bypass creative agencies, while publishers and broadcasters are broadening their own creative roles.
• Advertisers are demanding accountability and more specific individual consumer measurements across advertising platforms.
• Self-service advertising exchanges are attracting revenues that were once exclusively sold through proprietary channels or transactions.
• Nearly half of the advertising survey respondents anticipate a significant (greater than 10%) revenue shift away from the 30-second spot within the next five years, and almost 10 percent of respondents thought there would be a dramatic (greater than 25 percent) shift.
• Two-thirds of advertising experts surveyed by IBM expect 20 percent of advertising revenue to move from impression-based to impact-based formats within three years.

The report indicates by 2012, the landscape of the industry will change so profoundly that to survive, advertising industry players need to take aggressive steps to innovate.

The complete report with detailed recommendations for broadcasters, distributors and advertising agencies can be found at: www.ibm.com/media/endofadvertising

via Chris at IndieFeed