Can the Advertising Industry Survive on the Internet? was published in May 1996 as a wake up call to an advertising industry that seemed to have no understanding of what to do with the Internet. Their success at continuing to remain relevant these past 15 years appears to be the result of two changes. First, the advertising industry has become more skilled at integrating online technologies within the scope of a comprehensive marketing strategy. Second, and more importantly, corporate clients has taken responsibility for Internet technologies away from their IT departments. They have (correctly) understood that the Internet is a customer facing technology that is more appropriately supported through Marketing. This change in accountability and rightfully but a greater focus on the customer than had been the case when this article was written.

I have chosen to republish this article through the FranchiseFacts web site as an aid to franchisors in understanding how the Internet can be better utilized within their businesses.

Perry Shoom
FranchiseFacts

Can the Advertising Industry

Survive on the Internet?

By: Perry Shoom

Initial Publication: May 1996 in Strategy Magazine Republished without revision: August 2011

The advertising industry in general has not been successful at managing technology. Outside of desktop publishing technology, which is widely used in the design of creative materials, the advertising industry has been slow to embrace computer technologies for communications or productivity. So, when it comes to utilizing the Internet as a communication tool, the advertising industry must first learn to harness this tool for its own use before it can be pitched to clients.

During my ten years in the industry, first as Vice President of Ad-Scan Inc., later as an independent marketing consultant and now as Marketing Manager for Canadian Corporate News, I have remained in tune with communications technologies, with marketing and advertising, and the interplay among these disciplines. As well, my involvement in the development of CCN NewsNet, a “real time” Internet news service, forces me to remain in tune with the many issues surrounding the World Wide Web. As one of the largest and most heavily used Web sites in Canada, CCN NewsNet has forced me to deal with large volumes of one-on-one consumer contacts that are not common to the majority of other marketing initiatives.

As a client that employs advertising agencies, I remain concerned about relying on an industry that has a checkered history when it comes to making effective use of technology. An advertising agency is not my first choice for helping to make effective use of a communication channel that is equally important to my company’s strategic direction and overall productivity.

This may appear harsh. But, advertising agencies are not normally known for efficient management and operations. What makes for a good creative environment (that is, one in which effective creative materials are developed to communicate information and/or elicit a specific response) tends to result in inefficiency and what could be considered an unproductive work environment. Given the historical role of the advertising industry as the driving force behind effective use of media channels (TV, print and radio) for one-way information transfer, this is perfectly acceptable. Given the role of the Internet, however, this represents a major roadblock. The challenges which arise from the merger of an advertising vehicle with a business productivity tool and two-way information sharing has yet to be mastered within the industry.

Database marketing presents an interesting example of the industry’s dealings with technology. The merging of direct mail and computer database technology was primarily promoted as an advertising vehicle rather than as a productivity and market research tool. This technology was misunderstood by most of those who claimed expertise. Opportunities to better understand customers, to target markets, to improve productivity and to reduce overall costs were all sacrificed in an effort to conform to a traditional direct marketing model. Consequently, most organizations viewed database marketing simply as an alternative to traditional advertising.

The use of the Internet is raising these same issues. This time, however, more corporations are recognizing this medium as far more than an advertising vehicle. As companies become more immersed in the Internet, and move on to the next stage by developing private Internets (known as Intranets), advertising agencies become further removed from the technology and its productivity implications.

The advertising industry will undoubtedly play a role in the creative development of the Internet. A well designed Web site is far more effective than one which is poorly designed. And, most of the creative design skills reside within the advertising industry. But the industry must become more adept at understanding this technology.

Effective Web site design requires a more extensive understanding of computer software (for example, the browsers used to download files) and hardware (which has implications on the speed of access). While the ability to transmit and view graphics has played a role in the popularity of this medium, it is also a major impediment. For while graphics play a crucial role in most communications media, they are slow to transfer over telephone lines. Using standard telephone modems, many Web pages take a few minutes to load. A typical Web site visit involves five or more pages, some of which are visited multiple times. Expand this to include the number of Web sites visited during a typical Internet session and the problem becomes clear. It is not uncommon for a 20 minute Internet session to involve 15 minutes of down time while pages are loading. Few of the people who develop Web sites are aware of this problem and even fewer attempt to address the issue.

When a Web site can elicit hundreds or thousands of information requests a day, new ways to communicate with clients and consumers become crucial. Solving these challenges involves extensive knowledge of electronic communication and productivity tools. To date, this expertise tends to reside in the client’s MIS department rather than in its marketing department or an advertising agency. Those organizations that make the most effective use of the Internet are those where the requisite technology, strategic planning and marketing skills have been integrated.

To be successful in this expanding communications medium, the advertising industry must embrace the technology, understand how it affects on the whole corporate communications structure of an organization, and develop the skills needed to guide corporations through the transition process.

About the Author
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Perry Shoom is the founder of FranchiseFacts, a company that provides research services for the Franchise Industry. The company also publishes a Report incorporating the results from its National Franchisee Survey. The 2010 Annual Report, and the Franchisee Survey that is currently in progress, can both be found at www.FranchiseFactsUSA.com. The survey is open to all franchise owners and store managers. FranchiseFacts does not disclose identifying information that may be provided by survey respondents.

At the time this paper was written, Perry Shoom was Marketing Manager for Canadian Corporate News (now Marketwire) in Toronto, Canada. Perry provides marketing, management, strategic and technology expertise to mostly small and mid size businesses.