Advertising Industry Faces Monumental Change

"The next 5 years will hold more change for the advertising industry than the previous 50 did."

That, according to a new report from IBM (NYSE: IBM) Global Business Services. In "The End of Advertising as We Know It," (all apologizes to Sergio Zyman who published a book in 2003 under that exact title), IBM surveyed more than 2,400 consumers and 80 advertising executives globally.

The report shows, "increasingly empowered consumers, more self-reliant advertisers and ever-evolving technologies are redefining how advertising is sold, created, consumed and tracked."

Report Highlights

• 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.

• U.S. users report more usage of social networking sites and user generated content than almost any other content services category:

• 45 percent use social networking sites
• 29 percent visit user generated content sites
• 24 percent use a music service such as iTunes
• 24 percent subscribe to premium television content

• In biggest DVR market, users report extensive replay of television programming. This is resulting in ad skipping and revenue shakeup unless producers and broadcasters reinvent marketing formats and messaging:

• 24 percent have a DVR in their home, and 48 percent have used video-on-demand from a cable company or other provider
• While 33 percent report watching more television content than before the DVR, 53 percent report watching at least fifty percent on replay

• Users feel extreme regarding new forms of advertising. Marketers have to work harder than ever to understand individuals and micro-segments:

• Nearly 50 percent reported that video spots online – during, pre-rolled or as sponsorships – were the least annoying form of advertisement. Other formats tested were banner ads, pop-ups, and contextual search ads
• However, nearly the same level of consumers responded the same forms of advertising were most annoying online
• Additionally, 11 percent said they’d be willing to pay a little for ad-free viewing of video online

Check out the full report from IBM.