Saturday, 5 September 2009


“I was like a boy playing on the sea-shore, and diverting myself now and then finding a smoother pebble or a prettier shell than ordinary, whilst the great ocean of truth lay all undiscovered before me.” Isaac Newton

The transformation in the advertising business is only just starting. Like Newton said, we are just playing with pebbles on the sea-shore, whilst the full force of the transformation is like a tide waiting to come in. We are years away from it, but the biggest tide that will come in will be the semantic web, web 3.0, the Internet of things, or whatever you may choose to call it.

One of the most exciting things about the semantic web is its promise to link data. This will give us the ability to easily find and manipulate that data with web services. Berners-Lee talks about the semantic web being a unbelievable data resource based on linked data. In short with intelligent agents and the semantic web, things become easier to find and easier to manipulate.

I have a dream for the Web [in which computers] become capable of analyzing all the data on the Web – the content, links, and transactions between people and computers. A ‘Semantic Web’, which should make this possible, has yet to emerge, but when it does, the day-to-day mechanisms of trade, bureaucracy and our daily lives will be handled by machines talking to machines. The ‘intelligent agents’ people have touted for ages will finally materialize.

Tim Berners-Lee, 1999

Intelligent agents are not here yet, but their early ancestors are here, in spirit, if not in shape and form. Think aggregator sites, like moneysupermarket and expedia. These sites don't have the machines-talking-to-machines intelligence that Berners-Lee seeks, but they do aggregate data and allow for smart analysis. This idea clashes with and challenges the advertising business.
I already work on some agency accounts where the client sees their information presence on aggregator platforms like these, as a replacement for advertising. They feel they must be in these aggregator data pools, and they pay handsomely for the privilege.

The advertising business was built on a market of information asymmetry, where one party has better information than the other. Usually the seller has better information about the market than the buyer. George Akerlof, won a Nobel Prize for economics writing about this in a paper called "The Market for Lemons: Quality Uncertainty and the Market Mechanism".

Akerlof complained that
The cost of dishonesty, therefore, lies not only in the amount by which the purchaser is cheated; the cost also must include the loss incurred from driving legitimate business out of existence.
Aggregator sites rebalance these markets by bringing symmetry, where asymmetry existed.

In advertising, we sometimes work with brands with great unique products, other times we mostly work with brands that have products with the same features and specifications as the market as a whole (they are me-too brands). Our goal is to persuade by framing the information we have about the brand to make our client's products seem better or just different.Thus most of the branding we do is based on perceived constructs rather than a pure form of product feature differentiation.

You can already see that intelligent agents, and aggregator sites are an antidote to branding. They level the playing field. In these environments, brand claims are easily neutralised by information transparency.They aren't a complete antidote, as we find on aggregator sites, people still tend to choose the brands they know and trust, but it does change the dynamic of the market.

In the age of the semantic web, and in this age of the aggregators - information transparency demands that the role of the advertising agency changes.

Yes, agencies still remain custodians and developers of the brand, but their role must expand to also include thinking of new ways to add utility and service to the brand. Creating branded utilities, and advertising as a service are the two key skills they need to add. This will come through close study of markets, consumer behaviour, competitor analysis, and general digital anthropology. Nike+ and Fiat Eco:Drive are two ideas that show agencies can be part of this new paradigm.

The dawn of intelligent agents requires the dawn of a new type of ideas shop: one dedicated to creating branded utilities and branded services.

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