What can Eric Schmidt teach advertising professionals and marketers?

Eric SchmidtGoogle is by far the largest advertising company in the world. They make as much money in 3 month on advertising alone as the world's largest ad network WPP in a whole year. Google's ad revenues are higher than the 3 biggest USA TV networks together. Eric Schmidt former CEO together with the founders Larry and Sergei created Google AdSense and AdWords. This is a completely new advertising phenomena that delivers relevant advertising to individuals. This precisely targeted advertising method started to replace traditional media that is usually a generic message to a large audience. Read a few interesting statements Eric made in italics and then my thoughts about what they mean in the context of our profession.

The Internet is the first thing that humanity has built that humanity doesn't understand, the largest experiment in anarchy that we have ever had.

The internet from the very beginning was meant to be something else according to Tim Berners-Lee, the creator of the WWW. The internet evolves without any clear goal into something different every year. It's the first thing humanity did at such large scale involving almost every person on the planet. The internet has some rules, but it's still a space with unprecedented freedom that never existed in the real world since civilization emerged. What does that mean for us adman? The internet has a huge potential. Every brand should be exploring the possibilities. It's changing fast bringing new opportunities at every corner. While most of the spending is still made in traditional media, this may change dramatically in the next few years. Radio and print spending is already dropping fast. TV and outdoor will follow soon.

Brands are the solution, not the problem. Brands are how you sort out the cesspool. … Brand affinity is clearly hard wired. It is so fundamental to human existence that it's not going away. It must have a genetic component.

Brands indeed are part of the human psyche. It's how we make sense of the increasingly complex world. Brands are semi-solid ground in the sea of ever changing landscape of products and services. Some may think that the internet and social networking will reduce the importance of brands, but it's not true. People will never have enough time to research every single purchase decision they make even if the internet will make it extremely simple for them. They will rely on brands for the foreseeable future. It's worth spending money and time on branding exercises.

Our business strategy is not to compete.

The market is more fragmented than ever before. In the near future personalized services and products will strive. Your small company does not have to compete with large brands no more. Pick a narrow segment nobody is servicing. Invent one if it doesn't exists. It's easier to create new markets than to fight competitors.

More and more searches are done on your behalf without you needing to type. I actually think most people don't want Google to answer their questions. They want Google to tell them what they should be doing next... Serendipity can be calculated now. We can actually produce it electronically.

This applies to Google and should apply to every brand today. Companies should collect a lot of public information about their existing and possible future customers and massage the information to give them predictions about future needs. Brands should not ask customers what they want on focus groups. People don't know what they want. Brands should invent things that customers will want to buy in the future.

I think judgment matters. If you have something that you don't want anyone to know, maybe you shouldn't be doing it in the first place.

This is the information age. With WikiLeaks being the most vocal example, no secrets remain secrets anymore. A company can not anymore do anything that would need to be hidden from its customers. Eventually it will leak and the business in result of this will collapse. No more polluting practices, no more unhealthy secret ingredients, no more lies. The internet will make every company transparent. This is the time for all brands and companies to come clean or die.

The next big wave in advertising is the mobile internet.

If you're looking where to put your efforts as an ad professional, agency or a brand owner look no further than mobile. Soon advertising in the mobile space will be the most immediate, most widespread and most effective method anywhere. Those who will be comfortable in the mobile space will win.

Good luck in this brave new world!

11 comments

CuriousPencil's picture
CuriousPencil
4227 pencils

"It's easier to create new markets than to fight competitors" -

-yes, but creating demand for those markets is an entirely different matter. Look at Pepsico's laughable 'new market' of 'drinkifying' and 'snackifying' the food&beverage sector.

"Soon advertising in the mobile space will be the most immediate, most widespread and most effective method anywhere."

- bullshit. "Soon" according to whom? While it'll be certainly the fastest way to get to people, that's only because people bring the Internet with them; its spread will be determined by too many factors like demographic uptake and 3G availability. But calling it "the most effective method anywhere" makes a dungheap of your argument, from where I'm sitting. It's simply not something you can predict. Though people are already targeted by context & location ads when they roam near a mall or a diamond shop, I can't see these annoying gremlins in my phone making me more likely to spend where I'm pointed. Too many reasons why but think about image size, think about annoyance, think about attention span, think about ---- OOOoooh a pigeon!! ---- and remember that there is no Adblock for billboards or TiVo for print.

I think it's important for everyone in our industry to be an early adopter. A cynical, surgical fukkem-all early adopter, and bring a hurricane kite-mind to every new channel: let it blow our fucking minds, let it disgrace our ignorance, and let us learn it so we can then control it and use it for our clients. Bells & whistles will always be accessories to a strong idea. We forget that at our fucking peril.

ivan's picture
ivan

On mobile: Think about it, you have a device, that on approval can know your exact geographic location, the history of locations in the past, the time of the day, your call history, your messages, your search and browsing history, your social graph, you entertainment selection, even the phone's position in your pocket or whether you're walking or running. Has instant access to you and advertising data on demand or through push notifications wirelessly anywhere. The user can immediately and without effort act on the advertising message. With iPhone 5 you can even pay without taking out a credit card. You can practically create any level of customization of your advertising message and measure its success and fine tune it to the last detail. The developing world is skipping the PC era, people in Africa logging on to Gmail from their phones and charging it with solar power because there is no electricity. There are over 4 billion mobile phone subscribers worldwide compared to appr. 2 billion web users and appr. 3 billion tv viewers. Of course currently only a minority uses the internet on their phones, but that will change within years.

What is this if not an advertiser's nirvana? No other medium including the web comes even close to this.

Jaap Grolleman's picture
Jaap Grolleman
6996 pencils

Yeah Ivan, what you're saying is true. Mobile phones are in our reach on average like 80% of the day and first thing we check when we wake up, last thing we check when we go to sleep + all the things you've mentioned. But because of all this it's also very private, I mean, we don't have print ads in our purses as well right?

Still there aren't many mobile phone ads that really work. Not in the Netherlands at least. I sometimes get really annoying text messages like "text WIN A CAR to 1234" etc, and all that rubbish but most often I delete them before I read them.

There are some cool ones but they mostly require a smart phone + that you download the app before hand.
http://adsoftheworld.com/media/ambient/mini_getaway_stockholm

But the question is, will that really make up for a big audience? It seems that some ad-apps are really cool (+convenient, like the Starbucks app for coffee junkies) but most, I don't think people will even take all the hassle to download an... ad.

I think mobile phone marketing still needs to develop. It still has to to find a way to really reach people on an entertaining and accessible way. Maybe it'll never, like, when some providers suddenly take on the USP of "NO ADS INSIDE" or that phones will move towards a more open-source kind of way.

ivan's picture
ivan

More cool mobile app created to build brands here: http://creativebits.org/inspiration/best_examples_free_iphone_advertapps

Once mobile marketing will develop technologically and socially it will be big. Don't judge it based on what it is now. It would be like judging tv based on the black&white infomercials of the 50's. Now look at some of the fantastic, deep, inspiring, cinematic ads we can see on tv. This is how much mobile advertising will change in a few years.

It will not take 60 years this time to make such dramatic changes. If you have doubts think back a decade. Practically nobody had mobile phones, but a select few. In a few years practically every person in the developed world had at least one. Now think back just 4 years. 2007 was when the iPhone was launched. Before that all mobile phones were just that phones with limited WAP. Now, we have mobile computers in our pockets. In another 4-5 years the change will be dramatic compared to what we have today.

Let me throw some wild guesses. Payments of all kinds for sure. Personal identification not just for gym memberships and plane tickers but even ids and passports will be part of the phone. The phone will monitor your health. The phone will alert you of traffic and any other unexpected inconveniences including criminal activity or environmental disasters well in advance. Kids from very small age will wear phone like devices that keeps them in touch with their parents all the time. Proximity and other bodily functions will be monitored all the time. Same goes for the elderly. Your device will be on the grid 24/7 if you want and will help you with all kinds of advices including advertising messages pre-approved by the user. There will be almost no spam or unwanted ads as all marketeers will be pre-approved before they can appear devices. I can go on, but you get the idea. We barely scratching the surface of mobile today. Don't think small.

Jaap Grolleman's picture
Jaap Grolleman
6996 pencils

Well the device you're stating there shouldn't be called a "phone" anymore ;p

But you're basically saying the same thing as me though, that mobile phones still have to develop, technology wise, as that'll provide new possibilities. Since the start of this discussion I'm really looking forward to it ;-)

Though, I think if technology was brought to a stand we'd have some great mobile phone campaigns in a few years as well, as agencies would understand phones like the iPhone better. Just like there aren't many campaigns that really nailed Facebook or Twitter yet. That'll be part of the development too I think.

CuriousPencil's picture
CuriousPencil
4227 pencils

Android already is open source, and Apple never will be. But I think you've got it absolutely right in saying "there aren't many mobile phone ads that really work" - this is going to see the biggest upsurge in the use of the phrase 'paradigm shift' we've seen since bakers realised the smell of their food made more sales than the brown lumps they were selling.

I think we'll very soon see the death of the nuisance 'text SPEND to WIN debt' ads - they're already red flags that people trash immediately. It's going to take a lot of wide thinking to use this channel properly, and I hope we soon see examples on AOTW so we can get our teeth into the meal.

CuriousPencil's picture
CuriousPencil
4227 pencils

Um... "including the web"? Call me ignorant but isn't it the same thing but smaller and with more buttons?

I didn't disagree that it would be the most invasive step in advertising, the most pervasive form of personalised intrusion, and the cleverest and most accurate route to the crowded minds of our audiences. I still don't disagree. But I'm pretty sure that people will learn to hate it before we learn to be good at it. And will find ways to block, ignore and reject it. Because mobile spam, and now viruses, and whatever's next, will massively outweigh the small amount of smart mobile advertising. And it will take years before audiences are trained to learn the difference. And I still say that it's garbage to predict it will be the most effective form of advertising. Especially from an 'ad man' like yourself.

ivan's picture
ivan

The web does not equal mobile. It almost does today, but even today foursquare is more than the web right? In the near future only a small part of mobile will be web as we know it today.

I highly value your opinion. I won't argue, let's just agree to see what will happen in 2015 ok?

CuriousPencil's picture
CuriousPencil
4227 pencils

Foursquare is an atom on an itch in the web: it can't exist without it, so how can it be bigger? The web does not equal mobile for the same reason: mobile advertising relies on the web for its infrastructure, its backup, its engine. The reverse isn't true. Even if the fabled web 2.0 gets out of the development cave, it will be the backbone of 'mobile' as we'll know it in future. I think we need a flowchart of some kind... maybe in an ad format... but yes, 2015 seems a fair point to come back to this on.

ivan's picture
ivan

I know what you're saying and it's just a matter of terminology, but foursquare can indeed work without www entirely. It needs the internet, but it doesn't need the web. Just like you can use email without the web.

micheltoffy's picture
micheltoffy
2 pencils

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