Marketing in the Information Age--Interview with Prof. John Deighton--

Marketing in the Information Age--Interview with Prof. John Deighton(2)

2007-04-28 14:39:21 [ Big Normal Small ] zong xing 　Comment

Xing Zong: Today, advertising on the internet goes far beyond just posting a business sign. Companies have to deliver state-of-the-art graphics, to target at the right audience and to measure the responses instantly. As an expert on interactive advertising, how do you view all these changes? Do you think internet advertising is still in its infancy?

Deighton: Without a doubt it is in its infancy. In the United States spending on advertising and direct marketing exceeds $500 billion annually. Last year the Internet accounted for less than 5% of that total. It is tiny. The advertisers who spend the most on the Internet are the kinds of firms that used to spend their money in the Yellow Pages and the newspaper classified ads - little firms like travel agents and pest control companies. For consumer brands like Coca Cola and Toyota, the Internet is just a playground, a place to do some experiments. That may change. The Internet is the fastest-growing medium in the history of advertising, and as we learn how to use it my bet is that it will continue to grow at that pace. And here is another effect of the Internet. Advertisers buy Internet media based on results. They are beginning to ask, if I can buy keywords based on the number of people who click on them, why can't I buy television based on results? If I buy keywords by auction, why aren't other media auctioned? I predict that the Internet will change the advertising industry not only by taking a bigger share, but by changing the rules for the rest of the media.

Harvard Business School

Xing Zong: What kind of role do you view Internet as a marketing medium? Do you think it is as parallel as TV, radio and newspapers? From the advertisers’ point of view, one irony of the Internet is that thousands of websites spend bulk of money outside the Internet media market to promote their reputations. What is your comment on that?

Deighton: I call it the AT&T rule. The Internet gives you Awareness, Temptation and Transaction, all in one place. It's an advertising medium but it is also a marketplace. It combines the maximum of temptation with the maximum of opportunity. That's not entirely new - catalogs and infomercials do it too - but the Internet does it so well and so cheaply. All the best uses of the Internet are those that take advantage of this combination of medium and marketplace, and we have only begun to tap the potential. So I am not surprised that websites advertise offline. They thrive on traffic and use offline advertising the way department stores use newspaper display adverting.

Xing Zong: It is very interesting that you summarize the rules in that way! The popular website Youtube is a big hit in the year 2006. Many consider it to be the future trend of TV, and as a result, Youtube becomes a powerful channel for advertising. What do you think of Youtube as an advertising platform?

Deighton: Google's first problem with Youtube is to decide how to share Google's advertising revenue with the people who hold the copyrights on pirated content. Until there is agreement, Youtube cannot really explore the advertising possibilities of online video. The second problem will be to find advertising formats that consumers don't find intrusive. Advertising is killing television now that there are competitors like Tivo and the Web. Advertising will kill Youtube even faster because it is so easy for pirates to set up a server in Dubai or Beirut and offer the same clips without intrusion.
I'm not convinced that streamed content is an advertising bonanza, at least as a way to gather eyeballs and then slip in an advertisement. But when the streamed content is the advertisement, as it was for Unilever's Dove and the Evolution ad, in its time the most watched commercial on Youtube, that's exciting. But Evolution never earned a penny for Google.

Xing Zong: The internet powerhouse Google has wonderful demographics from an advertiser perspective. But in term of interacting marketing, it is less appealing than Youtube, do you agree? Prof. Deighton, in your opinion, what are the advantages of disadvantages of Google’s advertising strategy?

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