The era of digital change will break you if you don't embrace it: Accenture study

Marketers and are "largely unprepared" for the wave of digitally-driven change about to engulf them, according to a global digital advertising study by Accenture this year, which reports only 29% of executives believe the industry is technologically prepared for the resulting changes in performance measurement.

The report states the industry will continue to put more emphasis on performance-based remuneration, and in cases where advertisers have been overpaying, greater accountability means they will find out - and push prices down. By the same token, Accenture analysts believe advertisers will start to pay a premium for advertising that is proven to be working. So performance based advertising actually creates a potential route to a net increase in advertising budgets.

The study, ‘Facing the digital reality: The path to future high performance in advertising', reveals the proportions are even lower in terms of customer analytics (25%), targeted advertising (21%) and customer interactivity (13%).

With all the hype about Google and Yahoo's Cost Per Action (CPA) on top of Pay Per Click (PPC) and the rapid rise of other digital media, the players who are able to use technology to offer advanced customer interactivity, targeting and analytics are gaining "real competitive differentiation". In addition, digital content and online business models have lowered barriers to entry, inviting new entrants and traditional entrants to compete for advertising dollars.

43% of respondents believe digital media will become the primary form of programming and advertising content within the next five years, and a further 33% say it will happen in between seven and 10 years. The impact of this transition may be accelerated by the typical pattern that early adaptors tend to be from higher income demographic groups that are more attractive to advertisers.

Underscoring this is the fact the advertising value chain that serves this market has remained largely unchanged for more than 50 years, according to Accenture. And the traditional model's vulnerabilities, which include intrusive content, uncertain results and inefficiency are becoming glaringly apparent.  

Interestingly, the highest proportion of respondents (43%) believe advertising agencies have the most to lose in the transition to digital advertising, followed by broadcasters with 33%. Correspondingly, 46% believe online search companies have the most to gain, followed by digital advertising specialists with 19%.

In a related vein, 77% agree advertising will be viewed in an integrated way on three screens - television, computer and wireless handset.

These results of this study were derived based on over 70 interviews with global advertising leaders conducted between February and April 2007. The interviewees were queried on their view of digitalisation's impact on the way advertising will be sold, distributed and measured in the coming years; the impact on consumers' behavior and relationships with advertisers; how long this change will take; and the advertising industry's state of nonpreparedness for the digital future. 

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What your company must do now

If you are a traditional media company

Digitise all relevant and compelling advertising and content to sell online, on TV, IPTV, and emerging wireless platforms to drive revenue - and look to build, partner or buy end-to-end digital advertising systems to enable this

If you are a telecommunications, cable, or satellite company

Use your emerging platforms - such as video on demand (VoD), digital video recorders (DVRs), and T-commerce (television-commerce) - to increase revenue by building advanced advertising products across all three screens, and leveraging the interactive capabilities of IP-based solutions

If you are a new media company

Build, partner or buy systems (sales, reporting, delivery) to support products across three screens and to deliver targeted advertising in privacy-compliant ways

If you are a marketer

Escalate your integrated marketing and advertising initiatives across three screens, keeping a critical eye on performance metrics

If you are a technology company

Focus on developing front-end and back-end systems specific to each medium's unique needs