Future Audiences for Advertising: Enraged or Engaged? May 2004
About This Report
As audiences increasingly adopt interactive technology, will they use that power to turn away from advertising? Or will audiences use interactivity to intensify their relationship with advertisers? Of course, not everyone will respond the same way. But on balance, will interactive audiences be enraged or engaged by advertisers?
Suppliers of interactive technology often hope to find new business models for collecting revenue, and some of those models involve revenue from advertising. For Yahoo and Google, advertising is generating billions of dollars of annual revenue. Users engage with "Ads by Google" because these ads are relevant. At the same time, e-mail spam has become a daily annoyance for hundreds of millions of users. No matter what measures network administrators take, the spam continues. Users are enraged by spammers, who persist in intruding on daily life.
The enraged-versus-engaged theme applies across a range of technologies: television, electronic games, cell phones, and more. Notably, digital-video recorders let people skip TV commercials. If interactive audiences can control the content they experience, they may filter out advertising messages. But audiences also take advantage of interactive technology to engage with commercial messages—as in the case of the popular BMW Films Web site.
In reality, both practices will continue: Audiences will evade intrusive advertising and welcome interaction with friendly suppliers of goods and services. But uncertainties remain about what attitudes toward advertising will prevail among future audiences and what steps businesses must take to engage audiences.
When businesses must make high-impact decisions in the face of uncertainty, SRI Consulting Business Intelligence's (SRIC-BI's) Digital Futures Program advises exploring multiple possible future business environments. We use the term scenarios to refer to stories that describe these different environments. Organizations can test a course of action against scenarios. Often, an organization develops scenarios for internal purposes—frequently with help from SRIC-BI. But sometimes multiple organizations facing similar decisions can use a common set of scenarios. We expect that many industries are exploring how the future of advertising will affect business models, partner relationships, and new developments. Thus we are pleased to present four scenarios for the future of advertising in this report.
Table of Contents
Advertising Crisis or Opportunity? | 1 |
Enraged versus Engaged | 1 |
Push versus Pull: Which Will Prevail? | 2 |
Decisions and Uncertainty about Advertising | 4 |
Axes of Uncertainty | 5 |
Four Scenarios for the Future of Advertising | 9 |
Captive Audience | 10 |
Sponsored Production | 10 |
Ad Industry Contraction | 11 |
Advertising on Demand | 11 |
How We Arrived at the Scenarios | 12 |
Diverging Perspectives on the Future of Advertising | 12 |
The Interactive Threat to Advertising | 12 |
A Chance for a Renaissance for Advertising | 13 |
More Nuanced Views | 13 |
Scenarios as a Tool for Managing Uncertainty | 14 |
Uncertainties about the Future of Advertising | 15 |
Uncertainties about Technological Development | 16 |
Uncertainties about Audience Response | 17 |
Uncertainties about Social Trends | 17 |
Uncertainties about Advertising-Industry Responses | 18 |
Uncertainties about Government and Regulatory Responses | 19 |
Uncertainties about Global Events | 19 |
How Uncertainties Lead to Scenarios | 20 |
Rapid Scenario Development and the Future of Advertising | 21 |
The Enraged-versus-Engaged Axis | 22 |
Enraged | 22 |
Engaged | 24 |
The Degree of Interactivity | 25 |
A Link between Interactivity, Macroeconomics, and Technology Progress | 25 |
A Framework for Characterizing Trends in Interactivity | 26 |
The Push Prevails–versus–Pull Prevails Axis | 27 |
Push Prevails | 28 |
Pull Prevails | 29 |
Detailed Description of the Scenarios | 30 |
Captive Audiences | 30 |
Sponsored Production | 33 |
Ad Industry Contraction | 36 |
Advertising on Demand | 38 |
Tables | |
Enraged versus Engaged | 6 |
Push versus Pull | 7 |
Summary of Uncertainties about the Future of Advertising | 16 |
Figures | |
Axes of Uncertainty about the Future of Advertising | 5 |
Capsule Descriptions of the Four Scenarios | 9 |
Captive Audiences Scenario | 31 |
Sponsored Production Scenario | 34 |
Ad Industry Contraction Scenario | 37 |
Advertising on Demand Scenario | 39 |