Looking forward to 2010 – an interview with IAB President Randall Rothenberg

This post originally appeared on Business Spectator, Thursday December 3 2009

Many, including this writer, like to hypothesise around the emerging trends in the world of media.

Generally, this happens towards the end of the year, when many like to make predictions around the key areas of interest for the next 12 months.

Over the next two weeks I’ll be covering what many of Australia’s key media players believe 2010 will hold – the challenges, opportunities and key areas of growth.

However, I wanted to kick things off by asking one of the digital world’s most respected practitioners his thoughts.

Randall Rothenberg is the US-based worldwide CEO and President of the Interactive Advertising Bureau (IAB). Prior to this he held senior roles at Booz Allen Hamilton and was the technology and politics editor for The New York Times.

If there is anyone fully aware of the key challenges facing the media world, it’s Rothenberg.

Ben Shepherd: There’s a lot of talk for 2010 around ad exchanges. What do you believe are the positives these can bring to the wider industry and what are your thoughts around ad agencies’ interest in networks in terms of wanting to be both a seller and advisor?

Randall Rothenberg: In bringing market-pricing and clearing mechanisms to the trading of advertising, time and space is a logical extension of something that’s been happening in the sourcing arena for years, even decades. After all, commodities exchanges have been helping companies price, acquire, and build price-hedges against things like coal and grain for a long, long time. I first wrote about this in Advertising Age back in 2000. In light of today’s cacophony of interest, I look back with amusement on the response I got to that column: zero.

That said, all the conversation I’ve heard is far, far ahead of the marketplace, both in terms of its interest and in the capability to deliver against needs. First, ad agencies have been struggling to keep up with basic technologies. Large agencies still haven’t adapted to the early stages of the digital disruption in areas like SEO, SEM, and social. To assume they can, overnight, implement the sophisticated technologies and hire the expertise they need to create and manage new sourcing mechanisms seems a bit illogical. After all, this is an industry that hasn’t been able to manage e-business fulfillment on its own, and still outsources fundamental media-research and analysis needs to companies it criticises for not getting the numbers right. So in this regard, it’s hard to see the demand-side exchange chatter as anything other than another attempt by media agencies to drive prices lower.

This presents a fundamental challenge to them and to publishers. It’s hard to find a single chief marketing officer who says that his or her biggest problem is pricing for TV, print, and online ads. Instead, they say they want user engagement. They want dialogue. They want consumer intimacy. They want the insights that derive from social media interactions, which can help them develop new businesses. So, while it’s certain that exchanges will have a role in the ecosystem, we shouldn’t overstate their relevance to the complete set of marketers’ needs.

BS: What are the three major challenges facing the IAB and the industry at large heading into the next year?

RR: There are many challenges, more than three. In no particular order, I’d say for IAB the top issues are: Understanding and implementing tight safeguards for consumer privacy rights and expectations to avoid destructive and consumer-unfriendly government regulation; getting consistent measurement standards by which buyers and sellers can transact the basic business of interactive advertising more simply and cheaply; proving to brand marketers who believe that interactive is primarily a direct-response vehicle that it can build and sustain premium brands through time; and teaching media companies to transform – for we’re now in an environment where transformation will always be necessary.

BS: Do you feel marketers and agencies are using digital and broadcast in unison to its fullest potential? If so, can you give some examples. Or is there still a disconnect? If so, why?

RR: No, very few are. There are good, evolving cases at every major cable, satellite and broadcast network in the US, from the way NBC’s ‘Heroes’ used interactive for story development to the way HBO has extended the story line into the interactive space. But there’s still not enough of an understanding of how cross-media programs enhance the brand attributes of advertisers. The next few years will provide many more concrete cases and research on this and the fast growth we’re already seeing in online video will skyrocket as a result.

BS: Sometimes I feel that Google and its success has driven large chunks of the industry to find solutions in automation and pure data thus missing the art of great content and great context. Are we utilising the web as well as we could in terms of aligning advertisers with really exceptional, contextually relevant and best-in-breed content? Do behavioural targeting and ad exchanges somewhat contradict this – ie, putting more emphasis on the ‘who’ and not the ‘where’?

RR: Perhaps the greatest gap in interactive advertising is the creativity gap. There’s a need for a creative revolution in interactive advertising and that’s what the IAB has devoted itself to during the past two years. There are several reasons for this gap and that’s our direct-response heritage, the lack of integration of creative technologists into agency creative teams, a deficiency in great examples that get awarded and rewarded, etc. But that’s beginning to change as agencies and people like Steve Wax at Campfire, Jeff Benjamin at Crispin, Benjamin Palmer at Barbarian Group, Nick Law at R/GA, and others gain prominence along with such transforming larger agencies as Hill Holliday, TBWA, BBDO, and Goodby Silverstein.

One of the basic misunderstandings in the industry is about what clients buy. They don’t buy media, they buy campaigns that make their businesses better – and that often happens in complex and unexpected ways. I’ve got no doubt we’re at the dawn of the interactive creative revolution the IAB has been calling for, and that the next two to three years will be pretty exciting and spectacular.

BS: What challenges do Kindle and other portable devices pose to the interactive advertising industry? Especially in terms of creative execution and insight and thought around user habits?

RR: These are opportunities, not challenges – opportunities to reach consumers in the right way, in the right place, with the right communications. Kindle, after all, is a terrific place already for publishers to market books to consumers – and Amazon has helped provide publishers a platform to do that. Same thing with the iPhone; there are few better marketing efforts out there than Procter & Gamble’s ‘Sit or Squat’ app for Charmin toilet tissue. But woe betide to those marketers, agencies, and media that get this wrong, and assault consumers who are in greater and greater positions of control over their media environments.

From IAB’s standpoint, our role is to help the entire ecosystem understand what works and works best in these new, intimate arenas of consumer control.




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