Advertising in a digital era

Greg Satell worked in media and advertising across Eastern Europe before returning to the United States as a consultant with a focus on digital, and writing regularly for Forbes and Harvard Business Review. He tells Edwin Smith what digital means for advertising


Q. You’ve said that during the 1990s, post-Soviet Europe transformed from a forgotten place behind the Iron Curtain to one of the most dynamic, fast-growing regions of the world. What lessons did you learn while you were there?

A. Being there was actually very similar to being in the digital world; you constantly have to adapt to new ways of thinking very, very quickly. I found when I went back the States, a lot of the people who hadn’t had that experience found it difficult to make the shift because they had just been in one area of marketing, whether it was media, radio, TV, print or a particular kind of agency. They had trouble seeing beyond their own world.

Q. So you benefited from the experience?

A. It’s been a big advantage. When I arrived in Poland in 1997, everyone was questioning everything. I got there and America was on top of the world, the old super power, and here you are in a post-communist environment. You’re going to tell them how it works, but they ask you why and you say, “That’s just how it works”. Then you either think it through and there actually is a good reason or there is really isn’t. You can see exactly the same type of business done in completely different ways in different markets. There is really no limit to the different ways you can run a business and make money.

Q. Between then and now, how has digital technology changed advertising?

A. I think there have been three key shifts. The first – and I don’t think this just pertains to advertising or marketing, but to business in general – is a shift from efficiencies to connections. Ten years ago or more, strategy was about building up efficiencies and capabilities in different areas. But now we’re seeing advantage become a function of connections, so you have integrated software that takes you from idea, to execution, to delivery. Targeting, for example, used to be a fairly simple process, but now you have hundreds of entities, from data aggregators to analytics platforms, that must be tightly integrated.

You identify consumers by what they do, where they’re active and what content they consume, so it’s much more of a functional approach

And in commerce, consumers don’t distinguish between in-store and online offers. So, from a technological point of view, you need to integrate your sales systems, your inventory systems, your purchasing platforms – all that infrastructure. Some of it will be brand new online commerce stuff, but some of it is legacy systems that are decades old, written in different computer language. We’re at the beginning of that process and it’s going to take a decade to work itself out.

Q. What’s the second shift?

A. In advertising, we used to think in terms of one objective, which was awareness. In marketing, there were two: awareness and sales. Those were really primary, but now adverting also has to think about sales, but also in terms of advocacy. Ten years ago we would have described it loosely as “word of mouth”, which was a very abstract concept. But now it’s becoming something that we actively work on, measure and it’s quickly being seen as just as important as sales or awareness. That’s very important because you have to do things that you never did before, such as social and content.

Q. And the third?

A. The third important shift is away from the conception of a “target group”. Ten years ago it used to be a collection of demographic and psychographic traits, now it’s communities of purpose. You identify consumers by what they do, where they’re active and what content they consume, so it’s much more of a functional approach. We always knew target groups were more of a useful fiction than anything else.

Q. What can advertisers and brands do to take advantage of all these changes?

A. There is a vast amount of opportunity. We used to have just one screen, now we have three. That’s a very easy example. Content is another really, really big area where you can actually build a relationship much like a publisher does. Some brands have been able to build TV-sized audiences, with their videos getting millions and millions of views. That’s obviously a really big opportunity in conventional advertising terms – it offers coverage and frequency. But then look at American Express Open Forum; they built a community there for small businesses. They get some great business minds to reach out to small businesses, give them advice and enable them to talk to each other. That’s something we could have never done in the old environment.

Q. Conversely, what are the challenges that come with all this?

A. I think the toughest thing is integration. We’re taking in all sorts of new skills that marketers never had to worry about before. We have to think about so many skills, within mobile, social, creative and digital, and they’re all individual specialities. Even IT is a major marketing issue now; some research suggest that chief marketing officers are going to be spending more on IT than chief technology officers in a few years. And we need to call on data scientists, people who can write algorithms and people who can produce content.

Publishing is actually one of the hardest areas, because when you look at data science or advanced mathematics, publishing seems pretty easy by comparison. But there’s a lot more to writing than typing. There is a very discreet set of skills and there are best practices. Some things involve hard skills that it’s quite obvious marketers always lack, but others require skills they thought they were familiar with, but actually turn out to be quite hard. Publishing content is one of those.

Q. So, digital technology is causing some massive changes to the landscape, but are there some things that will always stay the same?

A. There are some. Building a relationship with the consumer – that hasn’t changed. What has changed is that our opportunities to do that have exploded, so we really need to think about it a lot more.

In the past, they used to say you could put it on the box and watch product fly off the shelves. There weren’t a whole lot of options, except making a good TV ad or making a bad TV ad, and being smart or being stupid with your media strategy. But you never really had this intense dialogue with the consumer, which you now have to focus on all the time. So, I would say that we’re still trying to do a lot of the same things – it’s just that we have to pay attention that much more.