By now you've all heard—Internet ad spending is up, spending on traditional media is down. A recent report by TNS Media Intelligence found that Internet ad spending would undergo 16% growth in 2007, compared with a 2.9% drop in newspaper ad spending.

With so much attention given to Web 2.0 and its technology-enabled marketing tactics, marketers using traditional approaches are under increased pressure to become more digital and technology driven.

The digitization of marketing is a gradual process that is taking place largely behind the scenes. Instead of a revolutionary change, we are beginning to notice the gradual evolution of traditional marketing towards new, dynamic media.

For the most part, retailers are not closing down all store branches to sell only on the Internet. Instead, they are making their catalogs more personalized and applying the new technology to get more value out of their marketing spend.

How It's Working...

In response to increased Internet ad spending, we are seeing a type of mass-market shift from traditional media spending to marketing that is more personalized—reaching the consumer with the right message at precisely the right moment.

For example, consider the evolution of the billboard.

The billboard has gone from its roots as a traditional, static advertisement to what now reminds us of scenes from the movie "Minority Report." Working off data sent from a transponder in the driver's car, the billboard can generate ads based on the driver's consumer profile.

Retail is another great example of how historically traditional marketing departments are beginning to invest in digital media.

Currently, retailers are digitizing catalogs and in-store materials. By digitizing this process, retailers can reduce the time that it takes to make adjustments in pricing and product offerings and increase responsiveness in their marketing campaigns. They can also create much more granular messages for different local markets.

Warner Brothers has also capitalized on the responsiveness that companies can achieve through digital media. Because it has automated the process of placing newspaper ads, the company can to look at yesterday's movie performances and make adjustments in what ads are delivered to newspapers within local and international markets to reflect the performance on a close-to-real-time basis.

All of these examples—such as billboards, newspapers, and catalogs—are, on the surface, very traditional and low-tech media. In line with the continued growth of the Internet, the interesting, cutting-edge part is how marketers are using technology to transform these traditional channels into next-generation marketing tools.

Why It's Happening...

Thanks to the Internet, consumers expect messages to be more relevant to them. We are used to Amazon, where we see recommendations on what products we might buy based on previous purchases. That affects how the consumer looks at any kind of media.

If suppliers of traditional media, like billboards and newspapers, are going to stay competitive with newer, Internet-driven marketing channels, they need to reflect the reality of customer expectations through increased focus and relevance. That is the marketplace driver.

The other driver is cost. Companies are looking at these technologies to develop effective media much more cost-efficiently than they have before.

Additionally, all of the increased focus and relevance will require greater versioning of offers, ultimately increasing the amount of media. In this way, technology will be paramount to speeding the approval process and management of the increased quantity of media.

As another downstream impact of the Internet, marketers are facing increased pressure to account for the ROI of their campaigns. The digital marketing via online channels that marketers conduct is much more measurable than traditional media has been historically. This adds pressure to the users and the creators of traditional media to offer a measurement tool to determine a particular campaign's responsiveness.

It certainly raises expectations that marketing focus more on measurement and accountability, resulting in measurement of every marketer's highest goal—actual impact on the customer.

What the Future Holds

In the future, we can expect the paradigm to shift more and more toward a dynamic and digital process. The things we see happening in the experimental modes are going to become more commonplace.

Another big emerging area is mobile computing and mobile marketing. We are seeing the evolution of static advertisements to advertisements driven by where a person is located and his or her specific needs. Marketers can now take into account a persons physical location and advertise only venues within a specified distance.

Instead of the traditional paradigm of espousing the value of the restaurant, the menu and the ambiance, marketers are now taking advantage of digital processes that allow them to pay for marketing only to people that are close enough that the marketing is relevant to that person. That is an example of the traditional media being energized by digitization, and we can expect in the future to see this to an even greater extent.

With increasingly personalized media, privacy and protection of customer information will become a growing concern. The more powerful these technologies become at targeting and being relevant, the more this technology is accessing information that is potentially private and embarrassing or could be used for other purposes. As a result, marketers need to self-police their activities to avoid interference from government agencies.

For marketers who are rightly cautious of crossing the line, utilizing customer opt-in is a good place to start. Marketers should respect the industry norms surrounding opt-in and use customer information only as permission is granted.

European privacy laws are already much more restrictive than those in the US. Without effective efforts at self-policing, we can certainly expect that the more vigorous kind of privacy protections that are the norm in Europe are likely to become more commonplace here over the next decade.

Next time you use your PDA, mobile phone, or computer to access restaurant recommendations, or when you feel that an advertisement is talking directly to you, think about the evolution in marketing that has been happening before our very eyes.

The days of "Minority Report" might be here before we know it.

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Michael Emerson is CMO of Aprimo and was, most recently, GM of the Enterprise Marketing Management (EMM) product line at Siebel Systems. He is a PhD candidate in Industrial Psychology at the University of Minnesota.