Chris Horn: Passion is the key to advertising in the face of tech disruption

“At the tone, it’s 8pm, B-U-L-O-V-A Bulova Watch Time.” Thus in 1926, the world’s first radio advertisement grabbed attention.

Bulova (now owned by Citizen Watch Co) was founded in 1875 by a Czech immigrant in New York. It rapidly came to prominence with the move from pocket to wristwatches during the first World War, and then introduced the first full line of wristwatches for women. Bulova also aired the world's first TV commercial, immediately before a Brooklyn Dodgers home baseball game in 1941.

In his recent book Television, film historian David Thomson observes how TV became a societal soother in an anxious world after the second World War. Revered in the place of honour in the home, it reassured families that they were safe. A sitcom would solve an invented crisis within half an hour; comedy aligned the majority to common social values, and news showed how society was protected from dangers elsewhere. And into this suburban bliss, adverts would interject to sanctify appropriately blessed products.

While most consumers considered advertising an interruption to entertainment, no doubt advertisers saw programme content as the necessary linkage to their brand campaigns and attention grab. Commercial TV stations built their business model on broadcast adverts. Advertisers became paternally ego-centric, competing for the authority to assert what was best for the public through the shrine in their living room.

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Ad breaks

As broadcast advertising grew, audiences evolved to exploit the ad breaks. British utilities would expect power surges as kettles were boiled during the ad breaks on Coronation Street. Pizza companies would flood with orders during Super Bowl halftimes. Less compelling ads drove consumers to channel-surf across stations, the broadcast equivalent of turning the page of the newspaper away from a printed advert.

At the 1999 Consumer Electronics Show in Las Vegas, TiVo released one of the first digital video recorders (DVRs) for TV. Then in 2002, the company caused a howl in the advertising industry by introducing a “skip” feature in its DVR to filter out ads. A similar anguish is heard today as consumers learn to use ad-blockers in their internet devices to suppress unwanted adverts.

For their part, advertisers, print publishers and commercial broadcast stations assert that their business models are doomed unless content drives the public to read and watch adverts.

Today, Google and Facebook have captured the majority of digital advertising spend. But rather than producing content themselves, they simply aggregate that of others. And rather than the ethos of paternally asserting what is the best for all, they instead deduce and argue what is the most appropriate for individuals.

If, for example, a specific consumer is clearly interested in a gym subscription, it is logical to assume they may well be interested in an ad for health nutrition. Using such reasoning to intelligently place temptations at the right time and place to the right people, Google and Facebook have severely threatened the business models of earlier industries.

Content is king

Still, Bill Gates of Microsoft did assert in 1996 that content is king and will win against simple aggregation. At the recent Consumer Electronics Show, Barry Diller, chairman of InterActiveCorp and Expedia, observed that 2016 has seen some of the best new content produced by ad-free streaming services such as Netflix.

If consumers are willing to pay a subscription to ad-free television, then perhaps traditional commercial TV stations are left with a business model of targeting less wealthy audiences,those who cannot afford subscriptions – and probably cannot afford many products appearing in their TV ads.

2016 also saw consumer interest in 360-degree content, using virtual reality headsets that literally create a surround-vision and audio experience. Go-Pro has shown what is possible with 360-degree video. Some brands and advertisers are now creating 360-degree content, in which the consumer is immersed and surrounded on all sides by the experience of the brand.

Finally, 2016 also saw a landmark year in consumer interest in e-sports. Leagues and competitions are held in which professional players and teams compete with videogames, watched in some cases by extremely large audiences that surpass those of traditional sports. Last year, ESPN launched dedicated coverage of e-sports. Some major traditional sports team owners and brands are now sponsoring or even buying e-sports teams.

E-sports fans are typically millennials, about 40 per cent female, generally wealthy, and many have families of their own. The demographics of e-sports are highly attractive to brands and advertisers, and in particular because of the sheer passion and dedication of fans to their favoured games and players.

Video content, be it traditional broadcast TV, 360-degree immersive video or and video gaming, is indeed king. But both interrupting content (as in traditional TV adverts) and logically placing tempting distractions alongside content (as do Google and Facebook) may embitter the enthusiastic fans of immersive video and gaming. The challenge is to find new ways of advertising directly into the new forms of content.

Egos – persuasion by authority and credibility – and legos – persuasion by what is logical – have worked in the past. But immersive video and e-sports invite pathos – persuasion by passion – as the new tool for advertisers. It threatens to disrupt traditional broadcasters, publishers, and even the internet aggregators.