The rapid rise of the sweet, sweet spot where influence meets advertising

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At Future of Influence Summit at the end of this month many of the most prominent people in the influence space will get their heads around where the space is going.

Given what I’ve been seeing and hearing over just the last few months, it is clear that an important part of this is the sweet spot where influence meets advertising.

A good overview of the space and two of the leading players in the space – 33Across and Media6Degrees – is provided in a recent article in New York Times titled The Online Ad That Knows Where Your Friends Shop. The article concludes with:

Margaret Clerkin, the head of the invention group at Mindshare, a division of WPP’s GroupM, who works with clients including Unilever and Sprint, said she wondered whether the approach would work for every category.

“The theory feels strong that in this very social environment that people are influenced more by their friends than they are by advertisers and brands,” she said. She plans to test Media6Degrees and 33Across later this year.

“I think the validity of that is going to end up being tested by brand and by category,” she said. “I can’t believe you’re going to see the same ratio in buying a bar of soap that you are in buying a car. The influence rate is going to be so much greater as the price tag of the product goes up.”

A recent article in AdWeek, Connect the Thoughts, also examines the space in some detail, describing some of the key ideas:

Calling patterns revealed… that there was a direct correlation between the connectedness of consumers and their purchasing habits. More specifically, consumers shop quite a bit like their friends and are more likely to respond to marketing messages from a brand a friend uses. How likely? Five times more likely.

These findings are among the factors encouraging some marketers and ad executives to believe that the next wave of Web ad targeting lies not in tracking user movements across Web sites but, instead, in mining social networks for the social tissue that connects consumers with their friends and family. With this data as the starting point, the bet is that ad messages can become significantly more relevant and therefore effective.

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Social targeting is part of a larger trend in online advertising that is seeing the focus shift away from content to audiences. Put simply, advertisers and agencies are less interested in using content as a signal to attract and identify their target audience.

The latest news is that Buzzlogic, one of the pioneers in the social media monitoring space, has decided to move on from this business to help advertisers with tools such as their ‘Conversational Ad Dashboard’. On their blog they write:

The rise of conversational media has enabled a new kind of engagement opportunity for brands – one that centers around cultivating relationships with content providers and offering them something of value for their audiences. Essentially, we’re starting to see the traditional PR role converging with a traditional advertiser role. Where things will get really exciting is how exactly these two points will intersect – and how advertisers will start launching integrated programs (combining both paid media and “earned media,” or WOM) to maximize awareness.

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Our focus is about helping those brands better understand the audiences conversational media attracts – and how to leverage conversational content to fuel a brand’s marketing strategy.

Given the market opportunity and how our business has grown within the advertising community, we have decided to no longer offer our subscription monitoring software as a stand-alone product.

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The future of online advertising remains a bright one; despite a tough economy, there is still huge opportunity:

1) The online display ad market is still forecast for growth $7.8B in 2009, $8.3B in 2010 (Forrester 7/09 advertising forecast).

2) Despite the worst economic recession in 70 years, spending on WOM spending word-of-mouth marketing rose 14.2% to $1.54 billion in 2008 (PQ Media).

3) Recent figures from Pubmatic indicate that ad prices are on the rise as more networks incorporate new targeting technology and premium content.

The fairly small number of companies in this convergent space of influence and advertising will grow rapidly over coming months and into next year, as traditional advertising models get squeezed and the value of this new space expands (subject to regulation and legislation).

We will go into detail on the topic of the confluence of advertising and influence at Future of Influence Summit.