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Marketing Renaissance

Kevin M. Ryan and Masha Geller
Marketing Renaissance Kevin M. Ryan and Masha Geller

The second day of the iMedia Brand Summit in Coronado started with a keynote by Doctor Peter Sealey where he presented a top ten list of things that are going to bring about a marketing renaissance. Dr. Sealey is a professor at the Haas School of Business at the University of California at Berkeley, the founder and CEO of the Los Altos Group and co-director of the Center for Marketing and Technology.

According to Sealey, the next few years will usher in a fair amount of "creative self destruction." He said that in order to create something new, "you have to destroy what came before it," and while it's very difficult to destroy our present models, we "have to."

That creative destruction will be spurred on by mega trends, such as the growth of bandwidth and processing power and decreasing storage costs. The 20th century economic growth drivers were manufacturing, transportation and agriculture, which were almost solely responsible for three to four percent annual increases in productivity. However, Sealy points out we've squeezed all we can out of those three industries, and now we're into the 21st century, where the economic drivers are processing power, bandwidth and cheap storage, which have led to 15-20 percent annual increases in productivity.

The sub-trend of the above, Sealey said, was that advertising is becoming digital, personal and controlled. He cited podcasting, RSS and drew upon his extensive experiences as president of marketing and distribution at Columbia Pictures in the late 1980s (responsible for such releases as "Ghost Busters," La Bamba," "Karate Kid," and "Tootsie") to compare the old methods of distributing entertainment and the future. It used to be that a movie was released in theatres, followed by DVD, video on demand and pay per view, then premium TV, basic cable, a second premium TV run, networks TV and finally syndication.

In the future, Sealey speculated, since the home theatre experience is coming closer and closer to the movie theatre experience, it's conceivable that a movie studio would combine the theatric release with a DVD release. Citing the upcoming King Kong release with a theoretical promotional budget or $100MM, would produce $50MM in revenues from the theaters and $300MM million from the DVD sales, conservatively, right off the bat, Sealey said.

As for radio, with the proliferation of iPods and satellite radio along with other music devices, "I simply do not know where broadcast radio will end up in 5 years," Sealy said.

Moving on to Internet Protocol Television (IPTV), Sealey predicted an outright demise of ad supported television. "Not only is TV grossly overpriced," he said, "we don't know who's watching or listening -- Nielsen and Arbitron are just jokes. We're spending enormous amounts of money with no justification."

Moreover, Sealy said today's model is broken because unlike several years ago when trade promotion comprised only 25 percent of an average marketing budget, today that number is up to 50 percent while advertising is down to 24 percent from 50 percent.

"Trade promotions are crack cocaine that do nothing for long-term growth," Sealey said. "It is my fervent plea that we get advertising back up to 50 percent and trade promotions back down to 25 percent. This is the single greatest challenge in marketing."

In conclusion, Sealey emphasized that attention is money, incumbents will lose in a period of discontinuity and technology will keep marching forward, despite all obstacles, legal or otherwise, and U.S. advertising will remain at 2.5 percent of GDP.

"It is going to be a glorious, glorious time."

iMedia Editor at Large Masha Geller is the founder of interactive marketing and corporate communications consultancy Geller Public Relations in New York.

Kevin M. Ryan is chief strategy officer at Zunch Communications.


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