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Advertising Will Soon Reach a Digital Tipping Point

Online marketing is putting increasing pressure on legacy ad businesses, with more people logging in than tuning in.
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While television continues to have its strong hold on ad dollars, digital is a rapidly growing category and there are no signs of it slowing down. Take for instance Google’s $3.2 billion cash acquisition of Nest, with many reports suggesting it’s a play to better target ads in the home.

These investments are increasingly putting pressure on legacy ad businesses, and in one way or another, have and will continue to pull at the purse strings of the $500 billion ad market. Furthermore, consumers are spending more time logging in than tuning in, with Google’s digital audience to soon eclipse TV viewing, especially as the ad-driven company continues to expand into mobile and the "Internet of Things."

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It won’t be long until Hollywood and other premium content providers take a digital-first distribution model, as in the case with Netflix’s House of Cards. The entertainment industry has been handcuffed to old business models, but that is beginning to change.

For the last three years, the National Football League has pushed into digital by streaming games, including the Super Bowl. It is also exploring new TV deals for Thursday night games, though it does not appear Google or Netflix will be offered streaming rights to any games as a part of this package for now.

But even Super Bowl ads, such as Apple's ‘1984’ commercial, don’t have the same return today. Even with more than 100 million viewers tuning into the big game, brands that have run iconic Super Bowl commercials are already beginning to take a digital-first approach to advertising.

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Rich Muhlstock, senior vice president of branding and acquisition at E-Trade, says the company wants to focus less on TV when asked about the decision to not run ads during this year’s big game. He went on to say that, "we will leverage other media, especially digital, social and mobile channels.”

Trudy Hardy, vice president of marketing for BMW North America at the Automotive News World Congress, also sees a digital-first future. "If our agency comes with a TV spot first, that's the wrong way to go," he says. "They have to show us the digital ideas first and the TV comes at the end -- supplementary."

But a digital-first approach to advertising faces a fast moving environment, with new innovations and regulation changes such as blows to net neutrality. Brands that can quickly embrace a digital-first approach to marketing and adapt to these rapid changes will have more opportunities to expand their market share. These changes present huge opportunities for smaller, more nimble digital agencies that can keep up with the pace of the times.

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