NEWS: IBM Predicts Decline in CPM-Based Ad Sales

Ed: Infrequent IBM presence in the advertising space.

IBM Predicts Decline in CPM-Based Ad Sales

In a report titled "The End of Advertising as We Know It", IBM has predicted significant changes for online advertising, forecasting "greater disruption for the advertising industry in the next five years than occurred in the previous 50."

Of the 80 "advertising experts" surveyed, more than half expect open advertising exchanges to take 30 percent of current revenues commanded by traditional media in the next five years.

In addition, two thirds expect 20 percent of ad revenue to move away from impression-based sales, in favor of action-based within three years, says the report.

The report goes on to imply that the balance of power in the ad market may move away from the provider, and towards the consumer, with individuals gaining increased control of how and where they view advertising.

As the report states, "Traditional advertising players - broadcasters, distributors and advertising agencies - may get squeezed unless they can successfully implement consumer, business model and business design innovation."

"Consumers are forcing marketers to experiment and make advertising more compelling, or risk being ignored."

IBM also surveyed more than 2,400 consumers, with results suggesting that the public now spend more time at their PCs than they do in front of their TV sets. More than 70 percent of respondents claimed to use the Internet for more than two hours a day, compared with just 48 percent spending the equivalent time watching TV.

The end of advertising as we know it

IBM Institute for Business Value study

Imagine an advertising world where… spending on interactive, one-to-one advertising formats surpasses traditional, one-to-many advertising vehicles, and a significant share of ad space is sold through auctions and exchanges. Advertisers know who viewed and acted on an ad, and pay based on real impact rather than estimated “impressions.” Consumers self-select which ads they watch and share preferred ads with peers. User-generated advertising is as prevalent (and appealing) as agency-created spots. Based on IBM global surveys of more than 2,400 consumers and 80 advertising experts, we see four change drivers shifting control within the industry. To read an overview of this study, download the PDF file at the bottom of this page.  About the authors Dr. Saul J. Berman Dr. Saul J. Berman, Global Strategy Leader, Media and Entertainment Industry, IBM Global Business Services Bill Battino Bill Battino, Communications Sector Managing Partner, IBM Global Business Services Louisa Shipnuck Louisa Shipnuck, Global Business Development Executive, IBM Media and Entertainment Industry Andreas Neus Andreas Neus, Managing Consultant, Communications Strategy and Change, IBM Global Business Services Download complete IBM Institute for Business Value study (302KB) Download executive summary (104KB)