Rothenberg discussed this subject during a keynote session at the Interactive Advertising Bureau’s (IAB) 2019 Annual Leadership Meeting (ALM).
“The business of our business is changing,” he said. (For more, read WARC’s in-depth report: IAB: Direct brands thrive in brick-and-mortar dust.)
“Today, we are in a business where value is created in a promiscuously available ‘stack-your-own’ supply chain, where ideas can become physical products virtually overnight.
“Value extraction,” the IAB CEO offered, “happens less and less in third-party retail stores, but in the direct relationships brands have with their millions of individual end consumers.”
At the 2018 gathering, Rothenberg – and the IAB itself – branded a powerful new “direct-brand” economy where digitally-minded entrepreneurs could bypass the middlemen of publishers, retailers and such third-party services as advertising agencies and use the data-driven ecommerce as a direct connection to consumers.
“The Theory of Revolution”, the theme of the 2019 ALM, provided evidence that direct brands no longer are just a theoretical threat to dominant brands. Instead, a “seismic shift” already has occurred that is undercutting legacy practices in a number of sectors.
Within the interactive community, the IAB chief declared, “We are no longer in the business of banner ads and video spots. We are in the business of brand creation, brand sales, and brand replenishment.
“We are no longer in the business of brands creating value in the rarefied confines of their owned-and-operated supply chains, protected from the extremes of competition that they could afford to extract value through a series of imprecise, expensive, third-party handoffs.”
As the shift from physical to online stores continues to gain momentum, Rothenberg allowed that the legacy institutions “will still comprise the greatest share of brand fulfillment”, even as “their singular power over consumer choice and brand strength is eroding”.
Indeed, he insisted, “No longer will consumers be forced to choose only from among the handful of brands that can buy their way onto scarce physical retail shelves.
“As soon as consumers start shifting to e-commerce channels, their brand-consideration set naturally enlarges, and their purchasing patterns change.”
Sourced from WARC