The Sharing Economy Has 'Mad Men' Scared to Death

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The Internet turned 25 this year. It came of age along with the Millennials, the first generation to live and breath in social media. The impacts from both are still rolling through and roiling the culture and the economy.

Advertisers now spend $5 billion in the social media ecosystem without knowing if that money is well spent, and even if anyone is actually looking at the ads, in part because it's so easy to spoof the data and views. Worse yet, a recent Gallup analysis uncovered something users know: even if traditional brand messaging is seen at all, it's tuned out and rarely trusted. In social media, trust is earned through sharing, not paid views.

This is the Internet's newest disruption, the emergence of a "sharing" culture.

A lot of people, especially Millennials, use the Internet to share opinions about restaurants and hotels (think Yelp, to name one site), share car rides (Lyft), boats (Boat Bound), homes or even a sofa-bed (Air BnB), share cabs (Uber), knowledge (Wikipedia), share in charities and fund raising (KickStarter, Indie Gogo), and even opinions (countless blogs).

All these, and many more "sharing-economy companies" were the focus of a recent feature in Wired, tech's flagship magazine, where the author concludes, perhaps only slightly hyperbolically, that we are witnessing the "re-creation of the neighborly interactions that defined pre-industrial society." Maybe a more civil society will emerge. But one thing is clear, the sharing economy powerfully rewards quality and creativity, and rapidly weeds out the badly rated or the over-priced. This impacts not only the products and services that advertisers promote, but also transforms the business of advertising itself.

The mistake many advertisers make is in thinking of the Web as just a different delivery vehicle. Madison Avenue quickly adapted from print, to radio, to TV. However, while the artform changed, the core product remained the same: create a short story, a pitch, and purchase time or space to display the ad. But the Internet is not just about a new way to display ads on digital screens, or simply the creation of a larger and more diverse platform. Rather, the sharing economy is changing the role of the consumer.

For the first time, consumers have gone from passive to active, from watching or reading to actively sharing and "recommending" inside a myriad of trusted networks.

The most effective advertisements in the Internet ecosystem, especially with the Millennials -- the ascendant spending and Internet-savvy demographic -- are those that "go viral" when likes and shares can earn tens of millions of free views. Duplicating this with traditional advertising involves an expensive "media buy," which lacks the endorsement feature inherent in share-driven distribution.

If ad-skipping DVRs and ad-free on-demand services gave ad agencies indigestion, the sharing-centric Web is a full-scale heartburn pandemic. But because advertising is the financial fuel that makes it all work, the entertainment and business communities need to adapt, even emulate the sharing model.

Shared ads won't completely replace traditional forms, but they are highly effective in the crowded online marketplace. Here you can't just buy eyeballs; businesses have recently become painfully aware of how hard it is to know where and if an ad is in fact placed at all, and how many eyeballs it really captures. Not so in the sharing environment.

T-Mobile gave us a spectacular example of how to benefit from the transformation, with its sponsored online video that spoofed the 2011 Royal Wedding of Will and Kate. You only see T-Mobile's name briefly at the end. The ad didn't follow the traditional "product placement" model, but it earned T-Mobile 28 million views. Old economy company Kmart, to note just one other example, saw similar mega views with its clever viral video ads, which one suspects were intended to move the meter more on brand image than sales.

The point is not that an Internet ad - where online video is one of the hot tools -- marks its success with huge numbers per se; rather, when a clever ad is shared widely within a target community, however big or small, it can be highly effective.

And while online ads are a new tool for big corporations, they are game-changing for small businesses and startups. The Web's sharing culture levels the playing field because content creativity determines value, the extent of sharing. Startups have access to the same resources and outlets, and same mind-share, as the big dogs.

The startup company COIN, for example, which created a virtual credit card, reached its first month sales goal in less than one hour after going online with a clever video that went viral. Producing that video cost a fraction of traditional ad placement.

Technology has also made the video production itself cheaper and easier as well. In the hands of creative people (in Coin's case, credit goes to Sandwich Video founder Adam Lisagor), today's low-cost high-quality video and computing equipment yields ads as professionally polished as those once produced only by mega-studios. But just as access to word processing gave everyone the ability to type clean and pretty copy, it didn't give everyone the talent to write compelling prose. Talent remains the key.

The new talent-centric Internet ad age will not replace all of the old-school advertising, just as TV didn't eliminate radio ads.

But if the Mad Men were starting out today to capture new trends, they might not camp out on Madison Avenue. They'd be in San Francisco, Los Angeles, Seattle, and Austin, spearheading innovative advertising, just as they did for television in the 1960s.

Phil Mills is an actor, screenwriter, and startup video producer based in New York.  

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