Promotion is Disrupting Advertising

“Promotions now are disrupting advertising, according to Gordon Borrell Associates. About 60 percent (59.7 percent) of all marketing dollars spent today are spent on promotion, rather than advertising. See http://www.borrellassociates.com/wordpress/. That has obvious implications for the health of general-purpose media, as advertising drives the business model for general-purpose media.

"In case you haven’t noticed, media companies have changed their strategy of charging for advertising," says Gordon Borrell, head of his namesake firm. "If it continues, the business model for media might change forever."

Promotion will be key for developing new applications and user experiences in a "local" sense. Ben Wood, Google executive notes that "local is at the heart of user search." About 20 percent of all searches have local intent and a third of mobile searches have local intent. In other words, people are searching for something they want to do, where they are now, or are going. It should therefore come as no surprise that Google and just about everybody else in the "marketing spend" business is looking hard at local promotions.

Groupon, and other "social shopping" applications that serve up promotions and coupons, are the first fruit of that shift to mobile-driven local promotion. What Groupon represents is yet another example of entrepreneurs taking a look at older markets and figuring out better, more useful ways to meet existing demand. Craigslist disrupted the newspaper classified ad business. Now social shopping services are going to disrupt the "coupon" business.

None of that seems like good news for the newspaper business model, going forward.

The Groupon phenomenon: beautiful deconstruction of an old media model