In 1962, sociologist Everett Rogers published a book that explains the theory of diffusion of innovation, which has stood the test of time, regarding how new ideas and technologies are spread throughout the culture. The theory, illustrated in the bell-shaped curve below, suggests that with regard to the adoption of new technologies, the rate of adoption is at first slow and then begins to speed up, but eventually growth will flatten out and perhaps decline. If we think about the adoption of mobile phones, for example, we can see that, beginning in the early 1980s with their introduction, mobile phones have now penetrated about 90 percent of the U.S. marketplace.
This brings me to the point of this blog post: with 90 percent of the market saturated with mobile phones, we can understand why Omnicom and Publicis, the two giant global communication holding companies, announced they are going to merge. It’s not because of the growth of advertising in traditional media, mind you, once the bread and butter of venerable advertising agencies from DDB, BBDO, TBWA or Leo Burnett (all owned by Omnicom and Publicis); it is because of the extraordinary growth in Internet and mobile advertising and the economies of scale that the merger will bring. In a related story, just this past week, according to Adweek, Facebook announced that mobile accounted for 41 percent of its $1.62 billion in ad sales during the second quarter. Facebook now considers itself a mobile company, especially with its new “Home” mobile experience.
We now have reached the perfect storm: mobile technology is so diffused that 90 percent of consumers have mobile devices; media companies like Facebook are responding with new innovations that re-focus their advertising efforts; and finally, it makes sense that advertising agencies have to adapt to this newer mobile landscape, so that the old advertising agency—read that as Mad Men and Women have gone digital. While it has to overcome regulatory hurdles in about 40 countries, the Omincom/Publicis merger is only the start of this industry consolidation. Prior to the merger announcement, WPP Group was the largest of the holding companies, which makes IPG and Havas ripe for take-over. Regardless of who takes over whom, advertising is adapting along with new and emerging media in recognition of the diffusion of innovations that are spreading globally.
by Neil Alperstein, Ph.D.
Program Director, MA in Emerging Media