Balitmore Business Journal March 2010
Booking business
E-readers expected to change way companies advertise
By Julekha Dash

Editor's Note: After reading about how e-readers could change the advertising industry, answer our poll question about whether you plan to buy one of the gadgets.

Oscar-winning 3-D film “Avatar” broke box-office records as the highest-grossing movie of all time. Michael Raphael, president of Direct Dimensions Inc. in Owings Mills, thinks the advertising and technology industry can learn an important lesson from the film filled with special effects: Consumers no longer want to see flat pictures.

As devices known as e-readers allow users to zoom in, rotate and flip through images, mobile ads will be stealing a page from director James Cameron. “The world is ready for 3-D,” Raphael said.

At least that’s what he hopes as the head of company that creates 3-D content. He is talking to Louis Vuitton and several other luxury retail companies in New York and Paris about creating 3-D ads on the iPad — Apple’s eagerly anticipated e-reader to debut next month.

The iPad will compete with Amazon’s Kindle, now the most popular e-reader on the market. As sales of e-readers are expected to grow more than 20-fold during the next eight years, technology marketing firms and advertising agencies are anticipating a revolution of sorts in the way Internet advertising will look and feel.

They anticipate a move away from static banner ads and toward more interactive ads, applications and Web sites. Ads will no longer look like ads. Rather, they will be content designed to provide useful information.

“It’s a hot topic in the industry,” said Al Yukna, chief digital officer at Baltimore’s GKV. “It’s something I’ve had my eye on.”

But don’t expect that revolution to happen just yet. Numerous technical hurdles remain before developers can create ads for the devices. And no one knows yet whether the devices will stick around or go the way of Sony’s Betamax.

“Is this device going to be the next great thing or something that flames out?” asked Bob Gilbreath, chief marketing strategist at Ohio digital marketing agency Bridge Worldwide and author of “The Next Evolution in Marketing.”

Engaging audience
Marketers dream of getting people to pay attention to their ads and nothing else.

E-readers could fulfill that dream. Unlike a laptop or cell phone, e-readers are solely used for reading books and magazines and, in the case of the iPad, watching movies and videos. That means the person viewing the ad won’t be distracted by an incoming phone call or that PowerPoint presentation they have to finish for work.

Another advantage of advertising on a mobile device is that you could target your audience more precisely, thanks to GPS tracking.

You could advertise a restaurant within 10 miles, for instance, because you know where the devices are sending data to, GKV’s Yukna said. “That’s one of the Holy Grails of advertising is getting your message to the right set of eyes,” he said.

Though you can do that now with mobile phones, the larger display size of the e-reader gives advertisers more real estate to play with. Viewers would not have to squint to find the store they are looking for or see that dress up close.

Yukna is talking to a snack food client about creating a coupon ad for the iPad. Folks who click on the iPad promotion would find out where they can buy the product nearby. Yukna declined to name the client. GKV’s snack food clients include Cape Cod Potato Chips, Tom’s Snack Foods and Archway Cookies.

Growing demand
Tech and marketing gurus’ interest in e-readers grew this year after Amazon got a surprise gift during the holidays. The company sold more Kindles than hardcopy books for the first time. Amazon sold more than 10 million of the devices worldwide on its peak day.

E-reader sales are expected to grow from $431 million worldwide last year to $9.6 billion in 2018, according to market research firm NPD Group.

Owners of the devices consume 18.2 hours of new media per week, versus about 8 hours per week for the general population, according to a survey of 2,000 households conducted by global management consulting firm L.E.K. Consulting. That means e-reader owners are reading more and likely to pay for content.

That could be a boon for publishers and for advertisers eager to put their promotions in magazines and newspapers that have been shrinking during the recession, said Ed Callahan, creative strategist at Baltimore’s Planit agency.

“It opens up a whole another medium for the print world,” Callahan said. “It will force print designers to be more technically capable than in the past.”