Andrew Walmsley on digital: Demographics' days are numbered

describe group characteristics, it's not intended to predict an
individual's behaviour. While knowing that one group is more likely to
buy our product than another allows us to target them, thereby
increasing our chances of success, we recognise that there will be a
substantial number in that group who won't respond to the message for
one reason or another.

We've come to live with this compromise - and entire media planning and
trading systems have grown up around it. But there is a better way, and
the biggest exponent of it, Google, already makes more money in the UK
than ITV.

Google's success is based on relevance. Advertising is bought against
keywords - terms that users search for - and, of course, these keywords
describe the interests of the searcher. Each keyword has a bid price
that depends entirely on demand, and the whole system is automated from
Google's side.

The genius of all this is that consumers get ads that are directly
relevant to their search, presented to them exactly when they've just
indicated their interest in a topic. And the content costs Google
nothing.

It's not surprising, then, that when Facebook launched an online
advertising system, it looked to the search engine for inspiration.

Its system imports features that made Google successful -
self-operation, combined with a credit-card payment facility that makes
it easy for small businesses to participate. An auction allows demand to
influence pricing, and you can target users' interests based on the
groups they belong to.

But it has gone much further than this. Social ads can be served to
friends of users. If I buy a book on your site (assuming I've arrived
via Facebook's beacon system), my friends can be shown an ad - 'Andrew
Walmsley rated this book 4/5 - buy it here' along with my picture to
emphasise the personal connection.

And whereas only individuals could set up pages before, Facebook now
allows companies to do so, providing a base for promoting their products
and services. Reflecting this, users don't 'friend' these pages, they
become 'fans' - an important distinction.

So what has Facebook created? Social media has challenged marketers,
because there isn't a clear role for brands in the space. For many
consumers, brand presence feels like an intrusion into personal space,
so success in this area has principally been limited to entertainment
brands.

Facebook has achieved three things. It has found a distinctive way of
creating a place for businesses to co-exist with people in a social
network. It has established a means of promoting brands that's derived
from people's interactions (and transactions). And it has created a
clever way of targeting people that reflects their interests and
behaviour.

The great thing about online media space is that nobody can be quite
sure what use it is going to be to anyone. Facebook has given us a big
box of toys, and it's up to us to figure out how to use it.

Google and Facebook give us a glimpse of the future - one where
demographics will no longer be the means by which we understand
audiences nor the currency by which we trade them. There's no place here
for the compromise that demographics force on us, and it'll change both
advertisers' and consumers' expectations across the media world.

- Andrew Walmsley is co-founder of i-Level

30 SECONDS ON ... RELEVANCE

- The Compact Oxford English dictionary says relevance is 'closely
connected or appropriate to the matter in hand'.

- In 1986 cognitive scientist Dan Sperber and linguist Deirdre Wilson
produced a paper on 'relevance decisions' in reasoning and
communication. It stated: 'Any utterance addressed to someone
automatically conveys the presumption of its own relevance. This fact,
we call the principle of relevance.'

- In his Treatise on Probability published in 1921, economist John
Maynard Keynes defined relevance in relation to risk calculations. He
suggested that the relevance of a piece of information should be defined
by the changes it produces in estimations of the probability of future
events.

- In computer science, relevance is a score assigned to a search result
based on how well it meets the information need of the searcher.