Creative Destruction and The Hype Cycle


Joseph Schumpeter, the 1940’s Austrian-American Economist, borrowed and retooled the idea of creative destruction from Karl Marx in which he states:

And so it is with advertising.  For those who have cut their teeth in big company marketing or agency work starting as little as 10 years ago, today must seem a troubled and chaotic time.  Andy Nibley, the former CEO of ad agency Marsteller, Reuters News and Universal Music sums it up nicely when he says “Here we go again. First the news business, then the music business, then advertising.  Is there any industry I get involved in that doesn’t get destroyed by digital technology?”

But it is also fashionable now to note the rise and fall of certain ad technologies through stages as a means of knowing when to invest in them or wait, or perhaps like Schumpeter observe them flame out.  It’s called the Gartner Hype cycle.

The theory goes something like this – a technology breakthrough plus some success stories leads to over inflated expectations.  When these fail to materialize disappointment and disillusionment sets in until the reality and correct promise of comes back through the haze the breakthrough created, and the technology begins again to gain credibility, market share and a self-sustaining (true) track record.  Like this:

Note a couple of things here about ad tech, even though this look is now 1 year old;

  • Real-Time Marketing is still a long way off.  It hasn’t even begun to climb the hill of expectations.  It means there is so much yet to do, invent, or as Schumpeter would say destroy so you can create.
  • Native Advertising is probably at or near the peak. When you hear something as often as you hear Native Advertising these days it’s a sure sign the peak of over-inflated expectations is in play.  And therefore beware the slide down the other side.
  • Note RTB has yet to reach the bottom of the trough. And it is marked in blue meaning a 2-5 year time frame.  So even though the graph is 1 year old there is still a phase of disillusionment to get through with RTB.
  • Predictive Analytics is way out there on the plateau of productivity. It made all the way through the hype cycle and is poised for steady establishment and value generating use.  If you place a bet on the ad tech stack in other words, do it here.

All of us in ad tech have gotten used to the incessantly pace of change.  But it does not mean we should stick our head in the sand waiting for the next wave to come, go and adjust.  It does mean we have to be on our toes, work hard, and mostly be smart about what is hype and what is real.  Those mixing up the two lose out.  Those who know the difference are the ones leading the charge to a new ad future and winning at the game.  Which are you?


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