The advertising industry is facing some major challenges: the increasing dominance of the duopoly, alarming increases in ad fraud and strict GDPR guidelines, not to mention the rise of ad blockers.
But revenue reports increasingly show that despite all of these challenges and new ones that surface every day, advertising spend continues to grow.
The Future is Coming
What does the future of advertising look like? Will it be ultra-personalised as in ‘Minority Report’? Or will we see a constant stream of data fed straight into our consciousness as in the futuristic film ‘Her’? Or is advertising as we know it well and truly dead, and needs a complete reinvention?
Perhaps the future holds something altogether different from what we know today. We need only to think back to when our global means of communication was television. TV broadcasts were carefully scripted to present a highly curated picture, leading us to unconsciously share a common worldview. Now we’ve transitioned to an online world with billions of viewpoints, coming from governments and businesses, and more importantly, from people. This has opened up a number of opportunities to co-create, join the conversation, engage and interact. It has also fast-forwarded us into the great unknown.
Little wonder that fierce competition, increased personalisation, rising AI-based advertising, interchangeable mediums, and the shifting role of agencies have led to one key question what does it all mean for businesses of the future? How can you future-proof your business to be equipped for the fast-paced changes that keep occurring?
In this article, we examine the Future of Advertising as we know it, and discuss the challenges that we currently face and the transformational changes that are most likely to re-shape the future.
Each section will be examined in detail to get a better understanding of how we can focus our efforts on effective advertising in the post-digital era.
Content consumption is growing (and growing) 2. What is this massive need for content driven by? First, there’s the rise of social and video display ads, as seen on popular channels such as Facebook, Instagram, and YouTube. Second, we’ve seen an increased dominance of mobile, growing by as much as 25% this year, with up to 60% of all internet ad spending taking place on mobile.
In order to keep up with the demand, content production has had to dramatically increase leading to intense pressure on brands to release content daily as opposed to the more traditional advertising model, when campaigns were released on a far less frequent basis.
These changes in internet and mobile usage have already revolutionised advertising and upped the volume of content as well as the way we receive ads, the way they are broadcast, and the way brands and consumers interact with them. With more and more time spent online and less time to switch off, the inevitable result is decreased attention spans and declining interest. The pace of the digital age is unprecedented, with ad content evolving and changing its shape every day. Keeping up with industry developments and new innovations is more difficult than ever.
Another huge challenge the advertising world faces is the negative associations around ‘personal data’; people are increasingly concerned with the misuse of their data and being asked to give permission to use it without knowing the consequences – this leads to a reticence to share as compared to previously and a consumer superiority to own their data and ensure they are in control of it. More than ever, businesses need to show they are acting responsibly when it comes to personal data and take consumers seriously when it comes to protecting it.
Yet, conversely, there is an increased expectation for hyper-personalisation and a need for consumers to eliminate ads that are not relevant to them – users may even find content offensive and off-putting if it’s placed in front of them when it’s not wanted. Consumers now expect greater control during the entire user journey. With ever more present ways for consumers to block unwanted content, brands are having to find new ways to not only to deliver a high volume of ads, but to ensure they are being seen by the right people at the right time.
With the decline of traditional TV viewing, relying on this medium is becoming far less popular and profitable. For example, in the US, traditional TV viewing among 35-49-year-olds fell by 6.1% year-over-year 4. With limited exposure of TV ad placements sending brands to new platforms, this will change the way we drive conversion in dramatic ways. There is an increased pull towards digital with the promise of great returns.
However, with every opportunity there are drawbacks. At the moment, one of the biggest difficulties that the industry faces is a hugely competitive marketplace that is crowded and loud, making it difficult to be seen, not to mention stand out from the crowd.
Additional challenges and considerations remain prevalent. Brands are looking for a greater understanding of what drives consumers towards purchase and more sophisticated measurement that’s connected to results. AI and machine learning is growing rapidly and impacting how we deliver ads. Keeping up is harder than ever.
The Future Consumer
When addressing today’s consumer, we find that simple retargeting is no longer enough. Consumers move on too quickly and get bored easily. Regardless of which digital channel an interaction takes place on, retargeting needs to advance beyond current limitations and target users based on the individual creative they engage with.
Choosing the right channel by consumer is tied to age and lifestyle as well as what channel is trending at any particular moment. Reaching the right consumers on existing channels remains a challenge as does predicting what new channels will emerge and last beyond the novelty stage. For example, emerging channel Tik Tok (previously Musical.ly) is a platform where users can share 15 second videos. While it is growing in popularity, will it stand the test of time and be competitive with the likes of Facebook and Instagram?
We now have Generation D, a new cohort with a completely different set of consumer behaviours and unique ways of consuming content. As defined by the Free Dictionary, Generation D is made up of people of any age who are familiar with digital technology. Is this the new norm: Where consumers range in age and shop across a variety of platforms? Where their second-screen behaviour is completely different and will change the face of browsing?
“Regardless of which digital channel an interaction takes place on, retargeting needs to advance beyond current limitations and target users based on the individual creative they engage with”.
We can also look at Gen Z, where 75% of this generation can be categorised as ‘Celebrity Networkers’ – they are 24% more likely to use social media to follow celebrities, TV presenters, actors suggesting an interest in the opinions of influential people 5. Also, Gen Z people are 1.5x more likely to be following vloggers on social media 5. As a result there is a clear opportunity for brands to reach this audience via influencer marketing, a trend which has grown hugely in popularity and will continue to evolve.
‘Ad blocking’ is now used more than ever as a line of defence – it’s the consumer’s way of eliminating content that is unwanted and not relevant. Users feel empowered to wrest back control of what they see in their feeds. They no longer passively accept content that they find unnecessary, unwanted and irrelevant.
However, even with ad blocking and the need for greater personalisation and control, consumers still have a fear of missing out. Read more on Tapping into consumers’ fear of missing out 7 by Joel Davis of Mighty Social.
The Agency of the Future
Every industry needs to adapt to stay relevant. That remains true for the agencies of the future if they want to remain integral to the ad creation and delivery process. In order to stay competitive, agencies of the future will need to produce rich branded content on a regular basis and keep up with the lightning pace of the industry. By taking risks to drive new and exciting creative solutions for clients, their content strategies will need to be adept and innovative.
To stay ahead, the agencies of the future will need to develop original experiences and / or creative content that enriches their strategies as well as fine tunes their creative offering, ensuring advancements are continuously being made. Technology will play a big role towards making sure that agencies are evolving with the times and applying data and analysis to their creative offering.
Targeting capabilities will need to be continually improved and tools will need to be regularly optimised. The smart agencies will be those who develop sophisticated measurement capabilities across channels and use analytical tools that accurately measure ROI of cross-channel advertising that create a full funnel experience.
So what does the Future look Like?
Rising Importance of Transparency: We will need to learn how to properly obtain consent and be more transparent about how we use personal data, to provide the experiences that users demand. Creating interactions between brand and consumer that don’t infringe on a user’s freedom is essential as we navigate the future. Expect to see a big shift in the importance of transparency; those who are not on board, will surely be left behind.
Accountability and Safety will increase in relevance: Creating safe environments for consumers is a must in order to gain public trust. Big platforms can no longer ride on the coat-tails of their previous successes, as accountability is key and will become a deal breaker if changes are not made.
Emphasis on the role of Social & Paid Media: Using Native Advertising to reach people through content that is meaningful and impactful will continue to rise, while ads that are sales orientated are set to decrease. The shape of ads is changing.
The use of video will become even more prevalent, as it continues to disrupt the way we consume media. For example, 1200% more shares are generated by social videos, than text and images combined 9. In addition, Marketers who use video grow revenue 49% faster than non-video users.
Further Personalisation and Optimisation: With greater personalisation comes the need for greater control – to the user. For ads of the future to be relevant, users want more freedom to choose what they see and when they see it. User journeys will become more personalised and optimised based on real-time interactions.
The need for distinct custom audiences will grow, with targeting becoming more sophisticated than ever and consumers only interacting with messages that are hyperrelevant to them. Collection and categorisation will take place across any digital media platform to deliver users into audiences for remarketing on Facebook, Instagram, Pinterest and other social channels.
Audience insights will need to be delivered and effectively analysed, in order to achieve campaign optimisation. Building audience insights from social listening is necessary to speak to consumers in the right way and build unique audience insight profiles. These profiles will give an edge to any advertiser and prove value to key stakeholders. These insights can also be fed back into creative optimisation to act as enhancements to interest targeting.
Using AR and VR: Expect to see Augmented and Virtual Reality increase when it comes to digital advertising, with more and more brands implementing them into their strategy and investing in these two types of innovation. AR brings a unique element of personalisation through participation and engagement, adding value to consumer experiences. The use of VR to drive digital advertising will likely add a sense of fun and a valuable interactive element.
Louder and More Disruptive Campaigns: Fierce competition and shorter attention spans will mean brands have to work harder and more efficiently to be heard. Innovation will drive new formats and new ways to deliver ads. Expect to see big, disruptive campaigns as well as those designed with the goal of creating social purpose and supporting social causes.
AI-based Advertising: AI and deep learning solutions will rise, putting an increased value on efficiency, productivity and higher customer satisfaction and leveraging insights and data to achieve these ambitions – as we move further into the future, this will become the norm rather than the exception. We are already beginning to see greater adoption of AI based advertising, with chatbots rising in popularity. AI allows greater customisation and delivery at the right place and time, as well as a new level of predictive advertising.
Using interchangeable mediums: We will start to see new mediums being used and an integration of experience. For example, we will need to understand new channels such as Connected TV in order to drive a new and improved way of reaching users of streamed TV. Or look further to voice recognition technology, which may eliminate text based search enquiries in the future.
Better System Integration, Data analytics and automation: An example of this is by capitalising on ‘Micro-moments’ – taking advantage of specific periods of time when users are ‘ready’ to receive a brand’s message. Discovering the key to consumer intent through analytics, automation and system integration will push brands to drive purchase at the most opportune times.
Amazon Advertising: With physical retail shops on the decline and an uber competitive marketplace, knowing how to navigate this ever more powerful retailer is growing in importance. It will become more necessary to find those users on Amazon who express genuine interest in purchase, and find ways to give brands more control over their relationship to the platform, to dramatically improve conversion rates.
The Landscape is Changing
Whatever the future of advertising holds, one thing is for certain, it will look dramatically different from where we are today and will change at lightning speed.
It is imperative for businesses to dig deep and take a critical look at their current challenges. If you are looking to do so but don’t know where to start, contact us for a comprehensive audit so we can help you adapt your current offering, and ensure your business is evolving at the right pace. Our consultancy services are ideal to identify your current touchpoints that need addressing and how to move towards a bright future.
“Whatever the future of advertising holds, one thing is for certain, it will look dramatically different from where we are today and will change at lightning speed”