Desktop in decline, blurred lines, Facebook Messenger to be critical, voice search means the winner takes all, and a flight towards attributability.
Before speculating on the future it would be wise to take a look back, in the hope that it shines a light on the direction we are heading in.
The recent UK digital ad forecast from Enders Analysis was my primary reference point when researching this, and it made for some fascinating reading. Did you know that 2016 will be the first ever year when desktop digital spend will decrease year-on-year? That’s staggering. A decrease! In desktop digital ad spend!
However the overall digital ad pot will of course grow year-on-year, and the engine of this growth is display. But if you delve a little deeper you’ll see that 73% of this growth is attributable to two specific segments; mobile video and mobile native.
A speaker at every conference I’ve been to for the past five years has declared The Year of Mobile, however we now have conclusive data that illustrates a tipping point. If we focus purely on mobile, however, I fear we are missing part of the picture. If you instead think of the formats and the content or ads that are being invested in, then it’s clear evidence of digital becoming a pillar in upper funnel marketing plans.
Erosion of TV revenue
Digital has always been viewed as a DR medium, and we’ve debated the power of digital to build brands with premium creative for some time, however this debate will be redundant in 2017. With regards to digital, I see the death of DR versus brand. It’s now all DR, just with different metrics to be measured further up the funnel, and with widespread adoption of solid attribution models now giving good insight into the interplay of digital as it transcends down the funnel.
This success is not just down to attribution though, it’s equally related to the developments we’ve witnessed in creative execution, with notable additions such as Google’s Double Click Studio allowing brands to provide the experiences that sit comfortably within premium brand activity.
As a result of this I see digital agencies with agile trading and creative ability further eroding the revenues of their larger, more traditional, media buying rivals – and clients will drive this choice due to impact, not just cost. I see this trend continuing for several years, with TV ultimately losing out.
Whilst on the theme of ad agency and media rivalry, I see a further blurring of the lines. When looking at creative, it’s no longer clear what is content and what is an ad. And when an agency launches the content or ad, it’s no longer clear what is paid and what is earned. Due to a maturing market, where platforms have built audiences and need to monetise them, we are now in a pay to play environment where you quite often need to pay for placement in order to then earn via audience engagement.
This is blurring the lines on a normal pitch. An agency’s rivals on a pitch are now unrecognisable. Imagine a content marketing pitch where you could have a media owner offering content partnerships, creative agencies offering their wares, a consultancy like Accenture who have made a big play into the market, and then a few of the more familiar competitive set.
This makes life tough for clients and means we, the agencies, may no longer recognise the opposition.
Voice search is winner takes all
With regards to technology it’s clear we are witnessing a step change in the adoption of voice, both in-home, with use of technology like Amazon’s Echo, and through greater use of established tech like Siri. This could herald the era of winner takes all organic search marketing – but that’s a separate blog on its own so maybe divert to my colleague Jon Norris’ thoughts on this here on PerformanceIN.
What is clear to me is that we’ll all need a strategy for this immediately from an organic perspective, and that paid media will ultimately be the winner, with sponsorship and affiliate adding to the more traditional model.
Facebook Messenger will become critical
I also hope 2017 is the year Facebook Messenger gives us our very own WeChat. For those of you not familiar with WeChat, imagine WhatsApp where you have informal one-on-one conversations with brands that use AI and humans to converse with you.
In China WeChat users can use the app for all the normal messaging functionality you’d expect, plus a vast array of other activities such as paying bills, ordering a huge variety of goods and services, transferring money to other users, and paying in stores. Most of this is handled in one-to-one conversations, where brands converse with you in a tone and environment that feels akin to how you talk to friends.
I don’t see display units here, however there will be ad functions and we’ll all need to consider how we play a part in these conversations without jarring the user’s experience.
A flight towards attributability
Ad revenue in 2017 is facing some significant downward pressures. Rather than focusing on the macro issues, such as the uncertainty over the temperament of the U.S. President-elect and China’s potential slow down, I’d rather look at Europe. Next year will see us start to deal with the reality of Brexit alongside other potential political upheavals in our largest economies – France, Germany and Italy.
Even if we avoid calamity we will definitely face uncertainty, meaning ad budgets will face pressure and will be signed off later.
I’m an optimist though, and I can’t leave you with a negative when talking about the future during the festive period.
When considering everything I’ve talked about, with digital media playing a significant role in upper funnel activity, I see any downward pressure on ad revenue resulting in a flight towards attributability, which will be good news for digital media and agencies alike.