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Changing Advertising Paradigms

The last two years have seen a rapid evolution in the way viewers access TV content. These changes in consumer behavior are forcing marketing professionals to re-evaluate long-time TV advertising strategies in order to reach an increasingly fragmented and elusive audience.

The world is changing – that is not news. Thanks to technology, jobs are disappearing, new ones are being created, and new products are changing the way consumers do even the minutest everyday tasks. And of course, it is changing how brands advertise, too. Consumer impact and influence is growing. Marketing has finally become a conversation. Not between corporations and consumers, but rather a global conversation involving millions of consumers. Advertising is just another form of it. As being incorporated or associated with the marketing process, advertising finds its position in every organization. In today’s world, firms do not hold back in spending millions of dollars on advertising and marketing; the obvious reason being that the competition is very high and every company wants to sell its product and make it a brand.

Advertising has now become a fiercely mooted topic. The amalgamation of advertising in the roots of the society has given rise to an industry that is worth USD 266 billion. With the landscape of advertising almost taking a new turn and advertising techniques being employed through social networking websites, blogging, and direct mail marketing, the future of advertising is looking bright. Effective advertising campaigns are a key to ensure that the product is launched in market at the right time and garners maximum sales. It is the hallmark of every successful advertising campaign that it is coupled with creativity and lots of thought behind it. The winners in choosing effective advertising techniques are the ad makers who never underestimate the power of consumer intelligence.

If an ad can emotionally appeal to an audience, it certainly has the potential to attract more attention from consumers and they may be eventually compelled to buy it. How does a consumer react to an advertisement, to the way a company depicts its image and thus lending a monotony in the buying pattern. Retention is what is important at the end of the day and the success of the advertisement is the main idea. Advertising has become increasingly important to business enterprises. The objectives of advertising were traditionally stated in terms of direct sales. Now, it is to view advertising as having communication objectives that seek to inform persuade and remind potential customers of the worth of the product.

Global advertising spend

The APAC region is estimated to be the leading contributor to global ad spend growth in 2018, contributing 39.7 percent, USD 8.1 billion of the total USD 20.3 billion incremental global increase in 2018. This is led by markets China, Japan, India, and the Philippines. The APAC is estimated to grow by 4.2 percent in 2018. Digital remains the only growth certainty. It continues to expand at double digits, improving 12.6 percent in 2018 reaching USD 220.3 billion – a 38.3 percent share of total spend, surpassing television spend for the first time at 35.5 percent share.

In the US, digital spend is projected to surpass TV spend in 2019 with 36 percent of all spend. Italy and Brazil remain TV focused markets in the foreseeable future, with over 50 percent share of spend still in TV in 2018. Within digital, paid search spend accounts for a significant 40 percent share of digital spend. With the arrival of voice search this growth trend is predicted to continue. Display spend accounts for over 50 percent share, within this the format growing at the highest rate is video driven by mobile video as consumers watch video content on their portable, small screens. This investment is not necessarily in in-stream/pre/post-roll VoD advertising – but also in out-stream, standalone video advertising particularly placed and consumed with the mobile-social channels. The profile of digital spend is changing as it evolves, with engaging online video formats and social growing rapidly.

Digital spending is becoming predominantly mobile spending rather than desktop, reflecting the shift in audience usage from desktop to smartphone. Mobile spend holds a significant share of 62 percent of digital spend in 2018. Much of the increased investment in mobile will be passively purchased by advertisers. A growing proportion will be actively planned and purchased as advertisers seek to reach and engage mobile audiences on the go.

The programmatic approach

The last 2 years have seen a rapid evolution in the way viewers around the globe access TV content. These changes in consumer behavior are forcing marketing professionals to re-evaluate long-time TV advertising strategies in order to reach an increasingly fragmented and elusive audience. Online programmatic advertising is bravely marching onto traditional TV scene. Who could have guessed that is going to be a reality for advertising industry a couple of years ago? Programmatic TV ads have a great future because television has not died, it evolutionized. Addressable TV advertising spending is expected to grow from USD 2.06 billion 2018 year to USD 3.37 billion in 2020, fuelled by new sources of ad inventory and more efficient pricing. Every year the users consume large amounts of video content, the thing that really changed is that TV audience is watching their favorite shows anytime and anywhere they want on their favorite devices. Programmatic TV advertising will trigger the massive changes on the market of TV advertising as participants will have to completely reinvent the approach to the price formation and ad placement.

The core of the automated ad placement system inside programmatic TV is a programmatic technology that enables any TV buy inside one unifying platform for all channels. The data-driven technology of the programmatic TV buying allows advertisers to bid on the TV impressions real-time and let the higher bid define whose ad will be shown while broadcasting takes place. The information about users including their lifestyle, personal preferences, financial situation or any other indicator used in programmatic ad targeting will be available for tuning in the system. With programmatic TV advertising, there will be absolutely no need in manual program selection sifting through possibly appropriate shows, programmatic ad will be served once TV audience matching the targeting options watches the TV. Advertisers often prefer programmatic TV ad buying algorithm because of its data-driven unified ad campaign management and real-time targeting that allows optimizing campaigns and buying relevant audiences instead of making blind choices.

Online programmatic advertising for TV represents a new ad buying method for apparently old, rusty, and completely different television advertising schemes, this comes off as a novelty, opportunity, and the main challenge at the same time because programmatic buying ecosystem is completely different from the one innate to traditional TV. Programmatic television buying is not excessively popular among advertisers yet. The early adopters of programmatic TV ad buying can take a full advantage of the situation and penetrate an uncharted TV audience market with minimum efforts brought into competition and achieve better results with advantages that ads on programmatic TV have to offer.

Ineffective ad spending is the greatest fear of every advertiser or media owner who is standing on the threshold of trying the new technology. Nevertheless, in the near future, reaching young TV audience without programmatic TV advertising will be borderline impossible because generations consume television differently. Traditional TV is rapidly losing ratings every year so whoever brands will be trying to reach using conventional ad placement methods will be drifting further away from reach. More and more people are getting accustomed to their favorite media channels and technology for content streaming with no indication of this trend changing in the future. This fundamental change is the reason why advertising on programmatic TV platform appears to be a single gateway to formerly unavailable TV audiences or audiences that will completely vanish from traditional TV medium tomorrow.

How much ad spending will programmatic TV get?

Programmatic TV (PTV) ad spending is on track to reach USD 4.7 billion in 2020 from a current level of USD 1.7 billion. Front-end PTV ad inventory avail systems for advanced targets are now being used for developing TV schedules. Connection with order placement and financial systems will likely take 3 to 5 years. For the foreseeable future, most PTV deals will be made privately, with agreed upon transaction rules and pricing and inventory guarantees between select buyers and sellers.

What is driving OTT ad spending?

OTT TV ad spending growth is in hyper drive as more ads become available through a diverse group of OTT purveyors, including MVPDs, OTT pure plays, connected device companies, and TV manufacturers that are now selling advertising through smart TVs. Marketers are being drawn to the OTT space to achieve granular, digital-like targeting in a low ad-clutter environment; they are also looking for younger viewers who are watching less linear TV.

The future is bright for digital advertising

Digital advertising trends have shifted from desktop to mobile in recent years. This mobile-first approach is quickly taking over as the preferred method for digital advertising and is on the cusp of being the most focused on medium for ad campaigns. The industry enjoyed years of lucrative and successful ad campaigns that were produced from the droves of user data made available by internet platforms. With juggernauts like Facebook, Twitter, and Google, everything a person views, likes, follows, shares, and searches can be monetized and packaged into effective advertising campaigns.

However, 2018 has brought a different tone to the industry. Revelations that Facebook and Twitter were used by the Russian government to manipulate public opinion during the 2017 presidential election – especially through digital advertising – has cowed audiences unquestioned support of the advertising content shown to them. When Facebook CEO Mark Zuckerberg proudly proclaimed, “Personally I think the idea that fake news on Facebook, which is a very small amount of content, influenced the election in any way – I think is a pretty crazy idea,” the message was clear: Silicon Valley was out of touch with the changing realities surrounding digital advertising. However, user data and digital platforms are essential for advertising agencies for the better part of a decade, and that is unlikely to change in 2019.

Growth in the digital advertising industry will continue alongside innovation. The new level of demographic data and real-time bidding has killed the need for blind ad buys. People are also becoming increasingly jaded when it comes to advertising, forcing companies to couch their messages in creative ways. But, the future is bright for digital advertising.

The effectiveness of video advertising and social platforms

Some digital marketers get too caught up attempting to rationalize not using video advertising. The truth of the matter is, over half of consumers state that they would like to see more video content from marketers of all sectors. This is a golden opportunity that should be taken advantage of, especially now. Customers, in general, are spending more time watching video. Additionally, video advertising is a high converter of leads to sales. Some of the largest e-commerce marketplaces have reported that adding video ads to product descriptions typically increase buying chances by over 35 percent. Also, people share videos far more often than text. This can get a brand’s message to a broader audience far faster than a 1500-word blog post. Additionally, search engines place a high priority on video content when changing up algorithms to alter the way searches are displayed and pages are ranked.

Social media has become a critical ingredient to every advertiser’s marketing mix. Gone are the days in which social media was simply used for product discovery and awareness. Today, social media marketing plays an increasingly important role in driving intent and conversion within the consumer journey. But the world of social media is dynamic and in constant change. The organic world of social content has been unfolding for some time and reflects a broader trend of the evolution happening in SEO. As Google, Facebook, and Amazon cracked down with more updates and AI-driven technology, marketers have had to become savvier to reach consumers.

What does this mean for social media marketers? It is time to change the game by investing in more useful, high-quality content that consumers actually want to see and engage with. Despite all the headlines about Facebook’s algorithm changes, it did not wipe out brands that effectively used organic content – it weeded out those that did not. With billions of daily video views happening on Facebook, Snapchat, and Instagram, marketers should not ignore the engagement that ephemeral (or short-lived) content can provide, especially with millennials and Generation Z-ers. Ephemeral content allows the user to engage with a brand on a more authentic level. A well-crafted ephemeral content strategy can deliver stronger brand engagement and loyalty using the right mix of images, influencers, and rich media, such as video. Marketers and their creative designers should re-envision their video strategy for ephemeral, given the content is short-lived and designed to create FOMO (fear of missing out), no matter the industry.

Leveraging CTAs is key to return on investment, and for ephemeral content that means the use of Snap Codes or Instagram Nametags. Through buyer personas and other audience segmentation tools, marketers can leverage ephemeral content as the purest form of social media storytelling. Marketers should expect more changes in the social media landscape in the near term, which means the role of social media marketing will continue to evolve. Combining the power of continuous reach and the ability to optimize and target will elevate the winners on this platform to the next level.

AI will bring a tidal wave of change

Artificial intelligence (AI) is being deployed far and wide in marketing and advertising. In fact, many of the tasks being handled by machine learning and other AI tools are making possible the kinds of user experiences that could not be possible even a couple of years ago. AI is doing the heavy lifting to enable personalization and agile product development to meet the rising demands of consumers. AI is doing way more than just housekeeping. For example, features within the advertising platform can optimize search, display, and video ads, and that AI is even making adaptive ad buys based on human-set goals.

Marketers are using AI capabilities to help build consumer experiences every day: Deep learning is sorting pictures posted on Snapchat, natural language processing is providing the backbone for customer service chatbots, and machine learning is helping companies accelerate product development. Marketers are pushing forward with AI spending and integrating it into their customer experience. The availability of software-as-service and cloud computing bandwidth has led to an explosion of AI use.

Machine learning, thanks to the rise of cloud computing, is maturing at a quick pace. The discipline had been around a while, but it was out of reach to all but the most sophisticated organizations. Most of the constraints that held back machine learning dissipated once companies leveraged cloud computing, because developers now can store as much data as needed to make their computer models work and use as much computing power as they need on demand. Some uses of machine learning will help organizations to bring products to market faster.

Integrating neuroscience and advances in quantum computing offer promise for expanding AI in the future, but those integrations are still a few years away from popular use, particularly the latter. In the short term, humans are still the ultimate software. Ultimately, AI will never be a replacement for human creativity and ingenuity. In advertising, great creative that drives an emotional connection always requires a human spark. What AI can do is free people up to focus on the problems humans are best at.

The blockchain will make an impact

Everyone is raving about the blockchain’s potential to disrupt practically every industry imaginable, and the advertising industry is no different. As blockchain technology gains enterprise level exposure, new applications are improving the ad industry’s ability to do everything from collect user data to protecting user privacy. Although it is most famous for its role in the exploding crypto movement, the blockchain offers many enterprise-level solutions. As a report by McKinsey and Company notes, the blockchain could revolutionize the world economy, and that is certainly true when it comes to advertising.

Strategy to be assessed on predicted outcomes, not retrospective results

For years, great creative was the marketing holy grail. Success was largely the result of the quality of the creative, not the underpinning insight or corresponding strategy. In fact, strategy was often used as a means to retrospectively prove the value of the creative idea. This is not to say that the industry did not want or value true insight, more so that research was used as an evaluation tool, rather than a powerful way to fuel strategy.

More recently, the explosion of data and quality of thinking around consumer insights has helped elevate the role of strategy. While there is some way to go before we reach the point where insight, strategy, and execution exist in perfect harmony, today it is more common to see insight fuelled strategy, where audience insight is used as the springboard for the strategy. Both the insight and strategy are also clearly recognizable in the subsequent executions. With so much data available to develop powerful insights, this should now be the norm when developing strategy. Demonstrating how audience insights have helped create the concept is something that clients have every right to expect from agency partners. A number of dominant and emergent trends help pinpoint how strategy is likely to change in the next few years:

ROMI. Justifying a return on marketing investment is now often a prerequisite for any campaign.

Predictive analytics. The ability of data scientists to forecast the likely outcomes of marketing activities is a fast-emerging discipline.

Behavioral economics. Relatively lower costs of creating prototypes and beta versions are enabling people to implement more tests and learn experiments.

Performance-based remuneration. Paid-for advertising is changing the way that clients remunerate many of their agencies, based on pre-promised outcomes.

Based on these trends, the industry is heading toward a situation where the quality and effectiveness of strategy will be assessed on the forecasted outcomes, not the retrospective results. Put simply, strategy will be expected to demonstrate the tangible improvements the thinking and work will deliver. Great agencies will continue to create great work, but in future the creative ideas will be accompanied by a business forecast, to be approved by clients. Clients will continue to reduce their risk by asking their partners to structure fees and incentives based on how well they deliver against their own forecasts.

These changes present a new challenge for the marketing industry. Forecasting the outcomes of work before it has been launched will require a different mentality, focused on experimentation, optimization, and forecasting – rather than the outdated model of learn, develop, and test. Hence, brands will hold their agencies accountable based on their predetermined forecasts versus actual performance. This new approach requires a new kind of joined-up agency model. Agencies will need to work together to ensure data, insight, strategy, execution, and forecasts are seamlessly aligned and integrated. Within organizations, business cases will change and evolve too. They will become anchored around the demonstrable improvements the work will drive, not just how good the strategy, concept, or idea is. Demonstrable strategy will enable marketers to make more informed and robust decisions, while creating more credibility with the rest of the C-suite. The future can be expected to be less about RoI and more about how campaigns perform against their forecasts.

Advertising to Generation Z

Marketers need to start planning and preparing for the new, unique lens through which Generation Z sees the world. Generation Z sees no difference between the physical and digital worlds. This is a generation that is native to technology and has complete comfortability with their phones. In order for marketers to successfully engage this group it is important to be equally relevant both online and offline. The brands need to keep the messaging and stories realistic and hyper-customized, as this is a cohort who understands that their digital engagement shapes the content and messaging they see. Gen Z realizes that brands collect their data, and they are willing to negotiate their information in exchange for value and customization of experiences. They expect the right message at the right time, and they also appreciate the ability to share the experiences they have with brands. Instead of Facebook, they are spending their time on platforms such as iMessage, Snapchat, and Instagram.

Social is a part of their life. It is how they find and consume content. Smart brands also recognize Gen Z’s reliance and trust in social media and are taking existing social behaviors and applying them to commerce. Content will play a big role in moving Gen Z through the purchase funnel. Marketers need to establish that voice with them and have them habitually interact with the content. By forming a habit with a brand as a content creator, the commerce end of the engagement will happen naturally. Gen Z is the first generation to always be able to get an answer to anything. They have Google and other platforms to answer any questions or disputes instantaneously. Social equality is very important to them. Equality is non-negotiable, and inclusivity is top-of-mind. Generation Z can smell disingenuous messaging, so brands should stick to standing for something that aligns to their DNA. Align to what you believe. As for traditional brands with a legacy heritage, they should focus on seeding the ground for what their future audience will look like.

Digital video may be growing, but it has not dwarfed TV just yet

Global digital ad spending for 2019 will rise 17.1 percent to USD 327.28 billion in 2019, with Alibaba, Facebook, and Google as the leading digital ad sellers. The three companies will account for 61.2 percent of the total global digital ad market. Google will become the first digital ad seller to cross the USD 100-billion mark in net digital ad revenues. Mobile represents a significant portion of total media ad spending as well, and it will get USD 232.34 billion in 2019. For the first time, over one-third of ad dollars worldwide will go to mobile in 2019. This is primarily due to high mobile phone internet adoption and improving mobile internet speeds.

However, 75 percent of the average time an adult watches video per day is still spent watching television. It is how consumers watch TV that is changing, thanks to the growing popularity of OTT services. However, these changes are making consumers more likely to try and avoid ads; 58 percent of people are more likely to stream programming to their TVs in an effort to avoid ads. And the trend toward streaming is not going away: 52 percent of time adults spend viewing TV content is through streaming, while the percentage of people who pay for cable TV is shrinking every year. By 2022, the number of OTT television viewers is expected to surpass pay-TV viewership.

All signs point to a shift toward OTT that will eventually surpass traditional television, and marketers need to make the shift, too. Even by 2022, the digital video ad market will still be lagging behind. However, it is not OTT TV that is making the majority of digital video ad spending now – it is social media. Social media video is the big kahuna now. But watch for OTT and connected TV to start rising fast. The video ad market is changing rapidly, but brands can keep up.

The brands who adopt a TV everywhere mentality will be ahead of the competition when it comes to providing consumers with a seamless experience. Marketing professionals who choose to apply programmatic omnichannel identity and data management technology to their buys will also be able to take advantage of new reach and frequency capping capabilities for television. Pay-TV operators throughout the APAC region will begin offering more individual- and household-level addressable environments (making content and subscriptions available through new set-top boxes and devices or apps) in order to fulfill the needs of consumers. Some will follow Western pay-TV operators and adjust their consumer offerings towards à la carte options or skinny bundles.

Print media is also growing because of the credibility it offers. Print ad revenues are expected to go up to Rs 22,424.3 crore in 2019. India is the only market in the world where print continues to be dominant and is growing in all aspects — circulation, readership, and geography. The medium is growing strongly on the back of language. There is no denying that there are platforms causing strain on print but the attributes of well researched, in-depth content, and authenticity can only be endorsed by print and that makes the medium more credible and hence relevant for advertisers. The impact of print is much higher as it allows for discoverability of ads and is the most non-intrusive ad medium. Also, higher quality of engagement and quality of the audience gives it power to influence and drive change. As a result, the focus is shifting from execution to strategy and better connecting marketing and advertising. Marketers will be free to experiment with new formats, new mediums, and new experiences, so a lot of growth is expected in breakthrough experiential advertising, too.

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