From brands getting to grips with ecommerce and personalisation in podcasts, to growing interest in advertising-funded video-on-demand, Marketing Week predicts the media trends that will take shape this year.
Ecommerce ads set to take off
Advertising that sits alongside and within search results and product listings on ecommerce sites is already well-established in China.
In fact, global ecommerce advertising is currently about as advanced as it was in China over a decade ago: in 2017, Amazon accounted for 0.8% of global advertising, the same proportion as China in 2009.
But it is starting to gain some global momentum, with Zenith predicting it will add around $100bn of new money into the global advertising market. If it follows a similar path to the one it took in China, it could account for 18% of global ad spend by 2027.
So there is a huge revenue opportunity here for the platforms, and a whole new way for brands to reach customers at the point of purchase.
The money typically comes from brands’ commercial teams rather than marketing, from budgets set aside for negotiating with retailers. It is therefore spend that doesn’t cannibalise other advertising, but it also raises new questions for marketers and their sales colleagues about strategic alignment of advertising investment as this medium grows.
Cassandra Stevens, global commerce director at Zenith, says with most FMCG companies now realising that ecommerce is important to capture growth opportunities, the only way to grow is to change the way they operate.
“Traditional silos will need to be broken down and a more integrated approach to reaching customers will need to be adopted by sales teams and marketing specialists,” she says.
“Real-time B2B dashboards will enable sales teams to have more efficient agreements with retailers, bringing trade budgets more in-line with media and becoming more transparent. Sales teams will focus on product assortment, ecommerce-specific packaging and retailer-exclusivity. Marketing teams will be able to access data to drive more informed optimisations of their media, including sales data from their distribution partners.
“Finally, all of this will drive a need for ecommerce specialists and create high demand for experienced talent with a unique blend of skills. It will be a talent frenzy, and a very good time to be working in ecommerce.”
Ecommerce and social media are also merging more and more, with the latter increasingly used for ‘shoppable’ customer experiences, something WeChat and Weibo have pioneered in Asia.
Dr Martens is one brand looking at how social platforms can be used to create their own ecosystem of marketing, social and commerce in one.
“How brands are going to bring a one-stop destination through social for their storytelling, product marketing and commerce but in a balanced way where the social platform isn’t just seen as a second ecommerce site,” says Darren Campbell, chief product and marketing officer at Dr Martens.
“Asia is leading the way with reference to creating a consumer journey which allows you to be messaging your boyfriend or girlfriend on a social platform when posting something and then you going straight through to a seamless transaction.”
Where brands will have to be careful, Campbell says, is making sure they aren’t just using this as a means to sell.
“Consumers will call brands out of they think they are driving them to a social platform just to transact,” he says.
AVoD will pick up speed
Subscription video-on-demand (SVoD) services like Netflix have been garnering plenty of attention as they colonise global living rooms, but competition is also starting to heat up in for online video ad spend.
Advertising-funded video-on-demand (AVoD) – think Now TV, Hulu and Sony’s Crackle, as well as growing interest from Amazon – is still very young compared to other media, but advertisers are fast beginning to see its future potential.
So much so that it is outpacing other media with spend set to double to $47bn by 2023 worldwide, according to Warc.
The expected $23.8bn in brand investment that AVoD will receive this year equates to a 5.2% share of global ad spend, which is increasing year on year. And as a percentage of total over-the-top (OTT) spend (an estimated $68.7bn in 2018, according to Digital TV Research), AVoD will account for 34.7%.
“Consumers’ voracious appetite for video content anywhere, on any device, has been propelled by SVoD services such as Netflix. But it is AVoD platforms which present the opportunity for advertisers to marry rich consumer data with pinpoint targeting during engaging content,” says James McDonald, data editor, Warc.
“This is why AT&T and Amazon are exploring moves into the AVoD sector next year, with the ultimate aim of taking the lion’s share of a market expected to be worth $47bn by 2023.”
Indeed, Amazon kick-started speculation in the summer when it posted a job ad looking for a UK-based executive to lead an ad-funded free-to-air TV offering.
An ad-funded platform, Pluto TV, has also just launched on Now TV in the UK.
For brands, this means a potential explosion of new online video inventory that can host both traditional TV spots and creative tailored for the medium. For broadcasters it’s imperative to keep pace with newer platforms.
“The UK’s broadcasters and pay-TV providers remain in a strong position,” says Jon Watts, managing partner at MTM.
“[They] have developed world-class OTT products – the BBC iPlayer, All4, the ITV Hub, My5 and Now TV – but we’re clearly seeing signs of significant shifts in consumer attitudes and perceptions of quality, in terms of content, value for money and innovation.”
Ad spend will shift from Facebook to Instagram
Instagram is becoming an increasingly attractive place for brands to splosh some dosh and the numbers suggest this trend will continue into 2019, with advertisers increasingly turning their backs on Facebook’s News Feed and making better friends with Instagram’s Stories.
According to Socialbakers, ad spend on Instagram increased in 2018 while decreasing on Facebook, driven by hard-to-rival engagement levels on the photo-sharing platform.
While Instagram has a smaller audience size compared to its parent company, its users are far more engaged, suggesting that Instagram is the go-to for capturing quality engagement within smaller communities.
Last year, Instagram posts continued to reach and garner more impressions per fan than its Stories feature (around 15% and 25% more, respectively).
However, the volume of brands posting on Stories has quadrupled over the last year, with brands investing 212% more in Stories compared with the previous year.
A quarter (25%) of brands’ Instagram ad spend now goes on Stories and this will continue to grow through 2019. As just a few examples, easyJet recently made it possible for users to find and book holidays simply by clicking on a photo, while Spotify, SoundCloud and Shazam are offering their services via Stories. Expect to see more of this integration in the coming months, especially as Instagram promises to enhance its ecommerce features.
Alice Cuffe, editor at We Are Social, says while no one can argue that the specialised and detailed targeting of Facebook is appealing to advertisers, when it comes to creative innovation, Instagram Stories has the edge.
“Instagram has evolved Stories to allow brands to connect with audiences in a space where they feel comfortable enough to express their truest, least curated selves,” she explains.
“While Facebook is simple and reliable, Stories is currently owning the reactive space. Functionalities such as polls, questions, emoji sliders and swipe-up links all provide an easy and immediate way to connect with your audience and allow them to react to your brand in the moment. The temporary nature of Stories also means brands have more freedom to experiment, without necessarily requiring heavy design work or rounds of internal concepting.”
Podcast ads get more personal
Podcasts have been having somewhat of a revival since true-crime podcast Serial burst on to the scene in 2014. This is no secret to advertisers, which in the US made a record $314m in revenue from podcasts in 2017. That is set to grow by more than 110% by 2020, according to the IAB and PwC.
But now, as personalisation tops many marketers’ lists, there are signs that brands are beginning to realise there is so much more to be leveraged from the intimate environment that podcasts offer.
Last year, in a claimed world-first, digital audio and voice technology company Acast began running personalised podcast ads across its global network of 125 million monthly users and 3,000 podcasts.
What this looks (or sounds) like is combining advertiser messaging with data such as the weather, time of day, location, show name, show category or device type to create thousands of unique combinations that can be used to target listeners.
Meanwhile, Global, which bought Primesight and Outdoor Plus to add to its radio brands last September, also moved into podcasts at the end of 2018.
It has already experimented with linking up outdoor and radio advertising to drive campaign outcomes for brands by targeting specific locations and local offers. Using geo-fencing, it can get data on whether someone has walked past a specific store or outdoor ad and then serve them a relevant audio ad while they are listening to a podcast or the radio.
Global found that people who were served a geo-targeted O2 ad were 67% more likely to go into a store afterwards than those that didn’t hear the ad. This should be exciting for advertisers. Podcasts are something that people deliberately opt-in to listen to which means they are – for the most part – more engaged than they are with the majority of other mediums.
“For advertisers, podcasts create opportunities for brands to deliver their message in contextual environments across a range of verticals,” says Ollie Deane, director of commercial digital at Global.
“Advertising in podcasts has increased in sophistication this year, with the help of new measurement tools to demonstrate its effectiveness. Ads in the form of a message delivered by the podcast host have proved to be an incredibly authentic way for brands to deliver a call to action.
“Rather than simply buying audio impressions, podcasts deliver immersive experiences for listeners and opportunities for brands to be part of amazing settings, be it a thought-provoking conversation or a major sporting event.”
Natalie Cummins, CEO of Zenith UK, says: “We have run branded podcasts for some of our clients, including NatWest and Mercedes, and found the content doesn’t easily date, and organic listens grow over time. Podcasts can also be a great way of telling a story in a richer or different way to how it is told in AV.
“As with everything, as this channel develops so will the opportunities to personalise content… In the future, we may see opportunities for users to ‘choose the ending’ of shows in return for listening to ad content.”
Declining ad opportunities with news brands
The decline of print circulations and challenge to monetise digital advertising revenues has long been putting immense strain on UK news brands.
While issues around brand safety, viewability and ad fraud, as well as the post-GDPR cleanup, have worked in publishers’ favour as brands begin to return to premium inventory, the growth of Facebook and Google continues to weigh heavy on newspapers and digital news sites alike. Ad spend with national news brands will decline 9.4% in 2019, according to GroupM forecasts.
As such, we should expect to see more publishers shift to subscription-based or membership models to find a more sustainable revenue stream to fund their digital news, meaning there will be fewer traditional opportunities for brands to advertise in trusted news brands.
A recent study by the Reuters Institute for the Study of Journalism, tracking how digital-born news sites have evolved between 2016 and 2018, finds they now face many of the same challenges as legacy media, including the need to establish sustainable funding models, attract new audiences and diversify distribution strategies.
The New York Times, The Times and The Economist are three examples of publishers operating incredibly successful subscription models, while the Guardian’s reader-funded model has received financial support from more than one million people in the past three years.
Many others are using freemium models and more are likely to start experimenting with paywalls having seen that consumers are willing to pay for quality news.
Although Project Ozone – the joint ad sales house of News UK, the Guardian and The Telegraph – is entering its first full year on a journey to reclaim revenue from Facebook and Google, the wind is increasingly blowing towards subscription. That means in the long term marketers will have to look to other media – or pay more to news brands – to find both mass reach and quality content to advertise against.
“There is a growing acceptance by readers that trusted, quality media is worth paying for, and a concurrent acceptance by publishers, that advertising alone will not sustain professional, honest journalism,” says Dominic Carter, group chief commercial officer at News UK, publisher of The Times, Sunday Times and the Sun.
“Genuine journalism and credible storytelling, are the only components that deliver real, engaged readers. It is my contention that those same readers, presented in trusted, context-appropriate news environments, will be desired more than ever by advertisers.
“Those readers are premium customers: they are discerning and hard to reach because they have paid to be where they want to consume. Scarcity therefore, is not something to be feared, but something that will increasingly be valued by advertisers.”