Digital Marketing Solutions Summit | Forum Events Digital Marketing Solutions Summit | Forum Events Digital Marketing Solutions Summit | Forum Events Digital Marketing Solutions Summit | Forum Events Digital Marketing Solutions Summit | Forum Events

Posts Tagged :

Advertising

UK consumers demanding more curation of the ads they see

Consumer demands for curated ads from trusted brands is prompting retailers to tap retail media opportunities and open up new revenue streams from monetising their first party audiences.

That’s according to the latest research from ADvendio, which surveyed over 1,000 UK shoppers to show the impact of customer engagement via traditional advertising was diminishing, with respondents saying they ignore over half (56%) of digital advertising they see, while 54% of search ads also go unnoticed by UK consumers.

And this diminishing engagement is being caused by unpersonalised and poorly targeted advertisements and engagement strategies; 68% of shoppers say they often received ads from retailers and brands that are unpersonalised or irrelevant, and 74% report they regularly receive ads for products they aren’t interested in.  A further seven in ten (68%) also said they frequently get served content digitally that’s not relevant to them.

And, because consumers are experiencing poor quality ad experiences with 3rd party brands, they are now wanting curate content and personalised ads served to them by the retailers they are already loyal to. Half (50%) of those polled said they would like to receive highly curated, personalised advertisements and brand communications from the retailers they already shop with, rising to 65% of Gen Z and 62% of Millennials.

And, with two fifths (38%) saying they would be most likely to buy from a product recommendation they received from a retailer they already regularly shopped with, this is prompting retailers to adapt how they leverage and monetise their own first party data and audiences.

Commenting in ADvendio’s latest report ‘Where the Retail Media opportunities lie in 2023, IGD’s Global Insight Leader, Toby Pickard, said: “This is a significant opportunity for retailers to enhance their collaboration with suppliers, unlocking new opportunities for revenue and profitability as they win over marketing spend from ‘traditional’ media like digital, out of home or broadcast.  The ability to influence shoppers before they start shopping, when they get to the store or website and at the virtual or real shelf – or ‘prime, prompt, purchase’ as Tesco puts it – is a powerful one as it enables brands to focus marketing spend on particular groups such as current shoppers, lapsed shoppers, competitor shoppers or possible shoppers.”

Bernd Bube, Founder and CEO of ADvendio, added: “Diminishing returns on traditional media ad spend, cookie depreciation and engagement levels on social media and PPC plateauing prompting lower ROI on what were previously lucrative channels is proving a perfect storm for retail media.  Those retail businesses with strong data sets realise they have a great position to benefit from this digital marketing crossroads.  Not just representing a sizable revenue opportunity, Retail Media Networks are changing the role of the retailer into media powerhouses, offering opportunities for advertisers and 3rd party brands to reach and influence highly-engaged and conversion-ready consumers.”

UK digital ad spend up 11% to £26.1bn in 2022

The UK digital ad market maintained double digit growth of 11% in 2022, despite a challenging year as advertisers navigated the cost-of-living crisis, political uncertainty, and the impact of structural changes such as the removal of Identifier for Advertisers (IDFA).

The IAB’s latest Digital Adspend report, produced with PwC, shows that digital advertising spend stands at £26.1bn – a 56% overall increase since the pandemic began in 2020.

Key findings include:

  • Search continued to maintain market dominance with spend up 13% year-on-year to £13.1bn. Meanwhile, display investment grew by 6% to £10.4bn, with growth in this area fuelled by standard display ads (+ 14%). Video spend grew by 9%, largely driven by investment in outstream formats
  • Reflecting the growing diversity within the online ecosystem, Digital Adspend 2022 includes an official sizing of the UK’s digital retail media market for the first time, with spend standing at £176.4m. This figure relates to UK-based retailers and specifically charts onsite spend. Our forecast analysis indicates that spend in this area will continue to grow in 2023, becoming a key driver of digital’s overall market growth as advertisers increasingly harness retailers’ first-party data
  • In another first, the rate of growth in desktop spend (+ 14%) outstripped mobile (+ 8%) for the first time since records began, a development that coincides with Apple’s IDFA changes in-app and shows how structural changes are shaping the market. However, mobile still has the largest share of the market at 58%
  • Elsewhere, podcast spend grew by 32% to £76.3m, which is more than a three-fold increase since IAB UK first started measuring the market in 2020. Another area of strong growth was in a category that includes wearable devices and in-car advertising, indicating how advertiser spend is embracing the opportunities posed by new technology

Jon Mew, CEO at IAB UK, said: “The latest Digital Adspend results highlight two things: resilience and opportunity. Not only was 2022 challenging for our industry, as it was for the entire UK economy, it also followed a year of stratospheric, pandemic-induced growth in 2021. In this context, it’s testament to the resilience of digital advertising that the market has maintained double digit growth in 2022 – and astounding that it has grown by 56% since the pandemic began.

“Today’s results also reflect the growing opportunities for advertisers to resonate with audiences in new ways. Of course, search and display spend still underpin the digital ecosystem, but the UK’s flourishing retail media market – officially sized for the first time in this report – alongside the continued growth of podcasting, show how digital is diversifying to offer advertisers more choice and more immersive routes to connect with consumers.”

Hannah Biernat, Senior Manager, PwC, added: “This year’s Adspend results reflect a stabilisation of the market growth in line with pre-pandemic levels, demonstrating the robustness of the industry and its ability to weather wider spread economic and political uncertainties. Clients appear to be embracing connecting with audiences in emerging formats as demonstrated by the growth in podcast investment and formats across connected devices. It will be exciting to see how the industry continues to innovate and diversify in formats and channels in the coming year.”

Simon Lonsdale, Strategy Director, Tesco Media and Insight Platform powered by dunnhumby, commented: “It’s hugely significant that digital retail media is in the IAB’s 2022 Digital Adspend report for the first time. While various forecasts and estimates have been published over the past few months, this is the first official cross-market spend figure for the UK-based market, which reflects the growing importance of retail media to advertisers.

“Our priority is to evolve and grow our retail media business to allow advertisers to reach the customers that matter most to them at scale. We look forward to working closely with the IAB to pioneer the frameworks that are essential to underpin long-term growth and allow retail media to reach its full potential.”

Ads still presenting biased representation of women

Women still lack unbiased representation in advertising in 2023, despite women being featured in advertising more than ever before.

That’s according to analysis by CreativeX of over 10,000 ads supported by more than $110m in ad spend from 2021-2022, which indicates that despite a more balanced presence among gender in advertising, equitable portrayals, and ad spend against diverse content remain low, particularly for intersectional identities.

Bucking the trend of other studies into representation within advertising, the dataset revealed that women appeared more frequently in ads than men. Of all unique individuals identified in ads from 2021-2022, 57.3% were women, and 42.7% men.

The higher frequency of women is most likely connected to the industries included in the study. A 2017 study from the Geena Davis Institute found that women appeared more often than men in ads from Healthcare and CPG brands.

Despite women proportionally featuring more in ads, this visibility did not extend to women with darker skin tones. Across all of the dataset, women with darker skin tones (type v and vi) featured 80% less than women with the lightest skin tones (type i and ii).

CreativeX says measuring appearance and casting only speaks to one part of the puzzle when creating representative content. i.e. inclusive ads that fail to receive sufficient ad spend will not be able to compete with inequitable content in an ever more crowded ad space.

For example, while its research demonstrated that ads featuring women aged 60+ received 221% more ad spend in 2022 compared to 2021, this was still only equivalent to less than 1% of total ad spend.

Individuals at the intersection of multiple historically marginalized identities, such as gender and race, face compounded disadvantages. This is evident when considering representation in advertising.

The research demonstrated that ads with lighter-skinned men in professional or leadership roles received as much as 4x more in ad spend as compared to ads with darker-skinned women in the same roles.

Previous studies have considered the context in which men and women appear in ads. Unilever’s own research found that just 3% of advertising featured women in leadership roles, and only 2% showed women as intelligent.

Despite being among the most educated group in the US, women of color make up just 4% of C-Suite executives, and black women make just 63 cents for every dollar earned by white men. Lack of representation in advertising exacerbates these real-life inequities.

Download the full CreativeX 2023 Gender in Advertising Report here.

Total UK advertising spend will hit £35bn in 2022

The latest Advertising Association/WARC Expenditure Report has forecast the value of the UK’s advertising market will grow by 9.2% in 2022, to a total of £34.9bn, a slight downgrade of 1.7pp from the previous forecast in July.

This is due to high levels of inflation and squeezed margins as the UK deals with supply chain inflation and subsequent rise in the cost of living. Within the media sector, advertisers are also facing higher media costs.

UK ad spend rose by 8.8% in Q2 2022, to a total of £8.6bn, while spend during the first half of the year was up 14.4% at £16.7bn. Advertising spend is projected to near £10bn during Q4, featuring the combination of Christmas and the World Cup.

Online advertising’s share of total ad spend is set to grow to a total of 74.% for 2022 and is expected to rise to 75.2% in 2023. Figures from our Digital Adspend study with PwC for Q1 2022 shows online classified advertising – including recruitment advertising and property listings – was up by almost a third. Broadcaster video-on demand continued to grow (+9.3%) as audiences turned to catch-up and streaming platforms.

Ad spend for the final quarter of 2022 is set to increase by 4.5% from last year’s record high, to a total of £9.5bn, setting a new record level of investment during the Christmas period. Search advertising – including ecommerce – is forecast to be one of the quickest growing media over the quarter, rising by 7.3% to a total of £3.4bn. Video-on-demand stands out amongst the wider market with expected growth of 4.2%.

Stephen Woodford, Chief Executive, Advertising Association, said: “It is encouraging to see strong figures in Q2, with media channels continuing their recovery from the COVID-19 pandemic. Looking forwards, political and economic stability is much-needed, given the inflationary and recessionary forces impacting all businesses. As companies navigate these pressures, we see them continuing to prioritise advertising investment to protect their brands in exceptionally challenging market conditions.”

Media Q2 2022

year-on-year % change

H1 2022 year-on-year % change

 

2022 forecast year-on-year % change Percentage point (pp) change in 2022 forecast vs July 2023 forecast year-on-year % change
Search 10.8% 16.5% 11.7% -1.5pp 6.2%
Online display* 5.4% 8.1% 7.1% -4.3pp 5.9%
TV -0.6% 8.7% 2.9% -3.0pp 0.5%
  of which VOD 9.3% 17.2% 10.1% -3.2pp 7.2%
Online classified* 32.4% 41.4% 20.1% +14.5pp -4.5%
Direct mail 3.8% 9.5% 2.8% +3.0pp -4.5%
Out of home 46.4% 79.1% 31.2% +2.3pp 4.8%
  of which digital 48.2% 78.8% 32.3% +1.8pp 8.4%
National newsbrands 9.1% 12.6% 3.4% +2.3pp -2.5%
  of which online 13.2% 16.3% 8.2% +1.6pp 3.7%
Radio 7.0% 13.1% 6.2% +0.8pp 0.1%
  of which online 5.9% 14.6% 8.1% -2.6pp 6.3%
Magazine brands 3.3% 5.0% 0.7% +2.0pp -5.9%
  of which online 3.9% 9.9% 5.4% +1.4pp -1.7%
Regional newsbrands 0.6% 10.3% 2.6% +2.6pp -7.1%
  of which online 5.3% 13.8% 7.2% -0.8pp -0.5%
Cinema 2,208.2% 3,978.0% 174.0% -17.2pp 21.1%
TOTAL AD SPEND 8.8% 14.4% 9.2% -1.7pp 3.9%
Note: Broadcaster VOD, digital revenues for newsbrands, magazine brands, and radio station websites are also included within online display and classified totals, so care should be taken to avoid double counting. Online radio includes targeted in-stream radio/audio advertising sold by UK commercial radio companies, together with online S&P inventory.

Source: AA/WARC Expenditure Report, October 2022

The Advertising Association/WARC quarterly Expenditure Report is the definitive guide to advertising expenditure in the UK with data and forecasts for different media going back to 1982.

Under the microscope: Lessons from iconic British TV advertising

TV is a huge part of everyday life, with iconic British soaps like Coronation Street and Eastenders still going strong today. Alongside these shows, certain British adverts have made a lasting impression on viewers. We all have memories of particular ads that just won’t leave our heads, and some have claimed space as an essential part of British culture.

These iconic British adverts can be a source of inspiration for marketers, alongside digital marketing books and social media. From BOGOF deals to drumming gorillas, here’s what we can learn from the iconic marketing campaigns that have appeared on our screens…

1) Mascots make money

118 118

Let’s start with the 118 men – no one can forget those strong moustaches and tiny red shorts. Although phone directories haven’t been commonplace in a good few years, it was hard to turn on the TV in the early 2000s without their presence.

Such was the impact of the 118 118 men, they even became a popular fancy dress outfit that you might still see out today. The two mascots featured in many different adverts, and created spoofs of other content, such as the movie ‘Rocky’ and even one Honda campaign. Despite the differences in ad themes, the two mascots were easily recognisable, and the numbers on their shirts were an unshakable link back to the brand. This effective campaigning positioned 118 118 at the top of their industry thanks to their memorable mascots.

Compare the Meerkat

You’d think Russian meerkats would make a rather strange figurehead for a comparison site. But, Compare The Market took a risk with a play on words and then continued to roll with it. Their successful campaign, Compare the Meerkat, first introduced Aleksandr Orlov, a talking meerkat with his own website – comparethemeerkat.com.

The campaign has since skyrocketed, and Aleksandr and his Meerkat coworker, Sergei, have gained somewhat of a celebrity status. They have hundreds of thousands of social media followers, and have even established detailed backstories for their lives. An insurance comparison site isn’t likely to amass lots of social media followers for its riveting content, so creating interesting mascots is a great workaround for attracting audiences.

2) We’re a nation of animal lovers

Three’s moonwalking pony

What are two things the nation loves? Animals and Fleetwood Mac. Three combined the two in a genius marketing campaign that depicted a moonwalking pony to Fleetwood Mac’s ‘Everywhere’. Their ad carried the tagline ‘Silly Stuff. It Matters.’ Clearly taking a step away from the more technical side of their services, the brand decided to appeal to public opinion with this lighthearted ad.

The video gained over 3 million views within a week of its release, and around 250,000 shares. A clever addition from Three was the hashtag #DancePonyDance, which trended on Twitter and helped circulate the video across other social media platforms. If there’s one thing we can learn from Three’s viral campaign, it’s that animals doing funny things will always get clicks and shares.

Churchill

Churchill Insurance really knew how to play up the patriotism with their bulldog mascot. Well known for his catchphrase ‘Oh yes!’, Churchill the dog still holds a place in Brits’ hearts with his famous nodding head. The Churchill craze was so widespread that lots of Brits bought their own mini nodding bulldog as a car accessory. This associated Churchill the dog with cars and everyday life, meaning Churchill Insurance was impossible to forget about. He even featured in 22 pantomimes around the UK back in 2009, proving he was more than just a brand representative. Creating a lovable animal mascot really worked in Churchill’s favour, establishing them as an iconic part of British history and culture.

3) Humour can send you viral

Moneysupermarket

When you think of memorable marketing campaigns, it’s usually the funniest ones that immediately stick out. One example is Moneysupermarket’s ‘Dave’s Epic Strut’ ad, which featured a businessman strutting down the street in hot pants and heels. Dave felt so epic after saving money on his car insurance that he sassily struts his stuff to ‘Don’t Cha’ by The Pussycat Dolls. The brand’s image isn’t lost in this ad though, as a deep voiceover says ‘You’re so Moneysupermarket’. After receiving an immediate boost in website traffic, the brand has continued to release humorous ads with the tagline ‘You’re so Moneysupermarket’.

But, there’s always a risk that comes with experimental marketing campaigns. For instance, ‘Dave’s Epic Strut’ attracted over 1,500 complaints to the Advertising Standards Authority (ASA) claiming ‘overtly sexual’ content. The ASA, however, did not uphold these claims and deemed the advert not offensive. The advert gained lots of press coverage for its bold approach, which was only boosted by the outrage. Not everyone has the same sense of humour, but implementing it can certainly go far in running an effective campaign.

Cadbury’s Drumming Gorilla

Possibly one of the most ridiculous campaigns to hit the screens, Cadbury’s drumming gorilla ad is also one of the best performing. Viewers were drawn in by the randomness of the ad, and it went viral quickly.

In fact, the campaign was a massive lifesaver for Cadbury, who previously had to recall over a million chocolate bars because of a salmonella scare. Luckily for Cadbury, the campaign received an overwhelmingly positive response from the public, and even won the top prize at Cannes Lions in 2008. But on top of its viral outreach, Cadbury also benefited from a 10% sales increase. This ad was undoubtedly an example of PR done right, and put Cadbury back in the public’s good graces.

4) Empathy can do a lot

John Lewis’ bear and the hare

It’s amazing how much impact advertisements can have on the British public. Once a certain time of year rolls around, you’ll often find eager Brits anticipating the newest John Lewis ad. There’s a reason for this – the brand’s ad campaigns target nostalgia and empathy to really tug at their audience’s heartstrings.

One of their most iconic campaigns, ‘The Bear and the Hare’, was accompanied by Lily Allen’s cover of ‘Somewhere Only We Know’ and follows the friendship of a bear and a hare. A study found that 48% of people who viewed the advert felt ‘intense positive emotions’, compared to an average 29% for other UK advertisements.

Both the song and the animation were a great success, sending Lily Allen’s cover into the charts. John Lewis was on everyone’s minds, with the advert playing on Christmas TV programming, and the song constantly played on the radio. From their clever campaigning, John Lewis has become synonymous with the festive season in the UK. Their yearly ad campaigns are proof that advertisements don’t need to be flashy and obnoxious to be effective.

5) Earworms are the perfect tool

There’s no better way to stay on someone’s mind than with a catchy jingle or phrase. Some of the biggest brands in the world have memorable catchlines, and when done right, they can skyrocket in popularity.

GoCompare

Car insurance has a wide target audience – car drivers live all over the country and exist within a very broad age bracket. So, how could GoCompare design a campaign that would appeal to so many people? Their inescapable advert ‘Tenor’ featured an opera singer telling viewers to choose GoCompare for insurance comparisons.

The advert has been criticised as annoying, but its longevity and GoCompare’s success seem to outweigh the complaints. Whether you view it as light-hearted fun or an irritating nuisance, audiences across the UK have probably had the tune stuck in their head at some point. The Guardian even reported that the catchy jingle was the most-played music in adverts in the whole of 2012. Annoying or not, it was certainly effective.

SafeStyle ‘Buy One Get One Free’

Although everyone loves a good sing-song, it’s not necessarily just songs that can be catchy. Many Brits will remember SafeStyle’s TV frontman Jeff Brown, who told viewers that ‘You buy one, you get one free’.

‘Buy One Get One Free’ aka ‘BOGOF’ is a common marketing tactic used by brands to sell products. However, SafeStyle’s comedic adverts firmly planted their ads into the minds of the British public whenever they heard the phrase. Maybe it was the strong Northern accent, or the bizarreness of the ad on the whole, but this advert soon became famous (or infamous) for its phrase.

SafeStyle recently tried to move away from their previous campaigns, taking a more serious approach. But, it’s safe to say that many Brits will remember them for their iconic marketing campaign back in the day.

6) Brits love a celeb cameo

PG Tips

PG Tips ads famously featured dynamic duo Monkey and Al. Although Monkey became a popular mascot for the brand, it was Johnny Vegas’ portrayal of Al which really left a lasting impression. The comedian’s strong Lancashire pronunciation of Monkey as ‘Munkeh’ was widely quoted and associated with the brand. Although it’s not everyone’s tea bag of choice, it’s hard to think of a more iconic campaign for the quintessential British beverage.

What’s so clever about celebrity mascots for brands is that they’re going to appear in non-advertisement spaces. Johnny Vegas has appeared on a wide range of TV shows, from Celebrity Gogglebox to Benidorm. We’re well aware of Vegas’ success as a comedian, but there have also definitely been moments of: “Oh look, it’s the PG Tips guy!” One of Vegas’ most associated catchphrases is indeed ‘Munkeh’, so PG Tips did a great job in establishing their brand identity with a popular comedian.

Just Eat and Snoop Dogg

Just Eat were finding that lots of consumers found their jingle annoying, so they needed a way to make it cooler. And what better way than enlisting the help of Snoop Dogg?

Creating a rap version of the brand’s jingle, the ad undeniably made a fun watch on screens. Thanks to this move, the brand saw a 50% increase in consumers who said they were willing to order from Just Eat. Two thirds of viewers also said that Snoop Dogg’s involvement made them feel more positively about Just Eat as a business. It just goes to show how much celebrity endorsement can influence the public!

7) Viral doesn’t always mean profit

Evian babies

In the days when going viral seems to be the be all and end all of marketing, it’s important to remember that campaigns should be driving sales too. Most of us fondly remember Evian’s dancing babies campaign, and the brand even recreated the ad once more in 2019. We can’t deny that the advert was a huge viral success, and it was difficult to find someone who hadn’t seen the hilarious video. However, the same year that their ad campaign went viral, Evian’s sales dropped 25%. Seems shocking for a campaign that attracted 50 million views in a year, right?

A theory for Evian’s mishap was that they didn’t establish their brand strongly enough within the video, like we saw with Moneysupermarket or GoCompare. It’s an important lesson to learn – although a viral campaign can be exciting, it still needs to successfully push consumers to support your business.

UK marketing budgets revised up in Q2, says IPA

Total UK marketing budgets continued to grow at a solid pace in the second quarter of 2022, according to the latest IPA Bellwether Report. Despite this, with strengthening economic headwinds, UK companies’ financial prospects deteriorated sharply, contributing to cuts in adspend forecasts.

The IPA Bellwether Report reveals the marketing spend intentions across the UK’s top industries and in its 22 years of reporting has been one of the first indicators to show both recession and recovery.

According to the Q2 2022 Bellwether data, around a quarter (24.2%) of surveyed companies raised their total marketing expenditure during the second quarter, while 13.4% registered budget cuts. At +10.8%, the resulting net balance remained in solid positive territory, but indicated a slight slowdown in growth when compared to the opening quarter of 2022 (+14.1%).

Events was a key driver of total marketing activity growth, with the latest data signalling another record upward budget revision. At +22.2%, the respective net balance was up from +18.7% previously and the strongest-performing Bellwether category by a considerable margin. The new “living with COVID” normal has given companies the confidence to plan face-to-face events, with many firms reportedly set to use this platform to relaunch their brands. The only other Bellwether category to record growth in Q2 was public relations, which saw its expansion strengthen from the start of the year (net balance of +3.7%, from +0.6%).

Main media – which includes big-ticket advertising campaigns relating to TV – saw marketing budgets stagnate, bringing to an end a year-long sequence of growth. At 0.0%, the net balance was down sharply from +9.4%. Within main media, there were notable differences. While other online (+4.4%, from +18.6%) and video advertising (+0.8%, from +9.0%) growth continued, they both saw steep slowdowns. Audio (-16.4%, from -8.5%) and out of home (-15.9%, from -4.6%) saw downturns deepen, while published brands moved from positive to negative territory (-2.6%, from +1.3%).

Direct marketing was another Bellwether category to stagnate in Q2, also drawing to a close a four-quarter sequence of growth. The remaining monitored marketing activities saw budgets fall in the second quarter. Sales promotions (-0.7% vs. +8.0% previously), market research (-6.5% vs. -3.5% previously) and other marketing activities not already accounted for (-8.3% vs. -0.9% previously) all dragged on total expenditure.

The latest Bellwether survey signalled a broad-based deterioration in financial prospects in the second quarter.

Compared to three months ago, survey respondents became more pessimistic towards their industry-wide financial prospects, with a net balance of -26.7% of companies more downbeat overall. This was the most negative outlook since Q3 2020 and compared with a net balance of -3.6% in the first quarter of the year. While 13.6% of companies were more optimistic, 40.3% expressed gloomier sentiment.

Meanwhile, for the first time since Q3 2020, own-company financial prospects slipped into negative territory. A net balance of -9.5% of companies signalled pessimism regarding their own-company performance, the most downbeat for two years. Underlying data showed that 30.7% of survey respondents were pessimistic towards their own business prospects, compared to 21.2% that were more optimistic.

Since the last Report, the IPA Bellwether author, S&P Global Market Intelligence, has downgraded its assessment for UK economic growth prospects in 2023 through to 2025, which in turn has seen it downgrade its adspend growth forecasts over this period too. It has also cut its adspend growth forecast for 2022 to reflect the strengthening economic headwinds that have built up through the year.

Elevated inflation throughout 2022 points to a bigger hit on consumer confidence and disposable incomes. High costs for businesses will also weigh on the economy, while rising interest rates act to deter investment. The risk of a recession has intensified, and as such, it has cut its adspend forecast for this year to 1.6% (from 3.5% previously).

Much of the economic challenges seen at present are likely to spill over into 2023. With interest rates also set to rise further and households and businesses likely to remain in cost-containment mode until inflation comes down, S&P’s GDP forecast for 2023 has been cut from 1.2% to 0.5%, bringing down its adspend growth forecast from 1.8% to 0.8%.

With the growth path beyond 2023 now looking more uncertain amid the potential for these strong downside risks to persist, 2024, 2025 and 2026 adspend growth forecasts have also been trimmed to 1.4% (from 1.7%), 2.0% (from 2.2%) and 2.3% (from 2.4%) respectively.

Research reveals Gen Z avoids ads at all costs

Any company looking to target Gen Z consumers (those born between 1997 and 2012) shouldn’t even bother with traditional advertising.

That’s the stark finding from a new report released by digital consumer research firm Bulbshare, which gathers insights from thousands of consumers around the world.

Titled Ad blockers and advocacy: Why Gen Z is blocking paid ads in favour of real voices, the report finds that 99% of consumers in this generational cohort will hit “skip” on an ad if it’s an option and that nearly two-thirds (63%) use ad blockers to avoid online adverts.

Their readiness to do so comes largely from the fact that they feel overwhelmed by the number of adverts they see daily. The report shows that nearly three-quarters (74%) of consumers feel bombarded with ads. The same percentage feel irritated with adverts and the incursions they place on their time. One in four, meanwhile, find advertising extremely intrusive, while one in two believe it is somewhat disruptive.

“The best advertising has always been disruptive,” says Bulbshare founder and CEO Matt Hay. “It should be difficult to ignore. But today’s brands face the very real danger of being part of an indistinct but annoying wall of noise”.

Over the past decade or so, brands have increasingly supplemented their traditional advertising efforts with influencer marketing. But customers are becoming more distrustful of the relationships between big brands and high-profile figures.

Bulbshare’s research shows that 84% of Gen Z consumers have lost faith in influencers. They are, unsurprisingly, more inclined to make purchases based on authentic recommendations. In fact, 86% would be more inclined to buy a product recommended by a friend than a paid influencer.

“This desire for authenticity makes it imperative that brands not only have products worth recommending but that they cultivate communities where authentic recommendations can take place,” says Hay. “In fact, there’s real hunger for this among Gen Z consumers. Some three quarters (74%) would promote a product they genuinely care about online. Moreover, 88% are enthusiastic about collaborating with brands, and 76% said they enjoy reviewing products.”

“In a world where 81% of consumers trust real opinions over those promoted via an advert,” Hay concludes. “It makes much more sense to allow consumers to be authentic advocates for a product or brand than to spend money on an ad that will, at best, be ignored and cause active resentment at worst.”

Download Ad blockers and advocacy: Why Gen Z is blocking paid ads in favour of real voices here.

Bridging the gap between advertising & subscription revenue

Digital readership experienced an extraordinary boost during the pandemic – especially in the early stages when online subscriptions soared by almost 150%. Lockdown consumers were avidly seeking both information and distraction, lapping up the diversity of content on offer, from news to podcasts, courses to exclusive member online meetings with journalists. In contrast, advertising spend plummeted and left the publishers relying on this unpredictable revenue high and dry.

That growth pattern may have normalised in latter months. And while ad spend – in particular digital advertising – has also rebounded, this crisis proved how perilous relying on advertising dollars alone can be. The aftermath leaves a significant challenge for media businesses in 2022.

How can they find the right balance between digital advertising and subscription models? How is the industry going to create a sustainable, long-term revenue model – especially with the shifting privacy landscape and its implications for digital businesses? 

Rupert Knowles (pictured), General Manager, UK, Piano, explores the changing digital landscape and outlines how publishers can adopt new ways of building reader trust that lead to better targeting capabilities and higher overall revenue from both advertising and subscription models, without compromising on data ethics…

Working Together

The pace of digital change during the COVID-19 pandemic has pushed many analogue dinosaurs to the brink and beyond. According to a McKinsey Global Survey, the share of digital or digitally enabled products in company portfolios accelerated by seven years in a matter of months. Publishing has been an amazing example of this shift, and many publishers have acknowledged the value of the subscription revenue stream for the first time. But there is still an internal conflict for many organisations – the traditional stand-off between subscription, advertising and editorial can severely constrain publishers’ abilities to monetise the new digital audience.

Retaining customers and building loyalty requires a new approach. While Google may have extended its use of third-party cookies until 2023, reliance on third-party data will be off the table from next year. Yet, readers actively dislike an irrelevant, unfocused experience. Publishers need to survive and thrive in a logged-in world, and this means being able to answer key questions: Why should a reader share their data? How is the reader experience being curated to inspire loyalty? And how can a publisher derive value from (and provide value to) occasional, registered and subscribed users?

To truly optimise this new customer base will require significant cultural change: Publishers must build collaboration between marketing (subscriptions) and advertising and editorial. In a digital world, all three are inherently part of the same overall customer experience. A reader’s decision to subscribe, to register but not subscribe, or just visit occasionally is influenced by many factors beyond the price. 

Know Your Reader

Every part of the experience needs to work well, from the editorial decisions regarding the position of content in front or behind the paywall to the number of advertisements presented to each reader. Understanding the reader is essential to deliver the customer value that is key to optimising long-term revenue.

As German Publisher, Funke Mediengruppe discovered: 50% of subscribers who churned were doing so because they felt there were too many ads, and most were low quality. The publisher opted to reduce the amount of ad space by 70%, retaining the higher quality – and higher value – ads, and cut this reason for churning by 50% in the process. By keeping the more valuable ad inventory, the overall drop in revenue was minimised – a drop that was immediately offset by readers being happy to pay a 20% higher subscription for a better reading experience.

This publisher has also separated its titles into “reach”, which are ad-financed with a focus on maximising traffic and “quality”, which are financed by reader revenue. Each title’s revenue stream is optimised by implementing cross-departmental cooperation and cross-marketing.

Understanding Customer Value

Data is key to understanding customers’ digital behaviour – and will inform the advertising, registration and subscription strategies required to successfully manage the customer journey from anonymous to known, to paid, to retained.

For example, registered readers are ten times more likely to subscribe than non-registered. People who pay for a trial are more likely to convert to a full subscription than those receiving a free trial. Emails and newsletters are still the highest converting channel. And the way pricing is presented will have a very significant influence on conversion.

By using A/B tests to determine the success of not just different pricing options, but different pricing presentations across hundreds of customer segments, publishers can gain vital insights that will help them create successful customer retention strategies. Moreover, with analytics and data-driven insight, they can enhance overall Customer Lifetime Value by building stronger relationships and delivering greater value through more relevant content targeted to each reader – whether that is articles, emails, newsletters or podcasts. 

Extending Content Value

The content presented to each reader will also influence subscription rates. Subscription platforms that include machine learning will provide vital insight into the reader’s response to specific articles. Which articles convert most readers to subscribe? Or to register? Which articles have high numbers of page views but don’t result in any reader action?

Machine learning can be used to deliver content recommendations to readers based on behaviour and known areas of interest. Providing readers with more relevant content will bring them back more often and encourage subscription. And it also gives new value to content – older articles can be presented again to an interested reader. Content is no longer written today, discarded tomorrow; it has far more long-term value.

The use of content recommendations can also nudge readers from short form to longer form content. One publisher, for example, has discovered that its valuable content recommendations are often seven days old and three or four times the length of most articles. Leading digital publishers including the Spectator are also using author matching, tracking if readers have a preference for a certain journalist or journalistic style and recommending their other articles. Science is supporting art to create the profitability that will be key to supporting high-quality journalism.

Conclusion

There are so many opportunities to improve revenue, and create a personalised reader experience and drive up customer engagement. Intelligent use of data combined with a willingness to continually test and learn is transforming the way publishers can interact with the readership. This can only be achieved with complete collaboration across marketing, advertising and editorial. Now is the time to grasp the opportunity, embrace a customer-centric, data-driven model and optimise the new readership.

IAB sets out Online Advertising Programme vision

With DCMS’s consultation on the Online Advertising Programme expected soon, the IAB has shared its view on how the regulatory framework for digital advertising can be developed

Ahead of the consultation on the Government’s Online Advertising Programme (OAP), the online advertising industry body has laid out its view of how the regulatory framework for digital advertising can be developed, building on and complementing the comprehensive system of self-regulation that is already in place.

To this end, its has worked with members to develop key principles for the OAP to ensure that the future regulatory framework is ‘proportionate, targeted, and effective’. The five key principles that it believes the OAP proposals should meet, and which it will ask government to use to guide its policy development, are:

  1. Recognition of and support for the value of the ad-funded business model and its crucial role in the digital economy: The UK’s digital advertising industry is world-leading and the biggest in Europe. It drives e-commerce, helps fund technological innovation across the economy, enables free access to content and services and supports business growth from big brands to SMEs. It’s important this value is recognised as the OAP is developed, both in terms of continuing to drive responsible and sustainable growth, and in understanding why it is critical to ensure that regulation is well-designed and is proportionate to the harms it is seeking to address.
  2. Recognition of the place of self-regulatory mechanisms and open standards in any new framework: From the ASA to IAB Tech Lab, there is already a range of self-regulatory mechanisms and open standards initiatives in place that are designed to directly protect consumers and to indirectly contribute to consumer trust in digital advertising. It’s crucial that existing self-regulation and standards are taken into account and complemented by any new regulatory framework being developed.
  3. A clear vision that brings coherence and alignment to all relevant policy and regulatory workstreams, aligned with the Digital Regulation Plan: For the OAP to be effective, it must align other relevant ongoing regulatory policy workstreams around a clear vision that is aligned towards the same policy goals, and present a coherent overall plan for regulating and supporting the online advertising sector in line with the Government’s economic goals for the digital sector and the Digital Regulation Plan. Collaborating with and drawing on expertise from industry is vital for designing a clear and coherent overarching framework that looks forward, not back.
  4. An evidence-based approach with robustly justified proposals: The OAP proposals should meet accepted principles of effective regulation. In its consultation, DCMS should robustly justify any proposed regulatory interventions based on clear evidence of the harms they are seeking to address, and how they will deliver specific, measurable outcomes. At the same time, government should recognise that a combination of regulatory tools and other solutions may be needed to address a single ‘harm’. We welcome the opportunity to support DCMS where we can in gathering the evidence that it needs throughout the course of this Programme. Where the necessary evidence does not exist, we are keen to work with DCMS to identify how it can be obtained.
  5. Emphasis on cooperation between industry, law enforcement and regulators to target criminal actors: Our industry shares the Government’s goal to protect consumers and foster innovation to fully realise the benefits of the digital economy. Where the evidence shows that a particular harm is perpetrated by bad actors, the Government should work with the relevant representatives of industry, law enforcement and regulators to design an effective approach.

To sum up, the IAB says OAP represents an opportunity for the Government to work with industry to design and develop a modern, digital-first regulatory framework that supplements the existing system of self-regulation and targets the bad actors that look to use advertising as a vector to commit crime and cause harm. It says it believes a partnership approach is needed from this point forward between the government and all actors in the digital advertising ecosystem, whose collective action is needed to deliver shared outcomes and evolve and maintain good practice within the industry.

The IAB has sent a version of these principles to DCMS ahead of its consultation on the Online Advertising Programme.

Global digital advertising market to hit $179.77bn in 2021

The global digital advertising market size 2020 was $155.53 billion and it is expected to grow to $179.77 billion this year at a compound annual growth rate (CAGR) of 15.6%.

That’s according to a new report from The Business Research Company, which says the growth is mainly due to the companies rearranging their operations and recovering from the COVID-19 impact, which had earlier led to restrictive containment measures involving social distancing, remote working, and the closure of commercial activities that resulted in operational challenges.

The market is expected to reach $281.32 billion in 2025 at a CAGR of 11.8%.

Along with interactions in the ads themselves, the report says digital advertising companies are increasingly adopting conversational interfaces or chat box to increase speed and productivity while dealing with common consumer issues.

End users of financial institutions have become extremely reliant on conversational interfaces to provide 24/7 service, instant responses to queries, and quick complaint resolution for providing answers to queries effectively. Conversational interfaces also provide an easy and economical way for organisations in different sectors to receive customer feedback.

The report cites companies such as Starbucks, which are increasingly adopting conversational chat box to allow users to order through its MyBarista application via auditory message, which works faster than the traditional methods.

It says the global digital advertising market is highly saturated, with small number of large players. The top ten competitors in the market made up to 64.53% of the total market in 2020. Major players in the market include Google Ads, Facebook, Alibaba, Amazon, Tencent, Baidu, Microsoft, Verizon, Twitter, and Sina Weibo.

North America accounts for the largest digital advertising market share 2021, having had 32.0% of the total in 2020. It was followed by Asia Pacific, Western Europe and then the other regions. Going forward, according to TBRC digital marketing industry growth statistics, the fastest-growing regions in the digital advertising market will be the Africa and the Middle East, where growth will be at CAGRs of 18.4% and 16.7% respectively during 2020-2025. These will be followed by South America and Eastern Europe, where the markets are expected to grow at CAGRs of 16.7% and 16.6% respectively.