The changing face of advertising and its implications for 2018

Wed, 20/12/2017 - 08:48

Is your advertising working? If, like most corporates, you’ve been shifting your spend away from print and broadcast into digital, a report from Forrester may make for uncomfortable reading.

Titled “The End of Advertising As We Know It”, the research giant’s report highlights a number of flaws in advertising’s current model – flaws that digital, far from addressing, is actually exacerbating.

While Forrester’s premise is not new – it’s known that consumers want conversational relationships with brands rather than interruption-driven ads – its prediction that about US$2.9bn will be shifted away from display advertising next year will provide little seasonal cheer for local publishers.

The prediction is based on three observations. The first is that display advertising simply doesn’t work: with average click-through rates of 0.35%, few brands can claim that display provides a good means of creating engagement or shifting product. And with ad fraud spiralling – it’s somewhere in the region of $16bn this year, according to Adloox – more organisations are likely to follow the likes of P&G, which slashed digital ad spend earlier in the year, demanding more accountability from their agencies and the publishing industry.

The second observation is that consumers can find what they want without ad interruptions. While Google and Facebook have made fortunes out of interrupting search and social interactions, technology is empowering consumers to avoid interruptions. Increasing numbers of people are installing ad blockers, while the adoption of voice search means fewer people will see adverts – about 20m US homes are using voice-enabled devices.

The third observation is that analysing and acting on customer data deliver a better return than conventional advertising. The rise of artificial intelligence means we’re better able to understand customer needs. Instead of spending advertising money to remind consumers that brands exist, the brands can view customer needs in real time and focus their messaging on the things that matter to those customers.

It’s all about the relationship

This last point merits most attention. Technology offers brands an opportunity to become relevant. And if consumers believe they have an authentic relationship with a brand, they’ll spend more with them.

Intelligent agents like Siri, Facebook Messenger and Acoustic (previously IBM Watson) will accelerate the creation of quality relationships. Chatbots may be clunky, but the tech supporting them improves every day. In the report Forrester predicts that by 2025 the most advanced consumers (nearly a quarter of the US population) will live lives that are entirely directed and assisted by what it calls persistent personal assistants. These will be interfaces that will have permission to monitor their conversations, surroundings and well-being, enabling them to foresee when they need help.

As brands get more vocal in expressing their dissatisfaction with conventional advertising, consumers become less tolerant of having their lives interrupted, and artificial intelligence continues its onward march, a dark picture emerges. It’s one that portends significant disruption to the age-old advertising model.

*This article was originally published on the Finacial Mail

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