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The future of Advertising

Pascal Malotti
Global Retail Strategy Lead & Strategy Director at Valtech France

September 28, 2017

The future of Advertising

Brave Old World

We still live in a world where watching a movie on TV means you will rudely, and frustratingly, be interrupted by commercials. Business, it seems, is the same as usual.

Well, yes and no! Yes, because many media still rely on advertising as a business model, and No, because some of them, especially TV networks, face some serious challenges with ever-rising digital channels. As a result, 30-second spots are being replaced with shorter ads. For example, six-second commercials will soon be coming to NFL games on Fox. There is clear evidence that the digital marketing trends are winning over the different touch points – and it’s a huge game-changer in the advertising world.

The New Masters of the Universe

Going back to the past is not a possibility for brands that are challenged both by the new Masters of the Universe (who can control people’s lives with their algorithms) and new so-called indie brands. These new Masters are leveraging technology, manufacturing and human behaviour to enable small companies to reach a global audience at a fraction of traditional costs.

As a result, traditional advertising is quickly fading, and agility, AI and network effects are the new keys to success. This means that brands that want to survice must follow the new rules - embracing personalized marketing and communication... including cross-platform attribution.

This is why traditional media advertising is losing ground, because of the still unresolved matter of attribution. At a time when marketing is led by algorithms and automation, you need to leverage programmatic cross-platform advertising to increase brand equity and conversion. This means that the digital levers are the biggest opportunity to maintain position and improve financial performance.

Clearly, Facebook and Google are thriving in this world and are grabbing the majority of market share: they are growing fast in a flat market, making them a duopoly in the digital era.

Clouds lining up

Not everything is going well in the brave new-world order. Google (through YouTube) and Facebook are adopting a soft approach to brand safety and it’s not helpful in a moment when a new paradigm needs to be set to build trust with every component of the ecosystem.

A few months ago, some ad-buying networks and big brands decided to stop their ad spending on YouTube following evidence that some programmatic ads were popping up alongside undesired content, such as videos promoting terrorism… That’s also when Facebook offered the worst excuse ever: it is not a media publisher but a platform and “we cannot become arbiters of the truth ourselves (sic).” When you are reaching 67% of American population, it means that you have become the biggest media company and advertising publisher, not just a piece of software. Then it also emerged that Facebook was allegedly manipulating the data reported on viewership and shares.

As a consequence, big ad-buying networks belonging to WPP and Publicis have demanded the use of third-party platforms to reassure brands that their ads on YouTube are not being displayed on inappropriate videos. Some independent analytics firms will help restore trust with a more comprehensive analysis of where ads are running, but it seems incredible that Google and Facebook are so reluctant to act on brand safety and accuracy of measurement since it could sap their business. It’s a matter of transparency that could shore up confidence between marketers and tech giants.

A lose-lose deal

When things settle down and digital keeps showing that spending does return investment, the likely winners will still be Facebook, Google and the new comer: Amazon – which recently expanded its programmatic advertising offering.

Meanwhile, brands realise that precision marketing needs to be done with their new friends/enemies for the sake of performance and to establish, at the same time, more direct channels and integrate experience into retail. Let’s not forget that Netflix also defines new standards for entertainment experimentations with subscription business model, accelerating the obsolescence of traditional advertising for both brands and publishers…

Everything is converging towards the disruption of the advertising market: acceptance from viewers, technology for reaching consumers and global business rules being completely reshaped, imposing some new recipes to blossom. Right now, big advertisers are losing shares in a world where consumers don’t want to be bothered any more by a way of communicating classic brand values and business positioning…

Out of context and interruption, advertising is no longer the best way to influence consumers with the right experiences: differentiation needs more genius than a great ad with the right brand ambassador.

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