Tag Archive: data

  1. Should Google be worried about Amazon?

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    It’s no secret that Amazon is no longer ‘just’ the world’s biggest retailer. Its ‘other’ business – digital advertising – is having a seismic impact on the advertising industry, so much so that is now a threat to the traditional digital advertising duopoly, Facebook and Google. This week, eMarketer released a report claiming that Amazon is ‘chipping away’ at the very core of Google’s business – search.

    Amazon is increasing its share of US digital ad spend

    Amazon’s star has been on the ascendant for a significant period of time, but 2019 has truly been a stellar year. Revenue for its ad business climbed by 37% to $3 billion in the second quarter of 2019, while back in February eMarketer predicted that Amazon would claim 8.8% of US digital adspend this year, up from 6.8% in 2018. This is impressive in itself, but even more so when you consider that Google’s share was predicted to drop to 37.2%, down from 38.2% in 2018, while Facebook would only increase theirs by 0.3%.

    Google’s near-monopoly of search is set to decrease

    This was the backdrop for the latest eMarketer report about Amazon’s search share. The US search market is set to grow by 17% this year, to a huge $55.17 billion. While Google still of course owns the lion’s share of the market, with 73.1% ($40.3bn), eMarketer anticipates that that will fall to 70.5% by 2021. Amazon, on the other hand, is expected to have grown its share of the market to 12.9% by the end of 2019, and to 15.9% in 2021. Microsoft has now been relegated to third place in the search market, with a 6.5% share.

    What’s behind Amazon’s success in the space?

    So what is behind Amazon’s increasing prominence in digital advertising? The key reason is its understanding of consumers’ purchasing behaviours. It has a treasure trove of data about buying habits which is of course very valuable for advertisers, as they can reach customers right at the time that they intend to make a purchase. Amazon’s data even allows advertisers to understand when a buyer might want to repurchase a product, so that they can be targeted at the right time, with less wastage.

    Consumers’ research behaviour is changing as well: they now increasingly use Amazon as a research resource rather than just a purchasing platform, and use broader search terms such as ‘gift’ or ‘makeup’, offering ample opportunities for brands to reach them. And it’s not just brands that sell directly on Amazon that can benefit; advertisers that sell products and services that can’t be bought on Amazon, such as cars or insurance, can use the retailer’s extensive customer data to understand who might be interested in buying their products. Finally, Amazon has very high conversion rates, particularly for products sold on their platform: 20-30%, versus 1-10% on Facebook, for example, where ads are seen as more intrusive and trust is an issue.

    Harnessing its advantages

    Amazon has wasted no time in harnessing these advantages over its competitors. Last year, it simplified the branding for its advertising products, creating Amazon Advertising. This includes sponsored ads which work in a similar way to Google search, allowing advertisers to bid for search terms, with the highest bidders more likely to appear in ad listings. Display ads are available programmatically for both Amazon and third-party sites using the Amazon DSP, which allows advertisers to see easily how well their media spend translates into sales.

    In 2018, Amazon acquired Sizmek’s adserving and dynamic creative units; the dynamic creative allows for more tailored ads which incorporate data such as location or shopper behaviour, while the ad server side helps advertisers to place ads and measure effectiveness, helping Amazon to better compete with Google. Overall, these acquisitions have helped Amazon improve the functionality that had been lacking in comparison to its two major competitors in the digital advertising space.

    An unexpected benefit for both Google and Amazon

    While Google will no doubt be alarmed that Amazon is encroaching on its search dominance, there is something of a silver lining. Both organisations are being examined by regulators at the Department of Justice and the Federal Trade Commission – Google because of its search stranglehold and Amazon for using its e-commerce marketplace to promote its own brands over those of rivals. While these investigations continue, it won’t hurt either of them to have increased perception of competition.

    An increasingly important player

    As Amazon increases its functionality and collects and organises evermore customer data, it will become an increasingly important player in the digital advertising sector and undoubtedly an ever more worthy recipient of valuable ad dollars. Advertisers – even those that don’t sell via the platform itself – should seriously consider Amazon’s advertising solutions for three reasons: lower pricing thanks to increased competition in the search space; remarkable conversion rates; and Amazon’s wealth of rich data from its sales funnel.

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  2. Apple is retiring its iconic iTunes in a move reflective of a changing industry

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    Apple is retiring its iconic iTunes in a move reflective of a change in industry

    Back at the beginning of the millennium, the music industry was in a serious state. CDs were in decline as consumers digitised the way they consumed music: but they were doing it for free via Napster and other pirate websites.

    And then, in 2001, the industry’s knight in shining armour appeared, in the shape of Steve Jobs. He announced the birth of iTunes at the Macworld Expo, heralding a music revolution. The era of MP3 music was here, and over the next six years Apple would sell more than 100 million units of the iconic iPod with which to listen to those MP3s. Apple was at the pinnacle of its success, having redefined what music ownership looked like: no longer physical records, tapes or CDs, but a world of songs in your pocket.

    In the 18 years since its launch, iTunes has become a media behemoth, a one-stop shop for users to consume not just music, but movies and TV and, latterly, podcasts too. But over the last few years, downloading has been eclipsed by a new kind of access: digital streaming.

    A new contender in the market

    In 2008, just a year after the launch of the first iPhone and when iTunes was at the height of its powers, a small Swedish start-up called Spotify launched its music streaming service across eight European markets. Its two-tier model – free to the consumer ad-funded, and a premium subscription option – gave users on-demand access to stream millions of tracks. Music streaming was still in its infancy, accounting for just 1% of global music revenues in 2007, and Spotify’s initial growth was good but unremarkable. By 2013, they had 30 million active users and 8 million premium subscribers.

    It is the six years since 2013 that have seen a seismic shift in how music is consumed. By March of this year, Spotify’s user base had skyrocketed, with 217 million active users and 100 million premium subscribers around the world, a number which looks set to continue growing. By opening up the streaming market and persuading users to give up ownership of their music, Spotify has arguably redefined the music industry, just as Apple did when it persuaded users to give up physical ownership.

    The consolidation of Apple

    iTunes’ download model was starting to look clunky and old-fashioned. In 2015, Apple launched Apple Music, its streaming service which it hoped would compete with Spotify and other broadcasters with its three distinct components – on-demand streaming, radio and Apple Connect, which allows artists to upload songs, videos and photos for followers. Since then, as streaming has increasingly become the norm, there have been rumours that iTunes would be wound down.

    That finally came to pass this week, as Apple announced at its annual Worldwide Developers Conference in San Jose that it would replace iTunes with standalone music, television and podcast apps. This will align Apple’s media strategy across the board: iPhones and iPads already offer separate apps for Music, TV and Podcast, and Mac/Macbook users can expect the same.

    However, the move is symbolic as well as practical. As Amy X Wang says in Rolling Stone, “by portioning out its music, television and podcast offerings into three separate platforms, Apple will pointedly draw attention to itself as a multifaceted entertainment services provider, no longer as a hardware company that happens to sell entertainment through one of its many apps” – and that’s increasingly important as iPhone sales have started to slow.

    Consolidation moves reflecting the wider market

    This move towards entertainment services is being seen across the technology and communications sector: we’ve seen the tech giants buy up rights to live sport, while AT&T acquired Time Warner for $85bn and Disney bought most of the 21st Century Fox empire, fending off an offer from Comcast. This trend is of course being driven by changing consumer behaviour as internet connections over 4G and now 5G accelerate – allowing for uninterrupted streaming of music, TV and films. We’re seeing the effects of technology on the media and communications industries, and lines between these sectors will continue to blur. This blurring of boundaries will then pose another issue on how they can all be monitored & assessed both separately and in totality.

    Image: Shutterstock

  3. Changing the rules of the internet: can Zuckerberg turn around Facebook’s fortunes?

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    After a difficult year, Facebook is looking for solutions

    Facebook is facing heavy scrutiny from people and governments across the world after a range of transgressions: the Cambridge Analytica scandal, the hiring of a PR firm to attack George Soros, the departure of 10 top executives and the livestreaming of the Christchurch terrorist attack among them. These and other issues have forced Zuckerberg and his senior management team to appear before governmental committees and the press to explain exactly how they are going to change. This was all reflected in Facebook’s share price, which peaked in July 2018 but had plummeted by 40% by the end of the year.

    The conclusion? Facebook must focus on real, meaningful evolution in order to ensure a prosperous future – and that’s just what they appear to be doing.

    More cooperation between governments and tech companies

    After months of appearing before government committees and journalists around the world, in March this year Mark Zuckerberg seemed to finally kick off the evolution that his organisation so urgently needs. Having rejected demands for increased regulatory oversight of Facebook for years, in an editorial in the Washington Post Zuckerberg called for more cooperation with governments to deal with the problems posed by internet platforms and emergent internet technologies: “By updating the rules for the internet, we can preserve what’s best about it – the freedom for people to express themselves and for entrepreneurs to build new things – while also protecting society from broader harms”.

    Changing the rules of the internet

    Zuckerberg argued that there were four areas that would require deeper cooperation between tech companies, governments and regulators: harmful content, election integrity, privacy and data portability. Measures he suggested included the creation of an independent body to review Facebook’s content moderation decisions and the formation of a set of standardised rules for harmful content; regulation for common standards for verifying political actors; a focus on creating laws that address advertising for divisive political issues; and GDPR-type regulations across the world. Nick Clegg, the head of Facebook’s global affairs and communications team, spoke about how “the way that the rules are drawn – or not drawn – will be quite different to how they are drawn in ten years’ time… and I think big tech companies have a choice: either they play ball and they try to play a responsible role in that debate, or they try to duck it all together.”

    Practical changes for the Facebook platform

    Facebook hasn’t stopped at promoting cooperation between tech firms and governments: the evolution strategy has also extended to a series of changes, announced in April, that ‘put privacy first’ because ‘the future is private’. These changes include encrypting Messenger messages and fully integrating the Messenger platform with WhatsApp; trialling a ‘private like counts’ feature; and ways of sharing content without a permanent record. Furthermore, the company is rolling out ‘FB5’, an aspirational redesign of the platform that puts the spotlight on what Facebook would like to be – thoughtful, meaningful and calm. The Groups functionality will be central, and there will be an increased focus on Marketplace as well.

    Other ideas for how to control Facebook

    The challenge facing those governments and regulators with whom Zuckerberg wants to work to create a new, brighter internet is massive. Siva Vaidhyanthan notes that “regulators are trying to address Facebook as if it’s like companies they have encountered before. But Facebook presents radically new challenges. It is unlike anything else in human history – with the possible exception of Google.” Governments are trying: the UK, for example, proposed a duty of care standard for platforms to ensure they filter harmful content, and the US government is expected to issue a $5bn fine for the violation of a 2011 order preventing the distribution of user data to companies such as Cambridge Analytica. But Vaidhyanthan compares this approach to dealing individual weather events rather than tackling climate change. Others have suggested more radical approaches: Facebook’s co-founder Chris Hughes called for Facebook to be broken up because “Mark’s influence is staggering, far beyond that of anyone else in the private sector or government. He controls three core communications platforms – Facebook. Instagram and WhatsApp – that billions of people use every day… The government must hold Mark accountable.” Meanwhile, US senator and presidential hopeful Elizabeth Warren proposed dramatic antitrust regulations, and a Bloomburg article suggested that, as social media has been proven to be addictive, it should be regulated in the same way as the tobacco, alcohol and gambling industries – and not the communications industry.

    Radical solutions for a brighter future

    The issues that Facebook faces are dramatically different to, and more important than, those faced by any other company, and they require dramatically different solutions. The varied approaches announced by Facebook in recent months are collaborative, radical and positive, and we at ECI Media Management look forward to seeing them come to fruition.

    With increased transparency in the Facebook marketplace, response from consumers is likely to be varied. Users, Governments and Corporations alike should clearly understand how their data is being used by Facebook to target Ads.  Changes to transparency and the required investment into security, will no doubt impact the firm’s profits. As customers and co-operations learn more about the result of their time and investment into the platform, initially it is likely demand for the Ad space will see a minor drop, before companies become educated on how to utilise on this newfound transparency. At ECI Media Management, we recognise the value and immense scale of Facebook, which will be crucial to monitor as it moves into this new era.

    Image: Shutterstock

  4. US senator and presidential hopeful Elizabeth Warren takes on Big Tech

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    Embattled tech firms face a new challenge

    There’s no denying that the tech giants are having a hard time of it at the moment. There have been the scandals that we’re all so familiar with: Facebook is still dealing with the fall-out from the Cambridge Analytica affair as well as accusations that it allows interference in national elections, while earlier this year Google once again had to face the wrath of angry advertisers whose ads had been run alongside inappropriate content on YouTube. They’re also facing numerous legal challenges from national and EU lawmakers in Europe over issues such as privacy, fake news, tax and competition – and of course there is GDPR to contend with.

    Into this rather bleak landscape strode Elizabeth Warren, a Democratic candidate for the US presidential election in 2020. In a blog post Warren laid out a plan to break up the tech giants, namely Amazon, Facebook and Google, by forcing them to divest some of their biggest acquisitions and money-spinners.

    Why is Warren proposing such radical antitrust measures?

    So what are the reasons that Warren gives? There are two key ones: in her view, the big tech companies damage small businesses and innovation which stifle healthy competition. In effect, she believes that Facebook, Google and Amazon in particular have too much power over the economy, society and democracy. Facebook scored an own goal by promptly removing her ads around this issue from the platform. It later restored them, but they had neatly illustrated Warren’s point for her (!).

    What would these antitrust regulations mean?

    The implications of Warren’s proposals are huge. She would pass legislation designating platforms with more than $25bn in revenue as ‘platform utilities’, which would be banned from owning both the platform and the participants at the same time. This would mean that, for example, Google would need to spin off Search, with Amazon doing the same with Marketplace. Perhaps even more dramatically, Warren also claimed that she would appoint regulators to reverse mergers that had already been completed – including Facebook’s purchase of Instagram and WhatsApp, and Amazon’s acquisition of Whole Foods. This would lead to a world where Facebook would be competing with Instagram and Amazon’s power over sellers – and buyers – would be curbed significantly.

    Warren wants to implement these measures to “restore the balance of power in our democracy, to promote competition, and to ensure that the next generation of technology innovation is as vibrant as the last”. She points to the antitrust case involving Microsoft in the 1990s which forced the ‘original’ tech giant to behave with increased restraint into the new millennium and, argues Warren, paved the way for the growth of the very giants she now wants to shrink.

    Are there alternative ways to promote competition?

    Warren is not alone in wanting to address the huge power held by the tech giants, particularly as the public feels increasingly uncomfortable about the amount of power they wield, but she is the first to have crossed the threshold to an antitrust solution. Of course, the chances are that Warren will not be the next President of the United States (she’s up against many other Democratic candidates, not to mention the incumbent) and, even if she is, many believe that her measures will be extremely difficult to implement. However, what is undeniable is that the tech firms must evaluate how they operate in order to regain trust from users and from governments. A middle ground could be, as suggested by the Report of the Digital Competition Expert Panel, which was commissioned by the British Government and led by Barack Obama’s economic adviser Jason Furman. The report recommends a new regulator to force firms to ‘rewire’ themselves so that users have more control of their data and can switch between providers; it also suggests modernising antitrust rules.

    As ever, Google, Facebook and Amazon have an uphill struggle on their hands, and they must examine their business models hard if they are to continue their success and deflect the scrutiny of governments across the world.

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  5. The reincarnation of audio

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    The last decade has seen a huge focus on digital and visual innovation in the advertising industry; but marketers and practitioners have always known the value of non-intrusive, highly accessible and limit-free advertising, which is why we are seeing a recent re-incarnation of audio for this generation.

    Divergence and evolution

    The audio marketplace has seen a divergence and then evolution from the standard radio format towards the podcast and music platforms, although radio still remains crucial. The beauty of these mediums for the advertiser is the ad: no blocking and no ‘peak-time’ engagement driving up prices.

    Demand for on-demand audio driven by commutes and smart speakers

    On-demand audio streams surpassed 400bn in 2017, compared to 252bn in 2016. Commuting times are rising as people seek more peaceful lives outside of cities, and rail commutes are on average 2 hours and 11 minutes: it’s no wonder that the demand for podcasts and other on-demand audio has risen so dramatically. Furthermore, smart speaker streaming helped to drive an 8% increase in the number of hours spent listening to digital broadcasts in 2018 versus 2017. The resurgence of audio should not go unnoticed.

    Is the marketplace ready for digital audio?

    Whilst the marketplace re-aligns with its audio roots, it is inevitable that there will be challenges for media planners, advertisers and auditors alike. The proliferation of streaming, smart devices and wifi has given consumers greater autonomy over their time and their method of consumption. Whilst this provides excellent opportunities for reach and brand awareness for advertisers, it begs the question: does the marketplace have the tools and devices ready to provide accountable and accurate tracking and analytics? Until these tools are standardised and harnessed across the market, it is likely the adoption of digital audio into media planning will remain consistent, but slow. Investment into this medium will be a lower priority until it can be demonstrated that digital audio outputs add strong, measurable value.

    Alongside this tracking and analytics issue, the industry will need to work out how to harness the increased quantity of data in order to drive further engagement with consumers. While digital audio attracts investment with an environment that is free of ad-blocking, it does create a transparency issue for the consumer-agency-platform owner relationship.

    An exciting future for audio

    The future of digital audio is an exciting one. The integration of programmatic audio is set to   propel audio back onto the main stage of advertising channels. Programmatic advances will increase campaign ROI, augment automation and decrease audio costs. The combination of these factors, alongside the accessibility and increase in the number of platforms will see marketers, advertisers and auditors being forced to become more innovative and dynamic in a format once seen to be traditional and static.

    All hail the return of audio: finally, our eyes will be given a rest from mobile screens!

    Image: Shutterstock

  6. AI will make personalisation even more powerful: advertisers must exercise restraint

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    In advertising, personalisation is king. As the mantra goes, right message, right time, right place – if you can tick all three of those boxes, your ad will be much more relevant to the consumer and therefore so much more powerful. In the rapidly approaching age of artificial intelligence, it will be easier than ever to personalise your advertising: when machine learning is applied to the vast quantities of data, advertisers can understand the motivations of almost every consumer on the planet. That promise holds a great deal of power and potential wealth, but as they say – with great power comes great responsibility, and advertisers must consider carefully how they will use and handle customer data.

    Personalisation will become ever easier with widespread uptake of AI

    Advertisers are understandably excited about the prospect of artificial intelligence; just twenty years ago, it was almost inconceivable that brands would be able to directly target individual consumers based on their unique behaviours and motivations, with messages that were relevant to them. To an extent it is possible now, but it will become increasingly easy as artificial intelligence becomes more widespread, particularly as it is harnessed by programmatic platforms for real-time optimisation, for example.

    But personalisation can annoy consumers

    Some research indicates that consumers actively want advertising that is relevant to them; indeed, they’re even willing to give away their personal data for more personalised advertising. But there’s a fine line between advertising which is more powerful because of its relevance, and advertising which is annoying or just plain creepy. That’s down to a number of factors: bad targeting, use of sensitive personal data, placement, frequency or a lack of relevancy. You can understand why. If, for example, a consumer has recently purchased a pair of blue shoes online and is stalked around the internet by ads for blue shoes, it’s annoying and the ad simply serves to remind him or her that their activity is being tracked – they no longer need blue shoes. Ads for a blue handbag, for example, or for nice socks, might be more relevant – but that is when the mighty GDPR starts making its presence felt. The EU data regulations, which any advertiser with a European target audience will be all too aware of, make the transfer of consumer data between one company and another very difficult.

    Of course, this example assumes that there are two companies involved, and that the brands themselves are doing the selling. The inability to share data will give more power to the platforms where consumers can buy from a large selection of brands: they will be able to harness their first-party data to build a more complete offering for their consumers, and more targeted marketing. The brands themselves could begin to lose the battle to understand and successfully reach audiences.

    Where is the line between persuasive marketing and behaviour control?

    Brands shouldn’t just be concerned about not annoying consumers. The amount of data at their disposal – and the tools available to process and understand it – means that they can have an astonishingly complete understanding of their consumer – and that means marketing which is too effective and too persuasive. The art of persuasive marketing could be elevated into the science of behaviour control. Layer that with the ability to exploit people’s inherent prejudices and insecurities and we’re into some seriously apocalyptic territory. Need we mention Cambridge Analytica?

    The golden rule: always remember the data belongs to the consumer

    In order to avoid annoying consumers and indeed to avoid straying into unethical territory, the answer is to always remember one golden rule: a consumer’s data belongs to that consumer, and must be handled with the care and respect that would be afforded to their other possessions. When collecting data, be transparent: explain how you will use it and ask for the consumer’s consent. Like any relationship, trust is critical and transparency is the way to earn that trust. Personalisation must be voluntary, overt and transparent.

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  7. Out of home: rising above the clutter

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    In a fully mobile world, where the average person spends hours a day on their smartphone and targeted ads are standard, out of home (OOH) can seem a little out of date. Don’t write it off yet though – it appears to be enjoying something of a resurgence. Many brands including, perhaps ironically, the big tech brands such are investing a huge amount in this medium; Apple, Netflix, Amazon and Google are four of the 10 largest spenders on billboards. The figures back this up: outdoor ads were the only ‘traditional’ media category to show growth in the US in 2018, with an estimated $33.5bn in revenue, with digital out of home (DOOH) being the main driver with growth of 16%.

    What’s behind the renaissance of outdoor advertising? There are three key drivers: it’s impactful, innovative and effective.

    Impact

    In a world of palm-sized screens, the sheer size of a billboard and its large, uncluttered layout give it impact that a mobile ad would find it very difficult to deliver. What’s more, while consumers can – and do – ad block on their mobiles and desktops, you can’t block real life. So it seems that the rise of OOH is partly a response to digital fatigue amongst consumers and the advertiser’s quest to reach them in a fresh way that will have the desired effect. However, the rise of this medium is also partly because of the overall shift to digital advertising: many OOH companies are harnessing the power of technology that are increasing impact and relevance.

    Innovation

    Over the last few years, OOH has had to become rapidly more tech savvy to stave off irrelevance. Innovations abound, largely to make the medium more responsive, interactive and, critically, targeted, so that it can compete with digital advertising in terms of relevance. Location and contextual data are crucial to the success of the OOH format as they can be used for increased targeting. Many companies working in this space are creating technological innovations that have brought OOH right into the 21st century. Clear Channel’s Radar programme uses global positioning data from mobile apps to understand who is passing by its signage, whilst startup AdQuick has developed a range of new targeting and measuring tools, including integrating digital voice assistants so passers-by can ask for more information – and therefore provide more data for advertisers to use. Google is, of course, putting its targeting and programmatic expertise to good use in the space, grabbing extensive demographic data from Android owners passing by, and even started to test its DoubleClick ad technology in London, allowing advertisers to purchase ad space on screens across the city programmatically. This opens up the opportunity to respond in real-time to events such as beer ads for the Friday commute home.

    Of course, geo-targeting is a key feature in today’s digital OOH. It allows fixed screens to surface information that people want or need in that place, at that time, therefore adding value to the consumer’s day, while OOH in situations like taxis can respond to changing points of interest as the vehicle passes. All this leads to dynamic, interesting and valuable content.

    Even more futuristically, artificial intelligence (AI) is helping marketers to personalise OOH content and make it more engaging. One such innovation is technology that detects the facial features and expressions of a passer-by and determine whether they are happy, surprised, sad or angry as well as their gender and approximate age, all with remarkable accuracy. This of course allows advertisers to deliver in real time the ad which will resonate best with the consumer.

    It used to be that OOH’s key purpose was to drive traffic to bricks-and-mortar shops, but with so much innovation going on in the space, the medium can now drive a specific action and interact in a personalised and targeted way – and that makes it so much more effective than it used to be.

    Effectiveness

    Technological advances and, conversely, digital fatigue amongst consumers has brought about a renaissance for OOH and have made it a highly effective medium. Being able to understand the geographic and demographic context of a billboard’s surroundings – and change content accordingly in real time make it a valuable weapon in the advertiser’s arsenal. Furthermore, rather than replacing other media, it works well in conjunction with other channels and can even amplify them. Mobile click-through rates increase 15% when supported by OOH ads, according to WARC, and 46% of US consumers have used a search engine after seeing an OOH ad. It even intersects with social media: research by Nielsen revealed that one in four American adults has posted a photo of an outdoor ad on Instagram – that’s much higher than TV, radio, print or digital banners. When Spotfiy turned a New York subway into an art installation, it reached 50 million people on social channels, with no paid amplification.

    All this means that the ROI for OOH in the US is remarkably high: each dollar spent on OOH advertising drives an average $5.97 in sales – that’s 40% higher than digital search.

    An innovative ‘push’ medium

    Gone are the days when a billboard was a passive brand-building format. It’s now a dynamic, innovative medium that has the ability to engage with, entertain and add value to consumers, pushing them towards a purchase in a way that can seem less intrusive than a mobile ad. In an age where consumers are being targeted by advertising from all angles, an effective, innovative and impactful out of home campaign might just be the way to rise above the clutter.

    Thumbnail image: Shutterstock

  8. The creation of Wunderman Thompson: is it really the answer?

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    The latest in a series of WPP mergers is that between Wunderman and JWT – but is that really what clients need?

    A difficult year for WPP

    2018 has been a difficult year for communications giant WPP. There was, of course, Sir Martin Sorrell’s sudden and tumultuous departure from the helm of the company, leaving waves of bad feeling in his wake, particularly when he started his new organisation, S4 Capital. Then, in October, it was revealed that WPP was no longer the world’s biggest marketing and advertising services group, slipping below American rival Omnicom for the first time in almost a decade. WPP’s share price has experienced a downward trend over the last year and is languishing at levels not seen since 2011: this is largely blamed on the disrupting influence of Sorrell’s departure and WPP’s struggle to transform the huge group in the face of a rapidly changing media landscape and increasing competition from Google and Facebook.

    Simplicity, accountability and scale

    So Mark Read, Sorrell’s successor, has a lot on his plate. He needs to ‘steady the ship’ and execute the transformation that will make WPP future-ready, in the face of the company’s own challenges and the challenges facing the wider industry. A major criticism of the industry is that it is bafflingly complex, with agencies, units, sub-units and specialist arms presenting clients with an alphabet soup of agency suppliers. Forrester said that WPP needs to ‘dissolve’ its hundreds of agency brands into a few dozen to ‘meet the CMO’s need for simplicity, accountability and scale’.

    Mergers to deliver on the simplification agenda

    Read has continued the process of simplification that started under Sorrell, including a series of mergers, including that of Maxus and MEC to become Wavemaker, and Y&R and VML becoming VMLY&R. The latest and most prominent of these mergers is between digital agency Wunderman and renowned creative shop JWT, which, on January 1st, will become Wunderman Thompson under a single P&L. In WPP’s press release on the matter, Mark Read claimed that Wunderman Thompson will be a new ‘creative, data and technology agency’ which will ‘bring together the capabilities our clients are demanding – award-winning creativity alongside deep expertise in technology, data and commerce – in a single organisation.’ Mel Edwards, the Global CEO of the new entity added, ‘To achieve transformative outcomes, clients today need inspiration that is rooted in data-driven insight. WT offers precisely what clients want – better creativity, expertise in data and sophisticated technology skills.’

    A new set of competitors?

    Interestingly, Wunderman Thompson’s positioning as a provider of end-to-end, data-driven marketing and creative solutions places it in direct competition with not only the traditional media and creative agencies, but with consulting groups such as Accenture and Deloitte who have recently entered the space with an offering that focuses on data, technology and creative.

    The modernisation of a legacy brand

    While the merger marks the end of JWT, one of advertising’s key legacy brands and one of the few agency names that the general public recognised, it does make sense: there had been a feeling that the creative agency was resting on its laurels rather than embracing a more consumer-centric planning approach. With Wunderman’s digital expertise, JWT’s clients will have access to data-driven insights to inform their creative. What’s more, some of those clients also already use Wunderman’s services, so the simplification argument is even more powerful.

    But is it what clients really need?

    This merger is being widely viewed as a demonstration of Read’s determination to change the direction of WPP and create a more streamlined, simplified and easily navigable organisation for the benefit of clients – even if the process is at times painful and difficult. However, at ECI Media Management we would question whether it’s possible to teach an old dog new tricks. Does this internal merger and others like it really make the agencies more customer-centric and produce better outcomes for clients? Or is it just better for the buyers? Furthermore, in this era of data and associated concerns around security breaches, transparency and brand safety, will clients continue to allow agencies to handle their consumer data? Can they be sure that it is they and not their competitors who will profit from the insights generated from the data? ECI believes – and indeed recommends – that clients will increasingly bring their data and ad tech in-house in order to truly understand their customers and drive that all-important consumer-centricity; external consultants can be briefed for support when and where it is needed. WPP and others have nodded towards this new consultancy model, but the need is increasingly urgent and the communications giants need to evolve quickly if they are to succeed in this space.

    Thumbnail image: Shutterstock

  9. 5G is coming – here’s what it means for marketers

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    AT&T and Verizon have announced 5G-enabled smartphones with Samsung for 2019 – 5G is here. Where will the new super-fast mobile internet connectivity take us?

    This week, both Verizon and AT&T have announced that they will launch 5G-enabled Samsung smartphones in 2019 – in fact, AT&T are launching two. 5G has been on the lips and the minds of the tech, communications and advertising industries for a while, promising as it does almost unimaginable opportunities. Earlier this year, AT&T launched its 5G mobile hotspot in a few cities across the US, but this week’s news makes it mainstream and a reality for consumers – and therefore marketers – across the world. So where will it lead?

    Higher speeds and happier consumers

    What makes 5G so revolutionary is its speed. 4G, which was launched in 2011, brought about video streaming, programmatic auctions and the first glimpses of augmented and virtual reality. 5G is 1000 times faster than 4G with 100 times less latency, effectively eliminating any delays. Often, if a consumer experiences a delay loading a webpage, they will give up, meaning the loss of a touchpoint for the brand. It could also lead to a decrease in the use of ad blockers, which consumers often use to avoid slow loading times; if webpages are loading more quickly, they may be less inclined to use them.

    The sheer speed of 5G means that it will be a viable and affordable alternative to home broadband. In the US, Verizon is looking at disrupting home broadband, particularly in areas where there isn’t much competition for local broadband providers. As Gartner’s Mark Hung remarked, ‘if 5G is able to create more competition in that space, then that could lead to more cord-cutters’ – and that of course has implications for marketers.

    Out of home will also benefit from the speed of 5G. A Digiday article relates how out of home advertising company Outfront plans to use 5G to distribute dynamic video to screens, which will be able to react to the viewers passing them.

    Deeper interactions with consumers – which means more data

    The increased speed of 5G compared to 4G means that technology applications which have hitherto seemed far-fetched are suddenly becoming realistic. These applications often provide much more immersive and meaningful experiences for consumers – and that means richer data sets for advertisers. Augmented reality (AR) and virtual reality (VR), for example, will become more normal ways for brands to interact with their consumers. AdWeek suggests that home decor

    brands could use immersive AR to show customers what an item of furniture would look like in their houses, while sports and music fans will be able to ‘attend’ games and gigs via their VR headsets; indeed, LiveNation and NextVR have already done this, and widespread 5G will only make the user experience better.

    Meanwhile, increased speeds and higher connectivity will mean that the Internet of Things becomes exponentially more powerful and useful. Hyper-connected devices will communicate with one other, giving the consumer increased convenience and control over their lives in the context of autonomous cars, connected homes, connected cities, connected healthcare and so many others. These networks of connected devices will generate a wealth of data on the consumer’s behaviours and preferences: a veritable goldmine for brands, who will be able to create ever more personalised and targeted messaging.

    Companies are already making plans to capitalise on the launch of 5G

    Unsurprisingly, given the opportunities for deeper interactions with consumers, companies in the US and worldwide are already gearing up for the delivery of 5G. For example, AT&T recently acquired Time Warner and AppNexus in order to ensure it was properly positioned to take advantage of the roll-out of its 5G service. Meanwhile, esports company ESL has partnered with AT&T to incorporate 5G technology into live gaming, in order to take mobile esports ‘to the next level’.

    5G may also have another effect. With telco companies coming into possession of such an unprecedented amount of consumer data, they may start being able to challenge the digital ad services duopoly currently held by Google and Facebook.

    We’ve looked at only a few of the opportunities presented by the arrival of 5G; indeed, there are many that the world hasn’t even imagined yet. It will change the world perhaps even more fundamentally than 4G did, and make the seemingly fantastical – for both consumers and advertisers – a reality.

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  10. Martin Sorrell’s ambitions for S4 Capital reflect a changing industry

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    Technology is dramatically transforming the communications industry – and S4 Capital is a reflection of that.

    When Martin Sorrell speaks, the advertising industry listens. That’s still the case even when he’s doing it as the head of a relatively small start-up, S4 Capital, rather than as the Chairman of WPP, the world’s largest communications conglomerate. Earlier this week he took to the stage at a Campaign Magazine event with his colleague Victor Knapp, the Chief Executive of MediaMonks, the content production company that S4 Capital acquired earlier this year. They discussed their ambitions for S4 Capital – some of which we will look at in more detail below; what is striking is that they are very much a reflection of how technology has transformed the media and advertising industries, fundamentally shifting priorities for brands and therefore for agencies. This change in direction is exemplified by the contrast between S4 Capital and the ‘traditional’ communications organisations such as Sorrell’s alma mater WPP.

    A digital and programmatic approach to media buying

    The ambitions that Sorrell and Knapp laid out for S4 Capital fall into four areas. The first is how S4 is approaching media buying. It’s telling that their first acquisition in this space is, according to Sorrell, likely to be in the digital and programmatic space, as ‘that’s where the biggest opportunity is’. Knapp added that the acquisition is likely to be a more ‘performance-based agency’, although he believes that ‘there is no difference between brand-building and performance’. There are many discussions at the moment around performance versus brand marketing – indeed, we wrote a blog about it and it was a hot topic at the ANA Masters of Marketing last month. Wherever you land in the debate, the inescapable fact is that data allows us to understand customers like never before and optimise activity to their preferences in real time; this has inevitably led to a focus on the performance of our media activity. Sorrell even went as far as to say that scale is not the most important thing anymore, as you can ‘make entries at a reasonable cost’ in the digital and programmatic arena. This demonstrates the impact that technology has had on the industry, if the size of your budget is no longer the sole most important aspect of your marketing strategy.

    A consumer-centric strategy calls for an always-on approach

    One of the key ramifications of the rapid advance of technology in the marketing space is that it has taken power out of the hands of brands and put it into those of the consumer. It is now the consumer that calls the shots, and advertisers must respond by focusing on the consumer’s experience of their brand and being ‘always on’. This is at the heart of MediaMonks and, by extension, S4 Capital’s approach to communications: it’s no longer about

    focusing on a big idea and creating 30-second spots. Brands and their agencies must consider how they can tell the best creative story across all platforms. This approach demands better, faster and more efficient content and, in Sorrell’s opinion, agencies aren’t responding quickly enough. This is the space that smaller, more agile companies like S4 can step into, as they come without the baggage of siloes, units and a plethora of agency brands.

    Helping brands to take control of their marketing services

    Data is, of course, the major marketing story of the 21st century so far and has fundamentally transformed how marketers operate, opening up a world of possibility and the opportunity to connect more deeply with consumers. It has also, unfortunately, led to issues of trust between advertisers and their agency partners, and a concern about a lack of control. This in turn has led many brands to at least consider bringing some of their marketing services in house and S4 Capital will have an offering that helps them to do that, although Sorrell pointed out that it can be difficult culturally for organisations to keep themselves and their talent abreast of the ever-changing market dynamics.

    As always, agility is the key to success

    It is telling that Sorrell and Knapp emphasised the importance of agility and consumer-centricity for S4 Capital. In the 80s, 90s and even 2000s, marketing was a very different affair and the role of the CMO was to relay stories to consumers on a one-way basis – and the likes of WPP, Omnicom and Publicis with their huge scale and buying power were well placed to support in that mission. However, technology has dramatically and fundamentally changed the landscape and the agencies that can respond rapidly in an agile, flexible manner are the ones who will stay relevant and useful for clients. This is clearly the space that Sorrell and Knapp are looking to occupy with S4 Capital, and we believe that they are well placed for success.

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