COVID-19 has forced the ad industry to accelerate tech adoption and experimentation. Yet, while most would agree that nothing will go back to the way it was in 2019, few have a straightforward answer to how the industry will change in the years to come.
“It’s 20 to 25 trillion dollars of [ad] spend, where everything is changing, and no one really knows what’s going to happen next!” Analyst Benedict Evans notes succinctly at Pioneers: Conversations on our Industry's Future - The Unbundling with Benedict Evans, the first of a series of discussions that dive into emerging trends and cutting edge insights on the changes that will shape the future of the marketing and advertising industry.
Here are some highlights from the presentation and conversation, moderated by Atifa Silk, Haymarket Media Asia’s managing director, and Leigh Thomas, Facebook’s global client & category director, EMEA.
Everyone wants to ‘go direct’
“Everything is getting unbundled,’ is the key takeaway from the session. Old value chains are breaking up, with everyone wanting to go direct. They want customer relationships-and they want data. Over 60% of products being sold on Amazon are via third party marketplaces. “Amazon is actually unbundling itself and opening its business to other companies,” notes Evan. The trend to ‘go direct’ is also epitomised by the billion-dollar success of Shopify, an e-commerce company that allows brands to build an online storefront-a model particularly favourable for big companies that might find their ‘best practices’ slowing them down. “You can be a giant company and have the same resources that Amazon or a software start-up has.”
The shifting nature of customer discovery
Accompanying this unbundling is a shift in customer discovery and purchasing. In the past, consumers knew what they wanted and might use the internet to find the cheapest place to get it, but the internet is increasingly used as a source of recommendation. “The internet has moved up the funnel,” notes Evans. “Towards a traditional retail model rather than being at the end point of logistics.” This development creates scope for new kinds of competitors, as one can hypothetically create a CPG brand without the kind of inventory one needed pre-internet.
The role of the agency
In the 1980s, one would go out to lunch with ITV and that was your UK TV ad strategy planned for the year, Evans says, quoting WPP CEO Mark Reed, but advertising in 2021 is much more complex. This has huge implications on the role of agencies. “The creative is still there, [but] the data and execution have become massively more complex. Agencies are more interested with the kind of digital services they can provide.”
Where to go to see the future
While one might visit Finland in the 90s and San Francisco in 2010 for the latest tech, where should one go to experience the next big thing in business and tech innovation? Is it China-or India? To Evans, it is not so much a tech question as figuring out the challenge one wants to tackle. “Technology wasn’t a big industry back in 1994, now it’s part of everything else. Think about what problem it is you understand and can see and see a way to solve, and where will be the best place to build that.”
Pioneers | Conversations on our Industry’s future is a new thought leadership series, brought to you by Campaign and Facebook, exploring emerging trends and cutting edge insights on the changes that will shape the future of the marketing and advertising industry for years to come.
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