Industry disruptions are like New England snowstorms—more frequently forecast than felt. This past winter, though, the meteorologists' predictions came true, and for my hometown of Boston, the Nor'easters were unrelenting.
The marketing industry faces simultaneous storms of disruption in mobile, video, and programmatic advertising. These three forces will reshape the platforms, the pixels, and the pipes of digital media. As fortune favors the prepared, executives are wise to educate their organizations about these landscape-altering forces.
The Mobile Earthquake
After a decade of wondering when mobile would finally arrive, marketers know see that the earth has undeniably shifted underfoot. Smartphones and tablets are now the dominant platform for media consumption around the globe. Among younger demographics and in developing parts of the world, it is mobile-first and and even mobile-only (in much of Asia, mobile devices dominate PCs.)
Yet the "Meeker gap" (that consumers spend 25% of their time on mobile, while marketers spend just 4% of their budgets there) persists. One prevailing challenge is measurement: Only 18% of marketers say they are very confident in their ability to measure the ROI of their mobile efforts, according to a report by Forrester.
A second issue has been the quality of the advertising impressions. Early mobile advertisers simply adapted the creative formats they'd used on desktops; but on small screens, so-called "banner blindness" is amplified.
These challenges aside, two trends are changing in favor of mobile: The first is an increase in screen sizes, which deepens engagement; and the second, related, is the dramatic rise of mobile video.
The Video Volcano
Though mobile is rapidly displacing the desktop, television's grip on consumers' attention remains strong. And yet the "cord cutters" are on the march. In 2014, among households with either a Hulu or Netflix account, 18% did not subscribe to either cable or satellite television. That's up from 13% in 2009, according to Experian.
The growing availability of high-speed Internet is driving the flight from traditional TV, with no reversal in sight. "Can TV migrate to online?," asked Shane Smith of VICE Media. "If that's the question, you're already dead."
Mobile devices, particularly tablets, are also playing host to more video consumption. In 2014, more than one-third of all digital video plays were on mobile devices, according to data from Ooyala.
In short, on every device where media is consumed—whether smart televisions, tablets, or phones—digital video is on the rise. This proliferation in screens will fuel an explosion in digital video advertising, as marketers finally have the best of both worlds: the engagement of video with the addressability of digital.
Global TV advertising spend in 2014 was estimated to be $215B. As Madison Avenue shifts these dollars to digital, it will do so much as China embraced capitalism: on its own terms.
Yet there is no denying one aspect of digital that will make this shift appealing for those who handle money: its potential for lowering overhead. Television, the last bastion of faxed ad insertion orders, will soon be amenable to the same kind of automation that has transformed other channels.
This brings us to our final megatrend, the inexorable rise of programmatic media buying.
The Programmatic Flood
The emergence of programmatic media buying, while less visible than the growth of mobile and digital video, has been no less important. In just under five years, a new kind of media transaction—the real-time buying of ads by algorithms—has grown to over $20B of spend. By 2018, Magna Global estimates this will increase to $50B. In the wake of this trend, a number of billion-dollar start-ups have been born.
The appeal of buying advertising programmatically, versus the traditional method of pre-negotiated contracts, hinges on dramatic improvements in both efficiency and intelligence.
On the axis of efficiency, programmatic is enabling a vast digitization of the piping that undergirds the digital media world: the pricing, delivery, and tracking of advertising impressions is handled by software. The media markets are following an automation path traced by Wall Street a few decades earlier, except that the daily transaction volumes in programmatic advertising are now 100 times greater than those of the NYSE.
On the axis of intelligence, these massive transaction streams also generate mountains of data, which can be analyzed to route the right messages to the right audiences. Methods such as retargeting (those Zappos shoes that follow you from site to site) and geo-targeting (digital coupons delivered as you walk down a pharmacy aisle) are two such examples.
Moreover, mega brands like Proctor & Gamble have publicly declared their desire to shift 70% of their spend into programmatic channels.
The Opportunity in a Crisis
This wholesale remodeling of marketing's platforms, formats, and processes has many CMOs and their agencies in a state of crisis. Yet the very technology that is upending this space is also opening up new opportunities for those willing to take even a few small steps.
First, be proactive. Don't wait for your agency to bring these trends to you, talk to them about ways you can invest in them. Second, just as you did with Twitter and Facebook, start by experimenting with small budgets, and be willing to fail. And finally, start building internal expertise and an understanding of mobile, video, and programmatic channels. That institutional knowledge will best equip you to select and get the most from your external partners, whether agencies or technology vendors.
