Thursday, 31 December 2015

Ten signs indicating that the #Advertising Industry is in turmoil

Simple question: Does advertising work?

Especially today, when the advancements in technology and the subsequent changes in consumer adoption and behaviour are out-pacing the legacy structures and legacy thinking of brands and agencies. Perception is, it's not that businesses can't keep up; it's the fact they don't know how to.

This recent interview between Lord Sugar and Sir Martin Sorrell (who naturally has a vested interest in promoting the value of advertising) clearly demonstrates this opinion. An excerpt from the discussion between two heavyweights of industry (and now middleweights of TV) went like this:

"This is how much you don't know."
Lord Sugar: Now there are so many avenues where [advertising] money can be spent. National newspaper [circulations] are falling; they’re not as popular as they once were. Internet advertising – subtle adverts appearing in the corners of websites – are where a lot of advertisers are placing their money. I haven’t got a clue how they’re supposed to work but nevertheless the advertising fraternity doesn’t care. It says ‘never mind, we’ll take your money – we don’t know how it works either

Sir Martin Sorrell: That's a little bit cruel.

Lord Sugar: Well, it's true.

I think it's very difficult to argue with Lord Sugar's point of view. How many of you have actually clicked on an ad? Yet, how many of you have been annoyed by an ad, which has chosen to stalk you across every website you visit online? I'm guessing the balance of being annoyed far outweighs the act of clicking through.

Holding up the mirror
Let's revisit the purpose of advertising. If it's to grab people's attention, with the simple and ultimate aim of persuading them to buy something, then it's impact has declined dramatically.

In these days of multi-channel communications and #IoT hyper-connectivity, the type of thinking, used to create the 30 second TV commercial, no longer cuts the mustard. I'd like to think (more accurately, hope) we have seen the end of the over-hyped and over-invested advertising we have just witnessed during Christmas 2015.

This type of legacy thinking has been transferred to online advertising (spray and pray - wallpaper the web), it's ill-informed, lazy and it doesn't work. Our ability to measure every impression, every click-through, as well as the post-click 'journey' should provide us with the clues. Average display ad click-through rates are 0.1%, which means 99.9% of the audience don't interact. We have seen a slightly higher number of clicks (or taps) on mobile, but this is most probably because we're tapping things by mistake...or worse still, being tricked to tap...let's just call that 'Native Advertising'.

So what are the ten things we're seeing, (but maybe choosing to ignore) that indicate the demise of the advertising industry and the gradual decline of agencies and rigid marketing departments? Do you recognise any of the points listed below? (As a marketer or as a consumer.)
  1. Continual Re-invention: - How many agencies have you seen, or been a part of, that have re-invented their 'value proposition' or even rebranded? In fact, the better question to ask is, how many haven't you seen? The time, effort and cost of undertaking such a task is significant. The motivation to do it? Fear, uncertainty, doubt. Lower revenues, lost accounts and the loss of key personnel.    
  2. Acceleration in Mergers and Acquisition activity: - As above: potential fire sales, joining forces to share accounts; to access new markets; or to up-skill existing company, the motivation behind this activity is similar to the above, but also with the vision of achieving longer term growth through M and A.
  3. Unnecessary Complexity: - How many new terms have hit the market in the last few years? Yet how many of these terms mean something new?  Examples: Content Marketing; the latest hype and buzzword for the web...yet, imagine the web without content. It'd be pretty empty. Content has always been there, but now content is being structured for marketing purposes. Can you see it yet? It's another term for online advertising. Other such bullshit phrases Native Advertising, Big Data, Storytelling, Omni-channel and the obvious cracker 'programmatic marketing' (ads placed by a computer) are being used to disguise the old as something new.
  4. False assumptions: - The biggest assumption being, the more we know about people, the more effective we can make our advertising. Wrong. The continual quest for the single customer view (because we can - because the data we can get implies we can achieve this) is an odd one. Typically, this level of data use manifests itself in people being followed around the web by the same ads, even if they already have bought the product; and ill timed and misinformed communications from other areas including email and DM. Why not use this data to enhance the customer experience, rather than use it to advertise more? The data is there, the application is wrong.
  5. Newly invented job titles: - To fit with re-invention, HR and recruitment agencies are being tasked to recruit people for jobs that haven't previously existed. How do they know what to look for from an experience or skills basis? What is the difference between a digital strategist, social media strategist, customer journey planner? Even in the C-suite, we are seeing roles evolve e.g. the Chief Marketing Officer (CMO), becoming Chief Digital Officer (CDO), becoming Chief Customer Officer (CCO). Evolution from task to channel to audience.
  6. Employee retention rates: - Whether it's because of confusion, lack of clarity, limited sense of purpose, frustration or otherwise, we're now seeing that two thirds of employees swap their jobs in the second year of employment in the agency world. [Propel Study]. Most of this is through the employee's own decision, however, redundancies are also a factor. See point 1.
  7. Awards: - For awards sake. Is there another industry, which judges and praises itself in such an overtly extravagant and frequent way? Awards subjectively given to others, by others who work together, who are friends with each other; organised by industry bodies and media companies constantly seeking out ways to stay current...whilst also making money. 
  8. 'Creativity' is lauded: - Creativity viewed through the very blinkered lens of advertising is an odd concept. 
    Let's be honest, it's over hyped advertisers giving awards for over hyped ads.
    Creativity should be celebrated in a much wider context, especially with all the technology at our disposal. How about creativity that enhances people's lives, as opposed to ads? See the Cannes Lions site extract...says one thing, but actually delivers another. The only people raving about the creativity in advertising are the advertisers themselves. Maybe this makes advertisers feel more worthy and fulfilled?
  9. Continuing to do the same thing, year after year: - In a world of constant change, many businesses choose to execute the same old media plan, and there is no let up in this habitual behaviour. The 'all agency' meetings follow the same pattern, with the same outcome...to please the most senior stakeholder in the client business.  £18.5Bn was spent on advertising in the UK alone in 2014 according to Warc; and 2015 is expected to show a further increase in this already obscene number. Yet the returns and consumers' appetite are diminishing fast. The impact of failing advertising led to desperation in the retail sector over Christmas 2015, with retail companies offering massive discounts four days before Christmas day. Quite clearly those very expensive ads didn't attract the desired level of custom.
  10. Ad blocking increased usage: - People are taking evasive action to escape online advertising. The increase in ad blocking usage is nearly exponential. People are paying money to platforms to escape advertising i.e. Spotify.
People's (otherwise known as consumers) behaviours have changed dramatically over the last few years, and they are continuing to change. They are savvy, less taken in by story-telling or ad placement trickery, have super powerful subconscious advertising filters, and take no nonsense. They have the upper hand. Yankelovich Research claims that an individual's average daily ad exposure has increased from 500 a day in the 1970's to over 5,000 a day, today. Ironically, the human being has been inadvertently trained by the advertising industry to switch off to advertising.

Like it or not, advertising is far less effective and agencies and businesses need to accept this. A time for the more senior agency people and brand marketers to start being honest with themselves and each other, to stop playing the game of pretend, and begin to re-learn what their customers really want. They don't want to be advertised to (they're quite clearly demonstrating this); they want the best product, service and experience businesses can offer, and would much prefer to see businesses invest more into these areas. It's becoming akin to the Emperor's New Clothes story.

The Brand (Emperor), The Agency (Weavers), The Consumer (Little Boy)

It's time to re-cut those marketing budgets and divert that wasted ad money into areas of innovation and product and service enhancement across the entire supply chain; break the same old ad habit, take calculated risks. Get that right and brands won't need to advertise; their actions will speak for themselves.

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