This is Hardcore: Is advertising facing an existential threat?

This is Hardcore is a new series that takes a deep dive into growing trends. Each month we'll explore a little more of what’s behind the headlines and see what’s really going on. In our first episode Neil is discussing the current threats facing the advertising industry. Find out what he has to say in the video and then read on to find out more.

 
 

Predictions of a decline in advertising have been made for a long time. At first glance, this may seem a strange view right now, given we consume more media than ever. And as is often quoted, and it is a fact, despite the rise of the internet, that we watch more TV than ever.

But at the same time, to draw the conclusion that it’s easier than ever to reach the public through advertising ignores a seismic shift occurring. Unless there’s a fundamental change in the trends I’m about to outline, we’re going to have to change our whole approach to selling.

Let’s start with television. Yes, we’re watching more than ever. But we’re also watching fewer ads. The growth has come from Netflix, Now TV, and Amazon, all of which are subscription based. Regular ad-supported TV is in decline.

Yes, there is YouTube with its ever-increasing number of ads but even here YouTube Premium now means you can cut them out. We also watch a hugely diverse range of programmes on the platform. So the big audiences that TV could deliver for brands like P&G as part of their marketing strategy are harder to reach. Particularly when it’s getting ever harder to make money as a YouTuber.

With these trends as well it’s generally the wealthier on the whole who block or pay to avoid the ads. So the total potential spend being lost is higher, compounding the pain.

If you work in digital marketing, your reaction may be to say so what? After all, there are now so many new programmatic options that can be used to target customers... But whilst there’s been explosive growth in digital advertising, the reputation of it is falling fast. Programmatic has raised issues over viewability, surveillance and brand safety. As a result, some very big brands have some serious questions about whether they should even be using programmatic.

This applies equally to social media. It’s seen as a monopoly with serious reputational issues. These go beyond causing concern to brand managers. Facebook, in particular, is in the firing line of governments around the world due to the issues they’re seen to be responsible for. As a consequence, increased regulation is highly likely.

Traditional publishers have also faced problems. Digital advertising reaches a big audience but the return is much lower compared to traditional means. As circulations fall, there’s been many closures. The industry is starting to turn a corner. But not from advertising. The publishers who are successful are those who increasingly don’t make their money from advertising.

Even radio has seen a move away from the traditional model. Spotify and Apple Music want you to subscribe and have taken the audience from many music stations. Podcasts, although ad-funded, typically have a single sponsor, rather than the many messages model that traditionally was the norm in Radio.

So what I wonder is this, although we clearly spend more time than ever before with all of these platforms, are there, in fact, less and less opportunities for advertisers?

If that’s true, what should you do? Well, here’s our top three takes to what you should do in this new situation.

  1. Ask awkward questions. If you are managing agencies, you should be asking them about the trends we’ve outlined here. The effectiveness of your advertising spend and the reputation of your business are in the balance.

  2. Stand for something. As we’ve noticed in judging the Webbys recently, in these polarised times, having a strong point of view is important to cut through to customers. Everyone has something they believe in. What’s yours?

  3. Your product is your marketing. Online word of mouth remains the most powerful way to connect with customers. Could you improve what you sell? A lot of brands have been built through strong product innovation and low-cost word of mouth. What additional value can you create to connect with customers?

We’ve been helping customers with all three of these issues, so if you’re interested in knowing more, please do get in touch at hello@createfuture.com.

Neil Major