YEAR-END REVIEW, 2017
Q1 RETAIL MARKET SETS THE TONE FOR THE YEAR
Despite high expectations for 2017, economic and political uncertainty led to a slowed retail market in Q1. Modest sales among major retailers and consumer goods manufacturers trickled down to advertisers, marketers, and agency holding companies, which were forced to realign their goals for the year. Omnicon, Publicis, WPP, and Interpublic Group all posted little-to-no growth after the quarter, setting the tone for the year ahead.
Although it took two more quarters, the consumer goods market has finally recovered. Early indicators from the holiday shopping season, including Black Friday and Cyber Monday sales, point to an overall strong Q4 marketplace. Going into Q1 2018, the Super Bowl and Winter Olympics are poised to keep the market high with brands allocating significant advertising dollars to align with the major events.
2017 Trends THAT CAME TO LIFE
Looking back at Nina Hale’s predictions for 2017, much of what was anticipated ended up flourishing despite a slow start to the year. More media vendors expanded their programmatic offerings to help advertisers reach qualified audiences with better targeting. In 2017, advertisers began effectively leveraging these technologies to execute programmatic TV, programmatic direct mail (the ability to send a personalized direct mail piece after a website visitor views a specific piece of content), and programmatic audio campaigns.
Live video streaming and influencer marketing also came to life in 2017. New consumer technologies, like live video, enabled users to capture the attention of their peers and build more-than-humble followings. These pseudo-celebrity personalities are now being categorized as micro-influencers and are helping both large and small brands reach highly engaged audiences.
It was also a big year for search marketers. New result types showed that search engines were homing in on searcher intent and attempting to align results that best matched that intent. Websites other than Google and Bing also looked to incorporate search into their core strategies. Pinterest’s foray into visual search and Amazon’s investment in audio assistants are proof of search expanding beyond traditional search engines.
Finally, brand managers began looking at their advertising budgets and started to prioritize channels and strategies that would yield more performance-based results. The shift away from click- and view-based ad interactions, as well as a shift toward performance agencies is setting these companies up for success in 2018.
TOP 6 TRENDS IN DIGITAL for 2018
As the world of digital marketing continues to evolve, staying ahead of trends is essential to success as a performance marketer. Here is what to watch in digital in 2018:
- AI & machine learning will lead personalization
- The retail landscape will continue to change
- Marketing departments will move to ROAS measurement
- Greater transparency to come from advertising networks
- Media types and measurement methods will continue shifting to digital
- Consumers will adapt to voice-powered devices
1. AI & MACHINE LEARNING WILL LEAD PERSONALIZATION
Perhaps one of the biggest marketing buzzwords of 2017 has been “AI” (artificial intelligence). Although technically a misnomer assigned to represent sophisticated machine learning algorithms, the potential of true AI is exciting to science fiction writers and marketers alike. At least four SXSW presentations focused on it this year, and everywhere you look, marketing leaders are sharing their thoughts on how it will change the industry. While a true technological singularity has yet to be reached, the impact that machine learning systems and tailored algorithms are having on advertising and communications cannot be ignored.
As a marketing concept, AI is an answer to difficulties marketers have faced in scaling efforts to meet consumer needs and improve upon marketing practices. The proposed outcome of artificial intelligence in marketing, previously defined simply as personalization, is the systematic customization of communication with consumers. If AI is biggest the buzzword of 2017, then personalization is its unrealized predecessor.
The reason true personalization has remained as an unrealized goal across multiple marketing channels is because until this point it has not been scalable. Before the assistance of AI technology, truly personalized communication was limited by a reliance on manual inputs. The ability to utilize algorithms to create, target, and measure micro-segments of consumers at scale will enable personalization to finally impact the greater advertising space.
Already we are seeing examples of this with advanced CRM systems, programmatic direct mail, and even social media messenger bots. These technologies enable marketers to more effectively reach individual consumers with unique content that appeals to their distinct needs.
Marketing technology is not the only category being impacted by scalable personalization through AI. Search engine algorithms will continue to serve results that best meet searcher needs and align with unique searcher intent. Additionally, device-specific (mobile) and input-specific (voice) algorithms could affect both paid search and SEO results.
Soon, user data may begin to influence how results are displayed, for example, results could be personalized to the searcher based on their search history, demographic data, or preferred websites. Google has already shown its personalization capabilities, providing a Feed of news stories for Android and iOS application users, which are curated from search history and user behavior.
2. THE RETAIL LANDSCAPE WILL CONTINUE TO CHANGE
There is no doubt that the world of retail is experiencing massive change. Disrupters in the consumer goods market and evolving online purchase channels have given buyers more choices and greater convenience than ever before. Brick-and-mortar stores remain a fundamental part of the buying process for consumers, but even major retailers have had to adapt to ecommerce trends.
This is no more evident than when looking at results from Cyber Monday 2017, which saw record online sales and more consumers opting to shop exclusively online than ever before. Amazon appears to have benefited most from the post-Black Friday surge in digital commerce. The company confirmed in a press release that the Monday following Thanksgiving was the single biggest shopping day in its history, surpassing even Prime Day 2017 for worldwide sales.
For marketers, Amazon should serve as a litmus test for estimating the direction of ecommerce and retail markets in 2018. In its What’s Next in Ecommerce report, Nielsen illustrates this by stating, “Amazon’s acquisition of Whole Foods was an important signal to the market: ecommerce is fundamentally changing the retail landscape. The future of retail will be built on a digital foundation.”
Marketers should also prepare for changes in consumer behavior that will affect retail. Notably, a recent surge in audio assistant and smart speaker sales, including the Google Home Mini and Amazon Echo Dot, indicates immediate opportunity for brands to prepare for voice-first commerce, AKA vcommerce.
For many businesses, the connection between online engagement and the purchase process is more complicated than that of the traditional retail market. Manufacturers that have relied on brick-and-mortar retail partners to sell product will have to adjust their logistics to accommodate for multi-channel sales. Businesses that rely on Amazon stores as the point of purchase may end up redirecting the focus of their branded websites, propping them up as portals to the third-party ecommerce experience.
3. MARKETING DEPARTMENTS WILL MOVE TOWARD ROAS MEASUREMENT
With more sophisticated technologies available to advertisers and a notable shift to digital sales funnels, business leaders will begin to expect deeper measurement from internal marketing teams and external partners. Vanity metrics, such as clicks, impressions, sessions, page views, followers, and engagements will no longer suffice as primary performance indicators. Instead, more CMOs will ask the question, “how does this impact the bottom line?”
To meet the expectation of being able to report on ROAS (return on ad spend), marketers must begin looking deeper into their performance metrics. Direct response, ecommerce, and lead generation campaigns should have a clear and measurable conversion point on which to report. Awareness and engagement campaigns should incorporate goals beyond reach. Instead, advertisers should measure awareness and engagement through brand-lift study responses, changes in search volume and social mentions, or by modeling channel hierarchy based on consumer touchpoints.
In addition to expecting deeper measurement from advertising partners in 2018, internal marketing teams must prioritize objectives that align with business goals and must attempt to assign value to those objectives. The onus will be on brand teams to determine how much a conversion is worth to the business to effectively evaluate the return of marketing efforts.
Attribution tools and methodologies will play a major role in readying marketers for ROAS discussions in 2018. Investment in the resources and personnel needed to implement a sophisticated attribution model will give marketing leaders the ability to connect disparate communication channels, identify key content that drives conversions, and segment high-value audiences by their path to purchase.
4. GREATER TRANSPARENCY TO COME FROM ADVERTISING NETWORKS
In July of this year, P&G’s finance chief Jon Moeller announced that the company had cut $100 million from its digital advertising budget. Moeller cited the ineffectiveness of ads being served on websites with fraudulent traffic, poor viewability, and objectionable content as the primary reason for pulling the ads. Three months later, representatives from Facebook, Twitter, and Google were asked to testify on Russian interference in the 2016 presidential election. Though unrelated, both stories illuminate digital’s transparency problem.
From concerns over viewability, fraud, and brand safety to questions around data privacy and ad intrusiveness, many media vendors are running the risk of forfeiting the trust they have gained from marketers. In 2018, these vendors must be more transparent with advertisers or face significant losses in revenue.
Facebook and Twitter have both announced new tools that will enable consumers to see all promoted content from accounts advertising on the respective social networks. These companies, however, are publicly traded and face more scrutiny than the multitudes of closed-door advertising networks that collectively account for a major portion of digital advertising spend.
Ultimately, it is up to advertisers and agency partners to hold media vendors accountable for transparency. In 2018, marketers should expect better communication with vendors, more control over where ads are served (access to whitelisting and blacklisting tools), and better reporting on viewability and audiences reached.
Nina Hale will continue working to prevent fraud by requesting proposals from media partners that have a direct relationship with ad verification vendors and closely monitor campaigns through verification dashboards. The agency will also continue to work directly with partners like Integral Ad Science (IAS) to monitor impression viewability, reduce ad fraud, and ensure brand safety.
5. MEDIA TYPES AND MEASUREMENT METHODS WILL CONTINUE SHIFTING TO DIGITAL
Despite concerns over the transparency of some digital channels, there is no denying the monumental shift of traditional media dollars moving to digital as consumers spend more time online. In 2018, over-the-top (OTT) video streaming services, such as Netflix and Hulu, and streaming audio services, like Spotify and Pandora, will account for significant portions of consumer television and audio entertainment time.
Increasing time spent online will mean less time spent with traditional media. According to eMarketer data featured in a September Variety article, cord-cutters (consumers leaving cable TV subscriptions) are expected to reach 22.2 million by the end of 2017. Meanwhile, the number of cord-nevers (consumers who have never subscribed to cable TV) is also rising. Combined, this puts the current number of paid TV subscribers at 196.3 million. By 2021, this is projected to plunge to 181.7 million. In contrast, Facebook, which recently introduced its own in-app streaming video platform called Watch, is projected to reach 217.4 million active users in the US by 2021.
With an exodus to online channels, the rise of OTT programming and podcasts is also affecting consumer media tastes and behaviors. Spotify recognized this early in the year and added three original podcasts to attract on-the-go and at-work listeners. The 2017 Primetime Emmy Awards also reflected a shift toward “bingeable” programming with Netflix and Hulu taking home a combined nine Emmys.
Brands have also taken note of OTT content. Deluxe recently announced a third season of its Hulu series, Small Business Revolution – Main Street, while Lowe’s is continuing its original home-improvement series, The Weekender, on the Lowe’s TV app in 2018.
To keep pace with shifting consumer behaviors, Nielsen is working to align online and offline audience measurement by partnering with major streaming services and social networks. In 2018, the company may begin offering advertisers access to audience lists built exclusively from streaming consumer data. Information on cord-cutters and cord-nevers would also help with building complete audience profiles for digital and traditional campaigns.
6. CONSUMERS WILL ADAPT TO VOICE-POWERED DEVICES
In addition to the impact that smart speakers and audio assistants will have on the retail landscape in 2018, voice-powered devices are poised to impact consumer search behavior, the use of connected home products, and the consumption of news/entertainment media.
Most important for marketers will be the evolution of voice search as consumer behavior changes. As it stands now, voice search mirrors mobile and desktop experiences, with the Google Assistant reading featured snippets (quick answers) for the searcher. In 2018, it is likely that Google will introduce paid options for advertisers and voice-only organic result types for users of screenless devices, such as the Google Home, Home Mini, and Home Max.
Ultimately, the impact that voice-first devices will have next year comes down to household penetration. According to a report from Edison Research and NPR, just 7% of US households owned an audio assistant at the beginning of 2017. Early holiday shopping trends, however, already indicate that household ownership of smart speakers is set to rise significantly by 2018. In its post-Cyber Monday press release, Amazon noted that its most-sold item was the Echo Dot smart speaker.
Marketers should begin preparing for voice search by evaluating website content to ensure it can meet the needs of a screenless user. For now, voice search results are dependent on featured snippets (also known as quick answers), which can be impacted through content optimization.
What this all means for marketers
Much of what drove industry change in 2017 is set to continue affecting marketing in 2018. Personalization may finally come to a head as AI and machine learning lead the way for automated communication. The way retailers do business and the way marketers measure the impact that media is having on their business are also bound to change significantly in the next year. Deeper marketing insights and a digital-first approach to advertising and sales will give business leaders the ability to make a real impact with their communications.
With monumental shifts in the way marketers reach consumers, there must also be major reform from advertising vendors. Transparency is key to digital advertising as an industry. Without it, business leaders will not be able to trust in the results they are seeing from their internal departments and external partners.
Consumer behavior will also continue to change in 2018. Voice search promises to alter the way consumers engage with the web and in-turn affect the way content managers think about their websites. Titanic shifts in traditional entertainment media being consumed online is also going to forever change the audio and video industries.
Preparing for change, however, will enable marketers to stay ahead of the curve, regardless of the technological development or change in consumer behavior. Keeping a close eye on trends as they reveal themselves will help marketers steer their brand ahead of competition.
