Over the last 20 years, the media landscape has rapidly evolved to meet the ever-changing demands of consumers and technology innovation. This has resulted in new opportunities for the advertising industry. It has also contributed to the great complexity that marketers face today.
It's amazing to think back at how much has changed in a relatively short period. Just 10 years ago, TV and newspaper commanded most media buyers' dollars. In 2017, digital has eclipsed TV ad spending for the first time.1 The two likely explanations for this are targeting and measurement. Digital advertising has offered targeting of precise audiences and detailed measurement of campaign performance where TV traditionally has not.
Of all the new ad tech and new technologies, the following five key trends are anticipated to have the most significant impact on marketing.
1. The shift from one screen (TV) to truly multi-screen entertainment
Content is no longer restricted to TVs mounted in the living room. Today's consumption is vastly different. It's estimated that there are eight video playback devices per broadband home today.2 By 2020, 83% of the population is projected to be consuming digital video.3
This means that advertising needs to follow the consumer – across whatever devices they use to view content. Advertisers will want to be able to serve, sequence and measure advertising seamlessly across screens and platforms. With this change, we will also likely see new ad formats (shorter ads, interactive ads) and growth in brand integration into content.
2. Moving from contextual-based targeting to audience-based targeting
The TV advertising ecosystem has to evolve to survive the competition from digital alternatives, and it is. Part of that evolution is the birth of targeted TV advertising. Data-driven and addressable TV advertising are on the rise because both give advertisers a more effective way of reaching their true target on TV while also being able to attribute ROI through the entire marketing funnel. The linear TV addressable space is growing quickly, and, according to one estimate, will reach over 74 million households by 2021.4
As addressable TV continues to grow in scale and adoption, the next phase is cross-screen addressable advertising, tying TV to digital and mobile. Hundreds of millions of devices are used every day, and the people using those devices are accustomed to receiving ads on them. There is tremendous opportunity to scale this product and deliver integrated advertising campaigns to the same target audience at home and on the go.
3. The rise of programmatic advertising
In addition to the way ads are now being served, even the methods of accessing inventory are evolving. The bulk of digital buys are transacted programmatically—the automation of planning, buying and reporting. Programmatic digital display ad spending was just $1.1 billion in 2011, and is projected to reach $45.9 billion in 2019.5 This represents an astounding 84% of total digital display ad spending.
While the television space has yet to reach these staggering levels of growth, we are starting to see some of these trends evolve.
4. Integration of brands in content
While the growth of content consumption has mostly been positive news for advertisers, there is also growing consumer demand for ad-free programming or fewer ad loads within programming. A marketer's solution to non-interruptive-based advertising must be two-fold: First, make advertising more relevant, as with addressable and data-driven TV. Second, expand native-based advertising, which integrates brands directly into content.
Branded content is any content produced by a brand that supports the brand's marketing objectives and aims to provide something of value to audiences—typically by entertaining, informing, and/or educating. This means that rather than having brand messages only be advertising, it can be woven into the content and the experience itself.
In 2016, B2C marketers allocated 32% of their total marketing budget, on average, to content marketing and 50% of marketers plan to increase content marketing spending in the next 12 months.6
While growing, both branded content and branded entertainment need better data to support high development costs and to track ROI.
5. Development of virtual reality and augmented reality experiences
While virtual reality (VR) and augmented reality (AR) have been talked about for decades, they are finally a reality for consumers and marketers alike. As headsets and software have become more affordable for consumers, marketers are ready to take to these new platforms to deliver truly immersive environments, which evoke a 27% higher emotional engagement than 2D environments.7
Often lumped together, VR and AR are actually different types of experiences. VR takes you into a "virtual" experience more akin to traditional video gaming whereas AR "augments" what you are seeing in the "real world."
AR could become the primary driver of a $108 billion VR/AR market by 2021 with AR projected to take the lion's share of $83 billion and VR $25 billion. In the short term, AR has more potential because you don't necessarily need special hardware/software – any smartphone can run an AR application.
Not only has AR proven its feasibility and practicality, but perhaps the greatest opportunity actually lies in its ability to integrate location intelligence. 750 million downloads of Pokemon Go would certainly suggest mobile users are eager to participate in immersive experiences.8
These opportunities for marketers to combine the idea of branded content with VR and AR to create fully immersive worlds and landscapes for consumers to interact with are the next level of entertainment consumption and ad delivery.
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2Q4 2016 Technology Industry Update, SNL Kagan
3US Digital Video Viewers and Penetration, eMarketer February 2017
4US Addressable TV Ad Spending, 2015-2018 (billions, % change and % of TV ad spending)
5US Programmatic TV Ad Spending, eMarketer June 2017
6Content Marketing Institute, "B2C Content Marketing: 2016 Benchmarks, Budgets, and Trends – North America"