NEW YORK (AdAge.com) -- This week, Ad Age posted its Look Ahead for 2011, which led us to consider: Just how accurate were we last year? Here we take an unflinching look at our predictions for 2010 and how they panned out.
Consumer packaged goods
Last year, we said innovation will determine what brands survive the next decade as retailers were winnowing me-too products from store shelves and efforts to expand established brand names into adjacent categories were running out of room.
While it's a little early to judge, it's clear innovation was a major focus. Procter & Gamble Co. launched its "biggest diaper innovation in a quarter century" with Pampers Dry Max, a major line extension in razors with Fusion ProGlide and a restage of Pantene. Those have had mixed results, as it ended the year with its SymphonyIRI market shares down in each of those categories, though it clearly made inroads with less-touted rollouts such as the Crest 3-D White line and Febreze flameless luminaries.
Despite the temptation we noted to cut budgets in the U.S. to chase growth in developing markets, personal-care ad spending was up almost 10% in the third quarter vs. a year ago, according to Kantar Media. But because all players were ramping up spending at once all over the world, it was hard to find clear winners and industry margins suffered.
But brands also proved more resilient than they looked a year ago -- recent innovation or no. Retailers at the start of last year, particularly Walmart, were pressing hard on margins and cutting out "also-ran" brands. It was heartening for the also-rans to see Walmart admit by mid-year that they still had enough consumer following that their elimination was costing the retailer trips, and it moved to bring back thousands of items.
Last January we predicted that government regulation will be the biggest challenge facing the restaurant industry. And we were right. The Obama administration in March 2010 signed into law the Patient Protection and Affordable Care Act, a section of which stipulated that all vending machine owners and restaurants with more than 20 locations must provide calorie count on menus -- a rule that the FDA has until March to put into effect.
A year ago we said that one way for brewers to emerge from their slump is to reclaim their cultural relevance through digital advertising. Well, brewers are still slumping for the most part, with sluggish trends that most blame on the slow economy. But they have invested more in digital and social media. For example, as part of its sponsorship of the 2010 FIFA World Cup, Anheuser Busch-InBev created a "Bud United" YouTube channel that included a digital reality show called "Bud House" which featured 32 soccer fans living together for 32 days in South Africa during the cup. MillerCoors, meanwhile, recently signed a three-year deal with mobile marketing agency Hipcricket as the brewer seeks to gain more of a social-media presence. Still, TV still sucks in most beer advertising spending, consuming 90% or more of all dollars for top brands such as Budweiser, Bud Light and Miller Lite, according to a recent report by UBS.
Efforts to tax sugar-sweetened beverages fell flat in 2010, but not for lack of trying. Former New York Gov. David Paterson and Vermont Attorney General Bill Sorrell called for a one-cent-per-ounce tax on sugar-sweetened beverages, while Philadelphia Mayor Michael Nutter proposed a two-cent-per-ounce tax on sugary beverages.
An ad war also broke out over the issue, with The Alliance for a Healthier New York airing ads urging New Yorkers to support the tax. The campaign, "Just a Few Pennies," lasted through mid-March and ran statewide on broadcast and cable channels. The American Beverage Association ran a series of its own ads that focused on how average Americans couldn't afford additional taxes.
Mobile phones have, in fact, morphed into personal shopping assistants, just as we predicted. And smart retailers jumped on the trend this year. The likes of Macy's, American Eagle, Sports Authority and Best Buy launched ShopKick, a location-based loyalty app that rewards consumers for visiting stores and trying on clothes. And in the consumer-packaged goods space, PepsiCo, Tyson and Seventh Generation were among the major companies that teamed up with the likes of Foursquare, Gowalla and CheckPoints to promote programs that reward consumers for picking up products and give them added incentives to put that product in their cart.
There were also innovations beyond location-based mobile marketing. Target posted store maps that could be downloaded to mobile devices in advance of Black Friday. And at Steve Madden, Mogreet, a mobile video platform, allows shoppers to text short codes and product names to get text messages, images and videos for further product information.
We were right when we said procurement would take a more active role in agency reviews in 2010 -- and that agencies would push back -- but what we didn't expect was that the relationship between the two groups would so quickly escalate that chief procurers, tired of being the industry punching bag, felt it was time that they do something about their image. Under the ANA, they late last year set up a task force led by the senior director of worldwide procurement at Pfizer, James Akers, to define the role of marketing procurement and establish a procurement mentoring program. What the task force achieves in 2011 remains to be seen, but we thought the dialogue would get far nastier before positive steps toward change would be taken.
The role of the media agency and its assignments did expand in 2010 based on our prediction that planning and buying ad space within an ecosystem that is rapidly evolving was becoming more and more complex. Agencies found themselves moving a bit more toward the center as they were asked to not only plan and buy traditional and new media, create content and run analytics and measurement. And the industry started seeing a switch from the old traditional pricing models to more performance-based models.
As we accurately forecasted at the end of 2009, direct marketers were in full-battle mode for much of the year on the privacy front, especially in the online space. In an effort to fend off legislators who think self-regulation just doesn't work, the Direct Marketing Association, along with other ad associations, proposed a wide-reaching program that allows internet users to opt out of being tracked for the purposes of online marketing. And, while the industry continued its love affair with all things digital, 2010 did see a bit of a renaissance for things like catalogs and mail, with some marketers investing in some of the more traditional outreach methods.
We said last year that PR needed to claim its rightful place as the authoritative voice on digital, and they are. One of the biggest drivers of revenue for PR shops in 2010 was digital- and social-media-based assignments. A realization among marketers that earned media and two-way conversations are the bread and butter of the PR industry has helped drive more digital work in the industry's direction and away from creative, direct and digital shops. And PR agencies put a bigger focus on connecting and developing relationships with influential bloggers and new media players. That has resulted in creating a more social and digital-savvy employee base. A number of shops have also put a bigger focus on getting their clients to go directly to the consumer and become content creators.
As 2010 stretched out before us, print publishers were determined to wring more money out of digital media -- or, to be precise, out of people consuming digital media.
On one front, more and more newspapers were going to try charging for parts of their websites. Soon enough, many people predicted, publishers would find they'd made a mistake. "Proving that what comes up must come down," Fitch Ratings wrote, "Fitch expects paywalls will be erected and dismantled in 2010 as media companies (with print products) experiment with charging users for online content and are ultimately disappointed by the results."
Like so many big changes, however, paywalls proved slower to arrive than anticipated. News Corp.'s Times of London did erect an imposing wall. It's even found out that some readers will pay for digital content -- enough, it believes, to eventually make up for reduced online ad revenue.
The Intelligencer Journal-Lancaster New Era in Lancaster, Pa., began charging for access to more than eight obituaries a month. And some papers continued the paid-content efforts they'd begun even before last year.
But the expected surge of new paywalls didn't arrive. It now seems more likely that 2011 and 2012 will be the years when newspapers put the paid content premise to the test. The New York Times and The Dallas Morning News are each introducing pay schemes early this year; The Boston Globe will follow later in 2011.
The other front for paid content -- selling app editions for iPhones and tablet computers -- at least found publishers engaging with gusto throughout 2010. Instead of moving methodically and cautiously, as newspapers are with pay walls, magazines leapt into the breach, rushing to be in Apple's App Store as soon as the iPad went on sale.
Results, however, have been underwhelming so far. It's partly the lack of cheap subscription offers while Apple and publishers disagree over the terms, partly a relatively low penetration for iPads and partly poor visibility for magazines within the App Store. If those problems can be resolved in 2011, we'll get a much better idea about the importance of app editions to paid content for years to come.
We were right: Ad Age predicted that carriers would key up for 4G and, yep, all four major carriers have 4G now, although with varying speeds, technologies and coverage areas. Carriers are definitely making moves to convert customers from voice fees to data. In 2010, AT&T was the first to changed its fee structures for data from flat-fee all-you-can-eat data to tiered pricing based on usage. Verizon and T-Mobile also adopted metered plans to make data hogs pay more, while Sprint is still holding out.
Here's a shocker: We were also right that high prices would keep the majority of consumers away from smartphones in 2010. Despite the iPhone and Android frenzy in media and marketing circles, smartphones only accounted for 37% of all mobile phones sold in the U.S. last year, according to research firm IDC's estimates. Globally, smartphones sales in 2010 were only a shade more than 20% of all 1.36 billion mobile sales, said IDC. However in 2011, with falling prices and more and more smart devices flooding the market, the tides are expected to turn this year. Smartphone sales are expected to account for half of all mobile sales in the U.S. in 2011 and Nielsen predicts that more Americans will be carrying smartphones in the U.S. than feature phones by year end.