How AI and a diverse majority will define the future of marketing and advertising

If you’re a marketer, chances are you’ve seen your share of think pieces about the “death of marketing” or the “death of the CMO” for, let’s see, the better part of the last two decades?

Hyperbolic headline writers: Slow your roll. To quote “Monty Python and the Holy Grail,” we’re not dead yet. In fact, we may be getting better.

In September, The List, the collective of leading marketers and advertisers assembled by Ad Age in partnership with Meta, launched “The Modern CMO Playbook,” a thought leadership series to examine the most pressing issues of the day with an eye toward coming up with workable solutions to ensure future success for the industry. This month, The List looks ahead at how the changing ad ecosystem, technological innovation and the coming majority minority population will define what’s next.

Ad Age recently reported that ad industry employment reached an all-time high of 504,000 jobs in October 2023—topping the previous record of 503,700 at the height of the dot-com bubble in November 2000. (It’s worth noting that the traditional agency model needs revamping; we’ve seen evidence of companies accepting this reality in the business by restructuring across brands and agency networks.)

Considering the trajectory of ad spend, emerging technology and the consumer market, the marketing and ad industry seems primed for another decade of growth and innovation.

Both WPP’s GroupM and IPG Mediabrands’ Magna have forecast growth in ad spend in 2023 and 2024 across various channels, particularly retail media and digital. GroupM expects 2023 global ad revenue to grow 5.8% to $889 billion, excluding U.S. political advertising. Magna predicts 5.5% growth to $853 billion. GroupM is forecasting 2024 growth to be 5.3%, while Magna forecasts a whopping 7.2%.

Magna expects global retail media network growth of 20% next year. GroupM downgraded its 2024 forecast of RMNs to 8.3% growth due to economic factors in China—but predicts that by 2028 the segment will surpass linear and connected TV revenue combined. GroupM predicts CTV advertising will increase by 10.9% in 2023 and 13.8% in 2024, although that growth is not enough to counteract linear’s continued decline. Dentsu is much more bullish, however, forecasting CTV spend to double year-over-year, to 30.8% in 2024.

In 2023, digital advertising accounted for 69% of total global ad sales. GroupM predicts digital to grow globally by 9.2% in 2023, while Magna expects growth this year of 10.5%.

As tech goes, so goes the ad industry

Alongside the increase in ad spend, emerging technologies are again reshaping the consumer engagement landscape. According to the Ericsson Mobility Report, 5G networks are projected to reach 1 billion subscribers by the end of 2023, accounting for approximately 20% of the global population. Almost 58% of all internet traffic comes via mobile, so any technological innovations will have a profound impact on the way consumers experience all media on their devices, including mobile advertising. Consider how Apple’s Big Tech rivals reacted to privacy-related updates to its iOS that threatened to limit advertisers’ access to user data.

But heading into 2024, the big story is how the rise of artificial intelligence is poised to reinvent the industry, just as digital and social media did in the recent past. Forrester’s report on generative AI predicts that in 2024 creative agencies that invest in the technology and build custom AI solutions for clients will “build sustainable economic models,” while in-house agency remits will shrink, agency reviews will increase—and digital agencies will “disappear from the agency landscape.”

“AI is possibly one of the only technology innovations that has forced all aspects of an organization to care about data and work together to get the most out of a product,” said List member Obele Brown-West, president of Tracer. “AI cannot work effectively without clean and organized data. In that regard, AI has already led to and will continue to lead to closer relationships between marketing analytics and data teams in order to get the full capability out of AI for marketing and creative purposes.”

As ad spend increases and the media channels that money is distributed through continue to evolve through emerging technology, the global consumer market is on track to grow by 1 billion within the next 10 years. Importantly, the market will be majority diversified by 2045 in the U.S. Requiring more deeply nuanced communication with 70% of consumers saying a company’s understanding of their personal needs influences their loyalty.

“With the growth of marketing channels and the U.S. increasingly becoming more diverse, brands have the opportunity to throw away the scapegoat of ‘general market’ given the limited ability to get to a broad consumer base,” said Brown-West. “Rather, brands now have the opportunity—and duty—to speak to all of their consumers in brand-authentic ways across a number of diverse marketing mediums.”

Brands and agencies that aim to successfully position themselves through another decade of innovation will be steered by leaders who (1) embrace new working models, for instance, by addressing the battle between returning to the office full- or semi-full-time versus a hybrid or work-from-home arrangement and (2) learn from the past 10 years of digital content and media investment, new technology integration and consumer expectations to optimize for the future.

Embracing new working models

The COVID-19 pandemic fundamentally altered the way many of us work and live. The concepts of remote and hybrid working arrangements went from perks to standard operating procedure seemingly overnight. In response, company leadership needed to create and implement plans to maintain/increase productivity, engagement and performance. However, as soon as quarantine mandates were lifted, many employers reverted to default in-office policies due to concerns about collaboration and productivity, as well as financial pressures to make use of rented office space.

Some key takeaways from the hybrid/WFH era:

According to research from Envoy, 80% of bosses regret their initial return-to-office decisions and say they would have approached their plans differently if they had a better understanding of employees’ office attendance, their usage of office amenities and other related factors.

A survey from Gartner shows that 69% of business leaders have expressed concerns about collaboration, culture, creativity and engagement due to hybrid working models.

Per a report from WFH Research, 59% of full-time employees are back to being on-site every day, while 29% are in a hybrid arrangement and 12% are completely remote.

Owl Labs’ State of Hybrid Work 2023 survey reports that 62% of employees would take a pay cut of 10% or more, and 4% would quit their job if they were no longer able to work remotely or hybrid.

Offices are still only half-full compared with their pre-pandemic occupancy. According to Forbes, by 2025, an estimated 32.6 million Americans will be working remotely, which equates to about 22% of the workforce. Remote and hybrid work is here to stay. All business leaders, particularly in the marketing industry, must tackle issues like culture, proximity bias and employee versus employer expectations that challenge the future of work.

Culture
According to Hubspot’s 2023 Hybrid Work Report, 70% of workers feel connected to their company’s culture, and 69% feel connected to their company’s mission or purpose. However, only 34% feel connected to their colleagues. Interestingly enough, remote and hybrid workers’ connection to company culture and mission outpaces that of in-office employees.

Proximity bias
Owl Labs’ survey examined the divide between WFH/hybrid workers and in-office employees:

• 63% feel concerned that managers view those in the office as harder working and more trustworthy than their remote counterparts.
• 60% are concerned that working remotely will mean they have less of a say at work and miss out on opportunities.
• 63% said they are more likely to ask the opinion of those they physically work with, rather than their remote colleagues.

Employer and employee alignment
Almost two-thirds (63%) of Owl Labs survey respondents said their company trained employees on how to hold effective and inclusive hybrid meetings, and 62% said their company trained managers on how to manage remote/hybrid teams—an impressive increase from 2022 when those figures were 54% and 50%, respectively, but clearly there is still room for growth.

Leaders must review the last three years of hybrid/WFH testing and learning to optimize team/departmental processes, define and assess engagement, and measure productivity/performance. Doing so will require establishing guidelines for communication channels, response times and expectations for communication; investing in easily accessible technology that enables hybrid and remote collaboration; setting goals and expectations; and monitoring employee engagement.

Learning from the past

The last 10 to 15 years have been epitomized by a revolutionary convergence of media, technology and content—all of which led to a culture of “building the plane while flying it,” as business leaders went through rigorous testing and learning regarding what type of content/technology/media channels to invest in, how to integrate those properties into business models, and how to understand customer expectations.

The information age ushered in a reality where everyone from large corporations to independent marketers could capture copious amounts of customer data to enable personalization, customer insights and segmenting on a scale never seen before. Digital content and social media platforms put the power in the customer’s hands making word-of-mouth a coveted tool for marketers worldwide. Along with that, customers were able to rely less on advertising and lean more into personal research via on-demand information.

A fresh decade of innovation driven by a new era of emerging technology coupled with perhaps even more polarized sociocultural realities of an increasingly diverse market of consumers and prospective talent is upon us. Business leaders must leverage key takeaways from wins and pain points of the 2010s, to create space for a better future.

In just a few short years consumers have moved from distrust in corporate brands to trusting corporate entities more than the media and government. In 2021 a Havas survey of over 395,000 consumers found that less than half of brands are seen as trustworthy (47%), and 75% could disappear and would be easily replaced. The 2023 Edelman Trust Barometer indicates 62% of respondents see business as both competent and ethical, compared with 59% for nongovernmental agencies, 51% for governments and 50% for the media.

“Brands should not shy away from audience-specific content that leans into their understanding of their consumers,” said Brown-West. “Consumers increasingly are choosing the brands where they feel affinity. If a brand is not speaking to the diversity of their consumer base, the brand will be leaving money on the table. And, if a brand does not know how to authentically speak to their consumer base, the brand needs to bring more diversity into their marketing room.”

Consumers still expect corporations to do business in the interest of societal good, a tall order for brands that must find ways to not just try to appear ethical and socially responsible, but also walk the walk in the midst of remaining profitable.

Brands must do the job of finding synergy between corporate social responsibility, marketing and advertising, and revenue. Big data provides enough insight to reveal nuanced consumer community needs. Consumers have the power to discover the truth about corporate ethics. Trust is the key to building sustainable relationships between brands and consumer communities. Content is the utility brands must use to display how they’re rising to CSR expectations while delivering quality products and services.

MDPI research examining the interactive effect of advertising investment and corporate social responsibility on financial performance reached the following conclusions:

CSR positively regulates the relationship between advertising spending, corporate revenue and value, and companies with higher CSR levels always have higher benefits from advertising investment.

Through advertising activities, companies show their CSR and confidence in product quality, which can improve corporate reputation, reduce shareholders’ concerns about future performance expectations, enhance shareholders’ investment confidence, increase the positive cash flow and, in turn, result in positive financial performance.

From the consumer perspective, companies’ active CSR fulfillment and advertisement can alleviate the information asymmetry between consumers and companies, reduce consumer perceived risks and market transaction costs, and increase purchasing intentions.

Preparing for the future by reviewing past actions to make better informed decisions is a best practice on a very human level, but it translates to business. People don’t buy from businesses anymore; they buy from people. Hence the drive for brands to become increasingly more personalized.

“Now more than ever brands are looking for efficient ways to reach a more diverse audience set,” said List member Whitney Headen, CEO of 19th & Park. “It’s imperative that they look to evolve their marketing tactics at the rate of the industry’s involution. Adopting new strategies, looking through new marketing channels and making technology a key part of every decision will be a driving force to see which brands will stand the test of the next 20 years.”

Wise business and marketing leaders acknowledge that in the modern world rapid change can occur in a moment, rather than in months or years. By embracing new working models and optimizing the use of big data, technology and media to drive consumer trust, the industry can successfully face the future.