Three pressures on marketing effectiveness in media and advertising
For almost two decades PHD, in conjunction with the IAB, has been producing CMUST (the Canadian Media Usage Study). CMUST compiles a macro view of the changing media habits of consumers and chronicles how advertisers are adapting. It’s a useful foundation for understanding the market forces at play today. As we compile the latest data and perspectives, there are three macro trends that have our particular attention. While the tasks are not straightforward, marketers that tackle these trends head-on with data, creativity and courage can expect more tailwinds from advertising than their peers.
Funding digital availability
The background:
In How Brands Grow, Byron Sharpe introduced the notions of “mental availability” and “physical availability” to the marketing world. Both are key to growth. Physical availability is all about distribution – being readily available when people are buying. Mental availability refers to having your brand come to mind when people are thinking about your category. Traditionally, advertising investments have been almost exclusively focused on growing mental availability, but the rise of e-commerce is changing that.
In a September 2020 article for Marketing Week, econometrician Grace Kite pointed out the remarkable correlation, in the UK, between the rise of e-commerce and the rise of digital advertising. This same relationship exists in Canada and it suggests that e-commerce growth is a direct driver in the growth of digital advertising expenditure.
On the one hand, this isn’t a new idea. On the other, the implications are profound. Digital advertising is generally funded by advertising budgets, but it’s becoming increasingly important to understand which parts of digital are like advertising (i.e. building mental availability) and which are a bit more like distribution (i.e. maintaining digital availability). Traditionally, this line has been drawn roughly between paid media (mental availability) and owned assets like websites (digital availability).
The reality is that paid media is playing an increasingly important role in digital availability – and as e-commerce grows, the cost of this investment will grow too.
The implication:
The most successful marketers will find the resources to adequately fund digital availability while also staying competitive in the channels that grow mental availability.
This will involve a combination of:
- Knowing when digital spend is growing mental availability and when it’s enhancing digital availability
- Finding non-advertising budgets to support the increasing cost of digital availability
- Using measurement to minimize digital availability spend that doesn’t contribute to incremental demand
Fragmented attention
The background:
Canadians are spending more time with content than ever before, but they’re getting harder to reach with advertising. And, when they’re reached, their attention is more precious. Advertisers have less time to convey their messages in ad formats that are generally shorter in duration and are reaching people that are more likely to be distracted.
While the trends aren’t new, there has been a clear acceleration in recent years and multiple forces are converging to make the situation more urgent.
The latest CMUST data compilation suggests that subscription services account for 31% of video consumption amongst adults in Canada. Amongst younger adults, this rises to 46%.
As cookies and similar technologies continue to fade, a new digital landscape is shaping up. Maximizing reach will mean working in multiple walled gardens simultaneously. Each of the major platforms has its own communication subtleties requiring expert navigation.
The implication:
Advertisers and their agencies will need to work harder to navigate the challenge of attention. On the media side, this means mastering the intricacies and the big picture of a rapidly evolving landscape. On the creative side, it’s more important than ever to make every second count.
The range of options represents a daunting set of decisions. Marketers that can rally their teams to the task will find lots of opportunities to adapt how they reach people and what they say. The most successful will find the balance between technical knowledge, consumer insight, data and intuition.
Multi-faceted inflation
The background:
Marketers, with cautious optimism, are returning to TV with investments this fall and are faced with intense competition for shrinking audiences. The combination of these factors is driving significant inflation in TV prices.
This in turn drives a greater shift in investments towards digital video platforms. The challenge? The unit cost for video on digital platforms is generally higher than for television. Often significantly higher.
Marketers buying video inventory in all forms, for the foreseeable future, should expect three types of inflation:
- Within TV as rates rise and reach efficiency falls
- In rising unit costs for budgets transitioning from TV to other video media
- Within digital video as demand increases and auction prices rise
The implication:
Advertisers with traditional investments in television should plan to act early and decisively to secure in-demand inventory.
It’s increasingly important to really understand the audiences that represent the best sources of growth for your business – and the degree to which they are addressable in digital video. The higher unit costs of digital video may be more-than-justifiable for audiences that can be effectively isolated.
Getting the balance right between channels can have a material impact on reach and effectiveness. An optimization approach that allows for budget allocation and flighting based on total reach is key.
