Advertising in 2020: The New Brand Building Reality (written in 2012)
This is a copy of a submission made in 2012 by Karl Heiselman and I for a Wharton book on advertising in 2020. Since we’re almost there, I figured I may as well share it. They quoted a small portion on pages 82 and 83. I’m surprised how much of it held up.
By 2020, advertising as we know will no longer be the primary marketing vehicle used to build brands. Advertising will instead focus on driving transactions. Rather than a tool of marketing, advertising will predominantly become a tool of sales.
Replacing the role of advertising in brand building will be a slow process, but by 2020 how we build brands will have transformed significantly. Instead of relying on advertising to drive extrinsic perceptions, brands will instead be focused on new methods designed to create more powerful intrinsic value.
Why Advertising Will Become A Transactional Tool
Automated, digital, transactions driven advertising will be the single biggest advertising growth arena of the next ten years. The combination of big data (including social data) with ubiquitous smartphone usage and an intense focus on advertising ROI will create a hyper aggressive, transactions focused battlefield.
By 2020, smart devices and high-speed connectivity will have become ubiquitous among almost all consumer groups. Media consumption will have continued to fragment, turning today’s remaining mass audiences into a set of smaller, more atomized and more on-demand groups. And while this new environment will bring significant threat, it will also provide significant opportunity. For in this digital environment consumers will continue trading their personal information for free access to services, providing more detailed, deeper datasets than we can imagine today.
What will not have changed is the pressure on the business to deliver results, hit sales targets, and deliver growth. The pressures on business by 2020 will be intense. Product cycles will have shortened still further, competition become more intense, markets more volatile and consumers more informed and empowered than before. In this environment, making the sale will be imperative.
As a result, an understandable desire for ROI will be manifest in tomorrows advertising solutions. Tracking which advertisements drive the most sales to which people, when.
By 2020, winning advertising will be those methods that compress the time between the advertising impression and the transaction being made, and do it in a highly measurable and predictable way.
This means we will see advertising that is contextual to our actions and designed to encourage a specific transaction. Searching for a lawnmower? Here's a deal for that. Eating at the same restaurant regularly? Here's a deal for the one next door. Friends who like a certain store? Here's a discount for you to try it too.
Contextual, automated, transactional advertising will be the perfect tool for the discounter but less so for the brand builder. An unintended consequence of the ROI imperative will be a new era of advertising that acts to compress prices, displace brand loyalty and reduce brand premiums.
In this new landscape, businesses will make a concerted effort to shift the risk profile of their advertising spend. As focus shifts toward measurable sales effeciency, a new set of advertising players will emerge that are paid not by % of media spent, but instead by performance generated. They will be accountable for sales, data driven and more interested in efficiency than creative excellence.
The New Brand Building Reality
While advertising is likely to become highly transactional, brand builders have much to be confident about. For just as technological and social shifts will provide new opportunities for the deals driven discounter, they will also provide significant opportunities for the brand builder.
Businesses that are focused on building and sustaining a brand premium will find themselves enabled by a new and more sophisticated set of tools with which to engage their customers.
By 2020, those same technologies that are driving discount advertising will be giving marketers and business leaders a more sophisticated understanding of their customers. They will be able to parse vast volumes of customer data, and monitor and hold significant social media based relationships. The knowledge and insights thus generated turning marketers into key actors in the delivery of innovation and the creation of new layers of brand value.
In specific terms, we believe that by 2020 there will be three areas of brand building innovation that take over the role advertising plays today.
1. Total Experience Management
Much as Total Quality Management transformed manufacturing in the 1980’s, Total Experience Management will transform brands in the 2010’s. Today’s brand experiences are highly fragmented and as a result are a significant source of competitive weakness (as any trawl of social media will demonstrate). By 2020, this will have changed considerably. Instead of focusing on individual touchpoints, brands will instead be considering the rich ecosystem of experiences they create. They will look at the integration of their brand ecosystem under a common “operating system” as a means of enhancing customer value. By thinking of the total experience, and usefulness, of the brand from the customer’s point of view, brands will create superior experiences across not just a single touchpoint but across the entirety of the branded experience. The beginnings of this transformation are already apparent in the way that technology brands such as Apple, Google and Microsoft are connecting their branded ecosystems together under a common user experience framework.
2. Marketing Products
Marketing products are products designed to deliver a marketing benefit, rather than something you intend to charge people money for. They exist to expand the ability of a brand to create utility, and value, around its core offer. For many brands, the core offer is often quite commoditized and as such unlikely to change significantly moving forwards. Under these circumstances, a marketing product seeks to create additional layers of value and utility that can ‘lock’ customers in to your brand rather than have them switch to a competitor. Tied directly into their experience OS, by 2020, marketers will be using their social monitoring of customers to find new areas of value that can be built around the core product or service offered by the brand.
A today’s world example is Nike+, which effectively uses technology to connect a community of running enthusiasts together, and in the process locks these runners into the Nike brand ecosystem. The innovation is happening around the shoe, rather than directly within the shoe itself.
3. The Content Ecosystem
By 2020, the simple reality is that every brand will be a media brand, requiring everyone to consider how they produce, distribute and manage content. In tandem with brand experience and marketing products, brands will be focused on the overlap between content that informs a customer about products, services or propositions, content that educates them in it’s use or in the things they can do, and content that entertains them around the core proposition of the brand.
This content will serve to drive multi-way relationships with and within a consumer community, meaning it will be socially, or third party driven, necessitating new skills in curation, editing, governance and presentation.
Increasingly by 2020, informing, educating and entertaining audiences will happen through channels that are controlled by the brands and their consumer communities themselves, rather than channels brands pay to advertise on, meaning that consumers will have actively chosen where to go in order to seek the emotional benefits that brands provide.
In Summary
By 2020, advertising will have become a major driver of transactional sales. It will be automated, data driven, contextual and ubiquitous. A disciplined focus on efficiency will have created completely new models.
This advertising will be discount driven, ubiquitous and hard to opt-out of. It will act to depress brand premiums and function more as tool of sales than of marketing.
Brand building will happen by other means and built through new methods: Total Experience Management, Marketing Products and Content Ecosystems.
Those brands that succeed will increasingly become opt-in, controlling their own channels to the consumer, where they enjoy multi-way relationships with an empowered consumer community made up of people who’ve chosen to actively seek the emotional benefits these brands provide.