Rapid growth, digital media add problems and possibilities
Agencies must navigate challenges
with creativity and integrity
GroupM & WPP, China
It has been a challenging year for brands and their agencies.
Brands typically operate in hyper-competitive and low growth markets. Growth is stronger in China, but consumer behavior changes more rapidly and even unexpectedly. And in these difficult circumstances brands are expected to deliver positive short-term results.
Meanwhile, legacy media continues to be challenged by audience fragmentation and competition from digital and mobile platforms. Even the digital giants are grappling with their direct sales and long-term success.
And sitting in the middle of this difficult market environment—between strained clients and stressed media partners—are the agencies.
The agencies witnessed and worked through the difficulties of 2017. And the challenges have clarified the responsibility agencies have for helping their brands navigate a difficult environment and emerge with success and integrity.
GroupM’s latest forecast predicts a more positive outlook for 2018, with global ad investment to grow by 4.3 percent or $23 billion. Incremental growth in China will reach $4.3 billion, second only to the US. But media’s share war gets even fiercer.
Globally, television investment will grow 2.2 percent in 2018, but traditional TV will lose one share point this year and another next. Data has changed TV advertising. Addressable TV and free over-the-top (OTT) internet access is here and it is growing.
Digital investment growth is expected at 11.3 percent in 2018; its share will increase from 34.1 percent in 2017 to 36.4 percent in 2018, globally. In China, digital has already surpassed TV. Data and technology plays an indispensable role in this process. For every dollar that migrates from legacy to digital media, GroupM estimates 25 cents goes to technology and data.
As consumer attention continues fragmenting across platforms, many see virtue in one of the oldest advertising media, Out-of-Home, which is also becoming more data-informed, digital, and versatile. The combination of location data with purchase, social media and viewing behavior presents an increasingly compelling proposition.
As digital ad spending grows, it is essential for media agencies to become stronger digital marketing players. Driving the move by acquiring a digital agency is a one strategy. However, for a media agency with ambitions, the key is to enhance core competitiveness and build internal capabilities.
Agencies with a vision for the future have invested in themselves, using multi-level transformations of organizational structure, formidable technical teams, and cutting-edge services to create their own marketing “weapons.” In today’s fragmented, diversified marketing environment, it is more important than ever for agencies to have the capability of providing integrated services.
A well-developed digital media is a two-edged sword. It makes mass and scalable marketing possible but also causes the existence of invalid traffic and risks, which pose a threat to brand reputation and market order.
The positive side is that we can adopt and invent technology quickly in China, we can learn from the mistakes that the rest of the world has made and avoid them in this market. The challenge that we have is “measurability.” How much of the total media businesses are we able to measure and see? In Europe and in the United States, measurability is above 90 percent, so they can control more of a market, but the number in China is much lower. If you can see or understand more of the market, you are able to control the quality in that market.
Therefore, GroupM China launched its Brand Safety Initiative in June 2017. It focuses on issues including invalid traffic, “viewability,” the opportunity for a brand to be seen, and contextual brand safety. The initiative has won support from multiple parties—including leading advertisers, publishers, tech measurement companies, and China Media Assessment Council—to fight for a safe, credible, and transparent digital marketing environment.
For the past year, we’ve believed that enough is understood and quantified about the issues for advertisers to make informed decisions about the real value of inventory, especially in the field of invalid traffic. Fraud is a crime and we have to get that out of the digital business as soon as we possibly can.
As marketers, in coordination with our publisher partners, we believe agency leadership means operating across the whole media landscape to develop the most integrated campaigns, as well as to help shape standards, measurement, and integrity.