As we sprint through the final months of 2016, many of us in the advertising and marketing industry are given over to thoughts of the year ahead. The typical planning process involves amongst other things, sales forecasts, marketing budgeting, go-to-market plans. headcount, and team structure. All of this budgeting is done in the face of a market that's battling shrinking ad budgets, layoffs and industry consolidations.
In Hong Kong for example, ad budgets have seen three consecutive quarters of mid-teen declines in 2016 and many agree that this will last to early parts of 2017.
I have news for you and you may not like it. I'll go out on a ledge and make the following prediction: your digital advertising and marketing specialist teams/divisions will be soon be obsolete and 2017 will mark the start of it.
Whether you're a digital specialist agency or an in-house digital team, you're going to be obsolete.
The idea of a digital agency and/or its spin offs, in each search, social, content, programmatic, mobile, creative were born out of necessity. While digital was emerging, specialized units were required to capture the consumers increasingly fragmented time spent online and on mobile.
The model worked well in the nascent stages of the industry’s development. At the time, we were at the beginning of the shift to digital and it comforted advertisers to know that their digital brand management were in the hands experts who knew digital platforms like the back of their hands.
We're now right in the thick of it. Print is dying. Radio is not growing and disrupted by streaming services such as Spotify. TV industry executives are shifting uncomfortably in their seats. Cord cutters are growing. Digital audio platforms such as streaming music and podcasting are taking off. Digital video? That train has left the station and is chugging straight into the future.
Eventually, EVERY form of media will be DIGITAL. Every traditional media company today is transforming itself into a digital content producer. Many are giving specific focus to mobile and online video. As we speak, boardrooms across the world are filled with executives planning when they will stop the printing press and rely solely on digital platforms. As a matter of fact, board room discussions between AT&T and Time Warner are happening with Bloomberg predicting that a merger announcement will happen as soon as Monday, valuing the deal at US$86 billion.
*Update Oct 23, 2016: AT&T has formally announced they will buy Time Warner for US$85.4 billion.
The discussions centre around how they will re-position themselves as “content companies” rather than newspaper / television / radio companies. Print will eventually lose all consumer mindshare and fade from relevance while the definition of television is blurring with OTT, Mobile Apps, and yet uninvented technologies.
Consumers no longer care where their content lives. It makes no difference to them if a Korean drama is on their phone versus or on free-to-air television or on cable. They just choose to consume media on their platform of choice and at time and place of their convenience. News on their mobile, via Facebook, Twitter versus on print. Ads on the radio or on Spotify. Searching for information online versus the yellow pages... well, yes, the yellow pages directory as we knew it is more than dead.
And therein lies the key question; if consumers, our target audience and eventual customers are platform blind then why are we still placing so much emphasis on platform silos?
While the current specialist model has worked for many years, it's time to move on. It's time to reshape your company’s marketing organization structure and get rid of the digital specialist units/persons and make everyone a digital specialist.
This has to start at the top, with a digitally savvy CEO, one with an appetite to continuously tap on digital platforms for the survival of their business.
Soon all content, entertainment and communications platforms will be digital and 2017 will be a key year. The last quarter of 2016 is a good a time as any to push for a change in your marketing team.
Globally, digital advertising is expected to overtake TV and most of traditional advertising by 2017. According to eMarketer, US digital advertising is expected to overtake television as the largest ad platform for the first time becoming the single largest media at 38.4% of all ad spends versus television of 35.8%*.
Closer to home, PWC predicts that in Hong Kong, digital advertising will overtake television as the largest advertising segment surpassing television by 2017 and will be worth up to US$1 billion by 2020 with a CAGR of 10% annually all the way to 2020.
"Hong Kong has one of the world’s highest mobile penetration rates, but advertising dollars have transitioned slowly because of limited applications to support mobile payments compared to China’s mature m-commerce sector. The emergence of social media TV and high video consumption are attractive avenues for advertisers to grow dollars and a captive consumer base,” said Wilson Chow, PwC China and Hong Kong TMT leader. The video segment is growing. By 2020, Hong Kong’s mobile video Internet advertising market will account for 35.7 percent of total mobile display Internet advertising revenue, PwC reported."
China’s Internet advertising market is already the largest in Asia and the second-largest globally after the US. In 2014, total Internet advertising revenue was US$16.62bn and forecast to reach US$33.55bn by 2019. A CAGR of 15.1% makes China the fastest-growing of the top five global Internet advertising markets.**
And if you believe that digital will be the largest advertising segment in 2017, you as brands, marketers, agencies need to drastically shake up your organization, and in today’s term, be a “digital agency / in-house digital team”.
The fact that most digital media or in house digital departments in Hong Kong agencies and brands are no more than a handful of people simply does no justice to the figures. Digital advertising is is at the cusp of being the largest advertising segments and there are only a handful of people in each agency that truly understand it.
Most brands I have spoken to intend to increase their ad budgets on digital platforms. Some are planning to allocate 50% or more of their budget to digital in 2017. Shouldn’t that warrant a much larger focus on digital in your marketing department ?
The inevitability of digital advertising becoming the dominant form of advertising, even here in Asia and Hong Kong, is happening sooner than you’d like. As brands, advertisers and agencies, you need to be ready to ride on this growth to capture the hearts and minds of your consumers.
That leaves brands and agencies with two choices; either you grow your digital specialist team or kill your digital teams... and make EVERYONE a digital specialist.
I favor the latter approach. Everyone has to be an expert in digital disciplines. In the era of AirBnB, Uber, WeChat, Twitter, YouTube, Weibo, Netflix, Spotify, Facebook and Google, it is everyone’s job to know digital, because eventually, it will all be digital.
Yes, it is by no means an easy task. For most large organizations with hundreds if not thousands of people whose careers blossomed in the golden era of linear television and print this will be a daunting task.
However your business survival depends on it. Your customers are spending more and more time in a digital envroment. If that's where your customers are, then that's where you need to be as well. Everyone needs to learn how to leverage digital platforms to reach your next generation of consumers. Without consumers / customers, you will have no business being in business.
As you plan for 2017, it’s time to trade up your skills, experience and knowledge in readership, viewership, GRPs and TARPS for unique users, UDID, Cookies, CPMs, CPIs and CPAs.
Your customers are living in a digital age. It’s time for you to join them.
Written by Kevin Huang, co-founder and CEO of Pixels, and managing director, APAC of Gravity4 Inc.