While companies are beginning to move their capabilities in-house, marketers from multinational companies surveyed said they will only in-house low-cost, fast creative executions. According to a recent report by WFA, other areas likely to be affected by in-housing included short-form content marketing and influencer marketing.
Other areas less likely impacted by in-housing include big ticket creativity, traditional media planning, creative strategy and programmatic search, all of which had over 50% of respondents predicting they would spend more externally. Agencies are also likely to benefit from increased spending in areas such as traditional media buying, where 45% expect to spend significantly more and 30% to spend somewhat more in the next 12 months.
Majority of marketers (77%) said advertising in the future will need to involve a value exchange or reciprocity, and 34% strongly agreed that direct-to-consumer brands will inspire the big traditional advertisers to find new and better ways of connecting with their audiences. While digital might be all the rage today, 62% of marketers believe that traditional advertising formats will still remain in the next five years.
Meanwhile, 65% agreed that most examples of brand purpose fail to resonate with consumers as they lack authenticity, while 67% agreed that the industry had become too obsessed with its own problems to the detriment of putting the consumer first,
Stephan Loerke, CEO of the WFA, said that as an industry, marketers are often prone to overstating sweeping new trends. As such, the report is a useful bellwether of what a lot of the world’s top brands really think.
"There is great optimism in terms of the perceived effectiveness of some direct response inventory but brands increasingly face the problems of clutter, ad blocking, declining reach and trust in advertising. There is also a stark reminder that, for all the talk of in-housing, our agency partners will remain critical partners in achieving brands’ goals,” he said.
Meanwhile, The Economist Group's CMO, Mark Cripps, said that there is a need for marketers to balance short-term needs with long-term brand building. Currently, majority of marketers (72%) said there was an improvement on the effectiveness of lower purchase funnel messages over the last five years. Meanwhile, only 43% said the same about top funnel performance, while 37% said that the effectiveness had declined, according to The State of Advertising report by the World Federation of Advertisers with the help of The Economist Group.
Despite this, most marketers still continue to focus their investment on awareness.
Marketing spend is still focused on top funnel activities, with 55% saying most of their investment goes into activities designed to promote brand awareness. Meanwhile, 31% were investing evenly between awareness and lower funnel performance, while 7% were investing mostly in performance messages and channels.
The report also said that despite stagnant economic conditions in many markets, ad investment has increased by 43% for its respondents over the last 12 months, with 15% reporting a significant rise and 28% saying it was "somewhat more". Close to half of respondents (49%) reported an increase in ad investment over a five-year period, with 27% saying there was significantly more investment and 22% somewhat more.
This trend, however, was not automatically improving performance, with respondents citing clutter (63%), the increasing ease of ad avoidance (53%), declining reach (42%) and declining trust in advertising (39%) as reasons behind the lack of improvement. To overcome these challenges, respondents were focusing investment in eCommerce, programmatic, POS and offline advertising.
About 28% of respondents cited eCommerce as top priority, while 30% said it was high priority. Meanwhile, programmatic covering search, social and display was named as a top priority by 26% and a high priority by 47% of respondents. Future priorities listed by respondents included Internet of Things, voice, virtual reality and augmented reality. Half of the respondents said data was an area that would increase significantly, followed by programmatic (27%) and influencer marketing (11%).
"Advertising is transforming with increasingly sophisticated audiences, media and tech. We need to plant the right trees for a changing climate. We need to create firebreaks, irrigation systems and nurture our saplings for a lush and thriving industry,” Cripps added.
The results are based on an online survey of WFA members conducted in June 2019. More than 100 individuals responded from 70 companies across 15 categories, including consumer packaged goods, automotive, food, alcohol, tech and finance. Collectively, respondent companies spend roughly US$115 billion on media and marketing annually. 49& of respondents had global roles, 24% were responsible for Europe, 12% Asia-Pacific and 8% North America. Respondents covering Latin America, Middle East and North Africa, India and China accounted for the rest of the participants.
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