Now that the barrage of 2020 predictions has (mostly) come and gone, let’s sort out the hype from reality and zoom in on the most important issues for advertisers to consider in 2020.
HYPE: 2020 is the year we’ll land a framework for federal data regulation laws.
REALITY: Almost zero chance of that happening in an election year. For now, it’s a mix of wait-and-see with a healthy dose of back-to-the-basics.
We can’t move ten feet today without addressing data issues. Data-centric marketing may have been in the spotlight for the last handful of years, but privacy and security issues have been rapidly rising to monopolize that spotlight. As 2020 progresses, the U.S. will dip its toe into legislation designed to protect consumers, a feat Europe has already attempted to accomplish.
While this year certainly won’t decide the future of data in marketing, it will shed light on innovation and advertising’s overall growth trajectory in light of targeting obstacles and some technology refreshes. A re-focus on the consumer’s journey and alignment with brand goals will drive marketers back to the basics for an understanding of their first-party data and how to do more with the accessible information on-hand.
Privacy legislation will promote innovation with some tough side effects: Unintended consequences are certain to arise from the CCPA, and don’t expect the federal government to step in with a 50-state consumer privacy solution in an election year. As consumer concern regarding data collection and activation grows, political voices have weighed in on the issue. While most agree that consumer privacy in the data era is a dire necessity, partisan legislators disagree on the methods to secure PII and exactly what “privacy” means in terms of the consumer, publisher, and brand value exchanges. Partisan differences mean that election-year decisions could be dangerous for any candidate’s prospects and the issue is unlikely to take center stage.
WHAT THIS MEANS FOR ADVERTISERS: Targeting won’t get easier with further restrictions on data and technology activation, but facing these issues sooner rather than later will push innovative and refined techniques for maintaining positive and informed relationships with current and prospective customers. GDPR showed us the high cost of compliance, the potential constriction of competition in favor of digital giants, and the costly disruption of the user and publisher value relationship (i.e., opt-ins covering the cost of opt-outs who have a right, by law, to the same information and services as opt-ins). The CCPA will likely see the same unintended consequences, and we in the advertising world should consider ourselves lucky to have a “dry run” in California’s new law, while also keeping a close eye on pending legislation across other districts. This is a test scenario that Europe was not afforded, so we’ll be watching carefully as it creates the groundwork for future federal legislation and data management strategies.
Personalization with purpose: This will be the year that brands begin to fine-tune the consumer conversation. We made leaps and bounds in this category in 2019, but too many advertisers are still engaging for engagement’s sake. Purpose must be clarified, and awareness, sales growth, or social sharing must be tied directly to dollars spent. Not every brand has a story or an identity that lends itself to customer engagement on a personal level. Navel-gazing can be as detrimental to marketing budgets as speaking to the wrong audience. Consumer touchpoints have the power to be more impactful than ever, but when prioritized incorrectly or inappropriately from a user perspective, they become expensive mistakes.
WHAT THIS MEANS FOR ADVERTISERS: Take the time to unearth the customer journeys that truly define your product(s). Consumer-first strategies come from an unquestionable understanding of what creates sales, brand loyalty, and lifetime value. Ensuring synergy between media strategies and creative intent is more important than ever, and technology makes it possible for us to adjust to varying customer motivation. What’s more, consumer understanding research, like segmentation, focus groups, or first-party data analysis will become highly valuable again in this new age of personalization. If you leverage these tools, then growth is inevitable.
Measurement evolution: The impending loss of Google ID and the increasing number of cookie-less consumers will not break the digital targeting ecosystem this year. While piecing together the entire consumer journey does get more complicated every day, cookie technology has never been the answer to precision conquesting. If the 25-year-old cookie does indeed die when Google phases out third-party cookie data in Chrome, we expect that there will be a resurgence in contextual targeting as the industry identifies expanded methods for behavior-focused targeting. The IAB and Google are already calling for the industry to come together on both fronts. And this twist of targeting fate could improve the quality of digital inventory and shift focus away from inexpensive “tonnage,” while placing publishers in a more advantageous position in the sales value chain.
WHAT THIS MEANS FOR ADVERTISERS: The diminishing import of the cookie will not be the death of digital advertising. In the absence of universal IDs, advertisers will use a combination of their in-house data streams and publisher-owned customer data. Balancing the two data streams to create stable and strategic insight into customer behavior will combat the loss of cookie data and drive advertisers to higher-quality sources of information as well as ad placement. Beyond just data sources, brands need to remember that investing in tangible methods to cultivate goodwill among potential and current customers (by providing a true value exchange for their data) will become even more important in a “post-cookie” world. Brands should consider their first-party data acquisition strategy as one of the most sustainable and reliable sources of information for media activation.
Consumer understanding research, like segmentation, focus groups, or first-party data analysis will become highly valuable again in this new age of personalization.
HYPE: “TV” and “radio” are (still) dead, and consumers LOVE the ever-expanding list of streaming options.
REALITY: So much to unpack here. First, Video is alive and well, and while the ecosystem has evolved to encompass a multi-platform definition of “TV,” the linear world still plays a big part in many Americans’ daily lives. But let’s be real, streaming subscription battles will get ugly this year, and some big names will fall. Bundles will come back in vogue, and Live TV programming will keep broadcast engagement high. Audio also continues to chart its new golden age; linear audio is maintaining its spot as the highest-reaching media vehicle today, and streaming opportunities are more exciting than ever.
The entertainment and information sector is coming off one of the most ground-breaking decades since the advent of consumer-focused broadcast. We expect an extremely exciting decade to follow as the audio and video marketplaces adapt to cross-platform consumer usage and the explosion of content production. As the TV and radio ecosystems have grown to encompass “anytime, anywhere” usage, the living room remains the single most important viewing area and audio content has expanded to anyone with a microphone and a story. This year will mark an explosive one in the audio and video sectors in both growth and content.
Subscription video wars will be epic: Industry hype aside, the digital video landscape has been relatively stagnant for the last few years. Viewership has risen but the main players have stayed the same as libraries fluctuate and original content has exploded. The onslaught of Disney+ will change that. An expanding competitive set, consumer choice, and, most importantly, the expense of increasing subscription costs with multiple-SVOD households will provide a necessary shake-up. More options mean more discerning consumer tastes. Will Netflix households settle for D-list offerings and original content with mixed reviews as Disney+ and Hulu increase their A-list libraries alongside original productions? Or will Netflix households decide that Disney+, Hulu, and ESPN+ are a sufficient bundle for one family’s varying tastes and walk away from the biggest name in streaming? And what will come of AppleTV+, HBO Max, CBS All Access, NBC Peacock, and the ever-growing list of streaming services? For now at least, our biggest bets are on Disney+, whose revenue is diverse and can bet the bank (and a low subscription cost) on acquiring new customers for their streaming platform.
The only saving grace for Netflix will be the (currently) low cost of adding Disney+ to household entertainment line-ups. For now, this means most households will tolerate multiple subscriptions (including Netflix), but we expect cost-conscious consumers to part ways with Netflix in higher numbers in 2020.
WHAT THIS MEANS FOR ADVERTISERS: As more consumers spend increasing screen time with ad-free viewing platforms like Disney+, we face a complicated road to gaining effective scale. Video platform diversity is essential and while Hulu is a great option for a well-rounded CTV campaign, their viewer profile is not always ideal for every target audience. We expect alternative ad platforms like placements via Roku and Amazon menu ads, along with brand integrations into ad-free shows, to continue to refine the offerings for penetrating the living room regardless of viewing selection. What’s more, confusion caused by too many subscription services will begin to create a consumer need for streaming bundling in 2020. While we believe the MVPD companies will push this sooner than consumers find a pressing need for it, we expect to see bundling ramping up in 2020. Hello, cable all over again!
“Traditional” TV: Nope, it’s not going to disappear in 2020 either. We’ll keep straddling the divide between digital and offline video options as consumers become ever more adept at jumping platforms. How long will they continue to do this? As long as offline video continues to deliver a value proposition. As such, we expect cable service subscriptions to decrease again in 2020 among increasingly price-conscious consumers, but until there is a valid, well-rounded option to fully replace the choice offered by multi-channel programming, we don’t expect a full migration to streaming. Over-the-air viewership is also seeing a rise from both older audiences and younger streaming-savvy groups (a 48% bump in the past eight years). How far that growth goes remains to be seen, but it clearly shows that broadcast networks still hold a soft spot with some younger viewers.
WHAT THIS MEANS FOR ADVERTISERS: Broadcast networks still hold the reins on the most engaging Live TV events, and they’ll continue to experiment with more in 2020. Until the streaming services can catch up, broadcasters and “traditional” TV will hold a monopoly on this type of content. Beyond programming, scale remains a key draw for TV advertisers. As of 2019, a majority of U.S. households still spend the most of their media hours with live and time-shifted TV programming versus OTT and online video. Keeping it in the mix, and experimenting with the ever-advancing targeting and measurement capabilities seen through addressable TV, is still a must for most brands.
Social video should not be forgotten: In 2019, the content being created by users, advertisers, and publishers was more than 80% video. Even though video is heavily consumed across social, it is often left out of larger video landscape conversations. Social video is typically siloed into its own category given its short form and/or user-generated (UGC) nature, but these platforms are making strides in evolving their products to be more useful in today’s marketplace. Facebook Watch, InstagramTV, Snapchat Discover, Bitmoji TV, YouTube TV, and Twitch TV are all examples of social platforms attempting to enter into the long-form content space. Additionally, new video-first platforms, like TikTok, are entering with power.
WHAT THIS MEANS FOR ADVERTISERS: Some of these platforms allow advertising while some don’t. For the ones that are currently ad-free (namely InstagramTV and Bitmoji TV), it’s likely only a matter of time before they become monetized. Since usage across these platforms is continuing to grow, it’s important that we start to consider social as part of our larger “video” campaigns. Despite the fact that the content itself might be different than the Hulus and Netflixs of the world, they are still a viable and effective way to reach engaged consumers. YouTube’s 2019 ad revenue of $15 billion (nearly three times that of each of the major broadcast networks) is a testament to its effectiveness and import in the video ecosystem. And this is not a single-source space: user loyalty and engagement make social video a strong player in the video landscape.
Podcasts will come into their own: If you’ve read any other 2020 forecast, or our 2019 Podcast POV, you’ll know that most analysts predict this is the year podcasts will hit “legitimate” numbers. Yes, this aspect of the audio industry is poised for growth. However, our measure of growth and legitimacy has always been aligned with consumer preference. These days, platforms are adjudicated based more on their data and tech than audience size and share of ad dollars. Time spent with media carries less weight in this new fragmented age, but podcasts proved their worth early with dedicated fans and unique content alignment opportunities. Measurement and ad purchasing capabilities are improving with increased investment from major platforms like Spotify and Pandora, and we expect ad dollars to increase substantially as a result.
WHAT THIS MEANS FOR ADVERTISERS: Podcasts are the niche magazines of the decade. Their ability to connect with engaged fans is powerful and, though not always measurable or scalable to the degree that we’d like in this day and age, they can act as an engaging complement to a consumer-first strategy. Listenership is growing, but we believe diversity of subject matter and growing diversity of audience is far more of a boon to this platform in 2020 than scale or ease of ad purchase.
HYPE: New tech and expanded data infrastructure will blow our minds in 2020.
REALITY: Some interesting opportunities are certainly arising in virtual spaces, but as usual, 5G and most shiny new developments seen at CES have a ways to go before adoption will warrant anything beyond test-and-learn approaches.
CES always provides marketers with an exciting road map for what’s to come across a growing variety of sectors, but much of the buzz tends to wear off once we dig down to the fine details of scale and execution. That said, there are a number of interesting storylines for 2020 in the emerging tech space that we’ll be keeping close tabs on.
Social AI is more accessible than ever: So far in 2020, we are not only seeing social platforms utilizing AI tech to elevate current advertising opportunities, but also seeing it become more accessible for all types of advertisers. Facebook, Instagram, and Snapchat have introduced custom AI lenses to be self-service to any advertiser at no additional cost in 2020, which was formerly extremely expensive. Facebook also recently launched a VR world, called Horizon, into beta where consumers can explore, play, and create with others. Even Pinterest prioritized AI applications in 2019 by launching a visual search tool that provides shoppable personal product recommendations based on the context of a user’s behavior.
WHAT THIS MEANS FOR ADVERTISERS: It will be interesting to see how these platforms continue to apply this tech across new advertising opportunities. We will start to see personalization in the social space become scalable, which we believe will propel brand growth from the top of the funnel all the way through to acquisition, and all points between. That said, many AI applications have yet to see their day in the court of privacy legislation, so the extent of their usefulness remains to be seen. Regardless, consumers will soon expect personalization in an even larger array of experiences, so it’s our jobs to continue thinking about all the high-quality and user-friendly data available to us when making cross-channel marketing decisions.
5G is not going to explode this year: To be clear, the possibilities will be enormous when it actually hits the marketplace at scale, and there will be lots of 5G hardware hitting the streets this year. But it’s not going to make a huge difference in consumers’ lives in 2020, so don’t fall for the hype. Infrastructure is required to activate 5G’s life-changing capabilities and we see 2020 as an ongoing investment year.
WHAT THIS MEANS FOR ADVERTISERS: There may be some pop-up opportunities with on-site event activations that could bring isolated 5G environments to life and enhance brand interactions and experiences (Super Bowl LIV in Miami being the first example from 2020), but anything larger scale is years away. What’s more, widespread access to 5G devices is unlikely aside from the minority group of early adopters, especially since most of the big names have only just begun to drop their 5G hardware (with Apple still notably absent from the party). Utilize 2020 to experiment if the right event arrives and budget allows, and put yourself ahead of the game once the network is fully built out.
Folding screens are a thing: As the technology for flexible screens and new user interfaces in general continues to advance after some false starts, the opportunity for smart and unique brand integrations does as well. Motorola’s resurrection of its Razr phone, now with a shiny new foldable screen, may bring back nostalgia for the brand’s more cutting-edge years, but the Razr’s hardware and functionality leave us feeling underwhelmed. Still, it does harken the arrival of a new era for flexible screen technology at the consumer level, with companies like Samsung teasing its Galaxy Z Flip in an Oscars ad. Intel announced a Horseshoe Bend laptop that doubles the size of the screen by utilizing a seamless touchscreen in place of the usual keyboard and mouse. For desktop experiences, it could literally redefine how we look at content that’s traditionally been considered “below the fold” (oh yes, we did).
WHAT THIS MEANS FOR ADVERTISERS: New interfaces and screen functionality have been advancing the mobile and OOH spaces for years, and advertisers have had plenty of time to test new approaches. While foldable screens will certainly rev up the momentum, it remains to be seen if it’s just a passing fad (curved TVs?) or here to stay. Still, this year will only touch the tip of the iceberg in terms of the newest hardware rollouts. We’ll be keeping a close eye on this latest generation of laptop, tablet, mobile, and wearable rollouts to identify new and creative ways to capture users’ attentions in moments that matter.
Expanding virtual worlds: Virtual reality and augmented reality will only grow more popular in the coming years, and that’s due in big part to the fact that 5G’s eventual rollout will produce a much-improved experience for on-the-go VR and AR experiences. Supercharged data exchange speeds will make for decreased lagtime and exciting opportunities to incentivize and capture the attention of consumers in wider variety of ways and places. And speaking of virtual, a parallel development in the social world over the past couple years has been the rise of virtual influencers. Literally a computer-generated character often augmented into real scenes (primarily on Instagram), virtual influencers are gaining increased visibility as their popularity among younger generations grows.
WHAT THIS MEANS FOR ADVERTISERS: Once again, 5G is going to take a while to properly scale. But brands should be putting game plans together now for ideas on how to maximize its potential when cost and infrastructure allow. That includes exploring on-the-go VR and AR brand experiences when budgets allow (and when there’s a clear value exchange with consumers, to avoid it becoming a cool gimmick). And while tapping into the power of virtual influencers doesn’t make sense for every business, influencers do offer an interesting way to present brands in an extremely controlled manner to younger and highly-engaged audiences. It’s true that brand integrations with animated characters are nothing new, but these influencers really bend the limits of what’s real and what’s virtual.
THE BOTTOM LINE
Streamlining the consumer experience and addressing consumer desire for simplification as our lives get seemingly more complex with technological advancement are major themes we’re watching this year. Consumers are looking to take back control of their data while having access to content, information, and utilities that make daily life easier. Our industry is certainly in the midst of a particularly noisy and chaotic moment, but things will undoubtedly simplify once consumer choice forces the hands of many in 2020.