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Posted by digital marketing agency in lower parel on December 13th, 2019
The future of advertising : what future for media agencies?
Etienne, Digital Strategy Consultant at Google , supports French agencies on the development of their clients via Google and YouTube Ads solutions. He shares his vision of the future of advertising and the future of media agencies.
During my last 3 years at Google, I had the chance to collaborate with a number of media agencies, about twenty to be exact. After nearly fifty customer meetings, dozens of trainings, multiple conferences and long discussions with business leaders, my conclusion is as follows: the advertising market is changing. The rules of the game are changing, advertisers' expectations are changing and agencies have to adapt to survive. I share here my analysis of the causes of this change, its impact on the future of advertising and solutions to take advantage of it as a media agency.
I. Consumption patterns
The maincause of this change is the evolution of consumption patterns . At the end of 2018, more than half of the world's population had access to the Internet, compared to only a quarter 10 years ago. In France, no less than 9 out of 10 people are connected to the Internet and all ages and socio-demographic segments are represented. One of the factors involved: the rate of digital equipment. In fact, in 2018, 80% of French people were equipped with at least one computer and a smartphone, and that's not to mention tablets and other connected objects.
Who says equipment says use, so it is natural that the uses explode. In 2017, 849 million apps were downloaded by the French, i.e. almost 13 per person. The reasons: make a bank transfer, book train tickets, order a taxi or have food delivered; everything that can simplify our daily life. Google counts 4 billion daily searches on its search engine and unsurprisingly, more than half of them are done on mobile. Smartphones are all the more an integral part of our lives as their use grows with the appearance of new social networks and modes of communication.
Beyond the equipment, an interesting phenomenon is that of the evolution of the formats consumed. A few years ago, when we were looking for an answer to a question (ex: how to tie a tie knot) , we had few options: ask someone likely to know the answer (yes, yes) or find a relevant web page via a search engine (subject to good referencing, of course) . Today, the answer can be found in other places and especially in other formats: videos, tutorials, images, podcasts ... everything is allowed, especially since our research behaviors are also evolving (19% of French have used voice search in 2018).
The main consequence of these changes, beyond an acceleration of content consumption (it took Despacito less than 9 months to reach 3 billion YouTube views against 4 years for Gangnam Style), it is obviously the more complex purchasing routes . The number of interactions with brands is increasing significantly and the sources of information preceding the act of purchase are multiplied: search, blogs, price comparators, marketplaces, customer reviews, forums, social networks, physical stores, everything in a cross / omni-channel world. And since we seek more, are better informed and have the choice, we become demanding consumers , intolerant to bad customer experiences(who never sighed in a long queue at the supermarket) . We want quick responses (53% of mobile web visits are abandoned if the page takes more than 3 seconds to load) , relevant advertising (damn the banner that offers a pair of shoes already bought a week ago) , of experiences personalized , assistance in our daily tasks, or even an anticipation of our needs. Waze would have to ask us for the quickest route.
II. The advertising industry in 2019
Bnew onne, the advertising industry in France is doing well. With 14.4 billion euros in spending in 2018 and growing, the sector is dynamic. The digital advertising , which represents 35% of the investments, is the main engine of growth (+ 17% vs. 2017) . It is itself driven by the Google-Facebook duopoly which captures the vast majority of investments (85%) and which displays double-digit growth rates on the unrestrained Search and Display. Traditional media, meanwhile, remain the majority but are in decline (-1% in 2018). Radio, press and cinema lose market share every year; only television and signage continue to grow very slightly or hold up year after year.
The e-commerce is also a dynamic sector as it appears in 2018 in France increased by 14%, reaching 82 billion euros of business, more than 370 million transactions and purchase frequency 20% increase compared to 2017. For cause: the skyrocketing seasonal events prompting the purchase (French days, black friday, cyber monday, sales, private sales), the proliferation of players in e-commerce and especially the meteoric rise of the marketplace giant, Amazon, which alone accounts for 20% of e-commerce sales in France.
Another trend of the moment: digital video . In 2018, the number of online video consumers has reached 37 million in France, which represents 56% of the country's population. On average, we watch more than one hour of online video every day, half of it on mobile, and these numbers keep growing. A Cisco study predicts that by 2021 video will account for 82% of web traffic. Some will say that it's impossible, others will see the rise of Instagram, Snapchat, Facebook, YouTube and TikTok video formats as a precursor to this evolution.
One can also cite as current trends in the voice , technologies to support the mobile , the programmatic or the chatbot, all these innovations whose common denominator digital . According to eMarketer, while the traditional media will continue to decrease gradually, the share of digital will rapidly increase in the coming years. In 2023, it will account for 52% of advertising investments in France. This growth will notably be driven by mobile, which will represent 65% of digital investments, videowhich will weigh nearly 2 billion euros against 800 million in 2018 and the Programmatic Display which will represent nearly 1.6 billion euros, against 1 billion in 2018.
III. The future of digital advertising
Ve you will understand, advertising is undergoing a metamorphosis. Mass marketing is on the way out, users have regained power and advertisers are more demanding than ever. Online advertising, which is particularly agile, evolves all the more quickly as it is driven by technological innovations and the democratization of machine learning. With a multiplication of players in the ecosystem, the entire advertising landscape as we know it is turned upside down. The giants of the board buy media agencies, the European Commission regulates the use of data for commercial purposes and advertising agencies push the adoption of their automated solutions. So what can we really expect in the years to come? Let's take a look at the digital advertising of tomorrow.
A direct consequence of the hyper-fragmentation of the routes is the increase in the data collected , which creates opportunities on the “data” market. Many cutting-edge technologies allowing correct operation are emerging and Machine Learningis more than ever at the center of the debate. If choosing your keywords, targeting a geographic area, filling in a few lines of text and defining your maximum bid were enough before to hope to make sales, today you need much more to beat the competition. 70 million signals are taken into account by Google Ads algorithms at the time of each auction. So even if one is very strong in mathematics and endowed with an extraordinary intelligence, it seems relatively difficult to challenge the machine and its computing power (if you don't believe me, take a look at AlphaGo). Supported in particular by the massive investments of GAFA, Machine Learning will take up more space in advertising in the years to come. It is already omnipresent since it is he who hides behind smart auction strategies, the creation of automatic ads and personalized optimization suggestions, among others.
A multiplication of areas of expertise related to digital
Digital marketing used to boil down to SEO, SEA and SMO. Today, notably due to the disappearance of barriers between online and offline or between reputation and profitability, expertise related to digital is exploding . We are now talking about attribution, programmatic, drive-to-store, CRM integration, audiences, inbound marketing, affiliation, content marketing, web analytics. The list is endless and new web professions are regularly emerging (Senior Digital Paid Media Acquisition & Retention Specialist will recognize each other).
Another effect of this increase in expertise is the increase in the number of technological partners . It is not enough today to collaborate with designers to ensure that our visual advertising is attractive, it is now common currency to integrate into its strategy third parties offering technological solutions to meet a specific marketing need: measure , analysis, attribution, tagging, bidding, marketing automation, flow creation, data centralization, for example. And if we add to this the growing number of advertising agencies monetizing their inventories, thus advocating their competitive advantages with advertisers and agencies, that makes a lot of variables to take into account.
Simplified campaigns, focused on business objectives
The first question I ask clients I meet is about their goals as a business. Their answers mainly revolve around the same topics: growth, turnover or profitability. The next question is generally about their marketing goals to achieve these business goals. Again, the answers are often similar: increase sales volume or leads, maintain ROI, improve CPA. A few years ago, the acquisition levers did not allow these indicators to be measured correctly, so it is secondary indicators (CPC, CTR, CVR, Quality Score) that were used to drive the acquisition. Today, an e-merchant can precisely measure the turnover generated by a marketing lever over a given period and deduce, after calculating its costs, the margin obtained following his investment. New advertising campaigns, simpler, more efficient and focused on business objectives appear. It is now possible to specify its objective (ex: generate sales or conversions) , its acquisition cost not to be exceeded and let the machine take care of the rest. Features of this type will continue to emerge, focusing more on achieving the objectives set (turnover, downloading of applications, store visits) than on the platform, the targeting or the format used to do this. Less room for control, but much better results in perspective.
New advertising formats
Another element to watch carefully is the revival of advertising formats . After a general “fed up” with the misuse of data and the intrusive and even invasive nature of online advertising (30% of Internet users use ad-blockers in France in 2019), influential players are taking action to regulate the market. The European Commission has set up the GDPR forcing advertisers to ask for users' consent to collect their data and Apple has installed Intelligent Tracking Prevention on its Safari browser, thus limiting the duration of storage of user data and their use to advertising purposes. The key word: empowering users. Advertising players therefore comply with these new rules and popularize new native ad formats, responsive, almost invisible and more respectful. In this line, Google recently modified the design of its search results on mobile in order to improve the user experience, highlighting the brands and thus allowing better insertion of sponsored ads.
Among the advertising formats that are democratizing, the video stands out in particular. Reflecting new consumer habits, advertising agencies now allow advertisers to communicate on video to their audience. 6 seconds, mobile, in-stream, out-stream, deactivatable, immersive, interactive: all formats are possible. The importance of advertising creations is therefore all the more important, especially when we talk about performance. A Nielsen study of a sample of 500 multi-platform advertising videos claims that 47% of a video campaign's ROI comes from ad creative, compared to only 9% for targeting. Some actors such as Splashrhave also made their niche, offering advertisers who want to launch packages of creative videos adapted to media (because no, put his TV spot on YouTube it does not work).
An extremely competitive landscape
Digital marketing makes many people salivate. Indeed, if France has nearly 4 million companies, all of them are far from being digitalized. The market is coveted by many actors and among them, some stand out.
The BIG SIX , historically established in the world of advertising and enjoying their network and expertise 360 °, are at the forefront. Havas, Publicis, Dentsu, WPP, Omnicom, IPG: all have their digital entity and share the biggest brands. The independent agencies then, also called “pure-players” are for the most part much more recent. In addition to being born in the digital and being at the forefront of innovations, they have the advantage of being smaller and therefore particularly agile. These take up more space on the digital scene, offering advertisers more and more comprehensive services, sometimes stealing the limelight from the biggest on the digital side. Finally and more recently, these are consulting firmswho are interested in digital. Accenture, Deloitte, PwC and KPMG through their acquisitions of media agencies, are now positioned in the top 10 advertising groups in the world, sometimes outperforming some historical players. Other, more recent and more digital consulting companies are also following the same trend and are adding digital marketing to their offer. One example is the acquisition of Netbooster by Artefact, from Fabernovel's lagencemedia or more recently from Adsvisers by Qwamplify.
IV. How to adapt as a media agency?
“Our job is moving on strategy, advice and implementation” - Pierre Calmard, iProspect.
Sccording to a study by Marketing Land , the main challenges faced by digital media agencies are: automation, the risk of internalizing, broken price competition, difficulty recruiting, reduced budgets, management and data measurement, consulting firms, third-party technologies. Added to this is the rapid evolution of the advertising landscape, an increased demand from advertisers and still too little solicitation in marketing decision-making. The good news is that this market shift that forces agencies to renew itself is an opportunity for them to reverse the trend. How? I share with you below some food for thought (which are my sole responsibility) to support agencies in their transition:
1. Capitalize on automation and machine learning
This first point is probably the most important. In view of the direction of online advertising, it is important to integrate the fact that automation and Machine Learning are going to grow. The question that arises is how to collaborate with them in order to make them their allies.
The machine does not replace humans. It helps the child to accomplish repetitive and time-consuming tasks, thus allowing him to increase his productivity and free up time in order to concentrate on tasks with high added value . If the machine calculates, executes, repeats and tests, it is the human being who invents, directs and defines the strategy. Time spent on optimization, ad creation or manual bid management can now be used for market research (competition, seasonality, trends) , in-depth data analysis (attribution, CRM, audiences) or the implementation of tests (formats, levers, landing pages),thus demonstrating the desire of agencies to create value for advertisers.
Other tasks such as reporting, data export, signing customer documents, flow analysis or even business reminders can also be automated. To identify them, one can for example use the following method:
Identify daily or weekly repetitive tasks
Evaluate the time spent completing each task
List the steps and sub-steps required to complete each task
Determine what is automatable
Automate with internal resources or via third-party tools
2. Adopt an advisory positioning
Until then, advertisers used the services of agencies to outsource some of their marketing thinking or to outsource operational managementtheir communication channels. The value proposition of digital agencies has partly been built on this second argument, highlighting the expertise and the "work force" in the service of performance, thus justifying fees in exchange for better returns on investments. Today and with the appearance of automated and simplified campaigns that reduce the time spent on this same operational management, this argument is no longer sufficient to fully meet the needs of an advertiser. If in 2019 a company uses an agency, it is above all for its potential contribution to the marketing strategy.
To cope, the most effective way is to adopt an advisory positioning. This does not mean turning your back on your expertise or mastery of the advertising levers, but rather take them for granted in order to renew yourself in the value provided to the customer. The objective: (re) position the agency with the client as a trusted partner, a force for proposals, consulted in important decision-making. A simple marketing positioning is not enough to transform the ways of working, it is necessary to approach this transition at all levels of the organization:
The Consultant / Account Manager will focus more on strategic topics, putting the focus of his thinking on developing his client's business and relying on automation to free up time and maintain results. He will sometimes oppose the vision of his client if need be, will force proposals on growth opportunities he has identified, dedicate time to competitive intelligence and market analysis and seek to talk to decision makers when necessary, all while maintaining a real customer relationship through regular calls and physical meetings.
The Team Lead , he will have to facilitate the rise in skills of his teams. Through the encouragement of the adoption of automation, planning schedules, coaching and training, it will take the role of facilitator of this evolution, thus contributing to the empowerment and the accountability of its teams. It will gradually modify its recruitment criteria, seeking for these new consulting positions more strategic and less operational profiles.
The leader of agency is the key to this transformation. Without his real desire to reform the agency, it will be impossible. He must first instill change in his teams by deciding with them the new positioning and encouraging them to share the project, before strengthening his words through decision-making. For example, it will be able to invest in technical and human resources to automate the agency's processes and facilitate the management of marketing levers, enhance teams' efforts during internal communications or even think about alternative remuneration and billing models.
3. Define, develop and affirm your area of expertise
Many media agencies have the same selling points, which makes it very difficult to differentiate them from advertisers. Claiming a multi-lever expertise and promising ROI to its customers is no longer enough to win a tender, it is therefore essential to define its positioning and build its identity around it.
To do this, the agency must first identify its predominant area of expertise before communicating on it in a strong way. A good positioning can take different forms: it can relate to the nature of the proposed offer (lead generation, paid referencing, acquisition consultancy, support for digital transformation), the targeted target (startups, pure-players, SMEs) , the added value of the service (outsourcing of the marketing strategy , time savings, alternative invoicing), the means implemented ( data scientists , innovative technologies, automation)or on a mixture of these different attributes. The important thing is to find what will reflect the real expertise of the agency and specify its offer to deliver more value than its competitors in the same niche. This reflection will allow the agency to deepen its field of expertise and to invest properly in the subjects of the future, thus building its legitimacy in the long term.