Digital 2020

Digital 2020: Are We Closer to the Future of Digital Advertising Than We May Think?

In this blog post I spoke with Michael Jiresch from Austrian Post about the end of advertising as we know it. At the same time, with our new Business Unit Enterprise we have set out to play an active role in shaping the future of advertising.

There is a healthy spirit of optimism in our industry and we are hearing similar voices almost all around us: How can we make advertising better? How could and how should advertising look like in 2020? A solid first step of finding an answer to such a big question is to take a step back.

How did it all start? The first online advertising banner appeared in 1994 on the web portal HotWired, which no longer exists today. Since then, advertising has continued to develop, but the basic principles behind online advertising have always remained the same.

The first online banner ad: AT&T in 1994

The first major mainstream advertising media such as radio commercials or TV spots in the 1960s were the result of a split of responsibilities that has seamlessly continued to this day: The creative team is responsible for creating the advertising material and takes care of the format, design and messaging. Media agencies and publishers take care of the distribution, organized according to target groups and channels.

When Online Banners Replace Traditional Newspaper Ads

So what is the result of all of that and where do we stand today? If we ask for the underlying reason behind the sometime unimpressive success rate of online campaigns, we would have to admit that this split of responsibilities has not experienced much change in the digital world. The online banner has replaced the traditional newspaper ad; the YouTube commercial has replaced the TV ad – but the principles remained the same.

Of course, more precise targeting and the introduction of Programmatic have made the distribution of advertising increasingly efficient. However, our industry is still to blame for the fact that advertising doesn’t always work. In other words, we cannot be satisfied in the long run with click rates of 3-5 percent and conversion rates of 1-3 percent.

In addition, the ad-blocker phenomenon shows us very clearly what many online users think of digital advertising nowadays: not too much! And even if only a minority of internet users install ad-blocking tools, we should realize that most users’ attention span for advertising is shrinking. In a sense, we have an automatic ad blocker in our heads, we have learned to ignore advertising.

What the Stock Market Tells Us about the Future of Advertising

The financial markets are not always right, but they are not always wrong either. As measured by the share price of large agency groups responsible for the majority of online advertising, we can say that basic trust in established marketing and advertising concepts no longer exists.

Let’s take the world’s largest advertising holding WPP. For the last year their stock price has only known one direction, and that is steeply downhill. The picture doesn’t look much more promising for competitors such as Omnicom and Publicis. We are all noticing that advertising as we know it cannot work in the long run and the financial markets are feeling this, too.

Share price development WPP

Share price development of the world’s largest agency group WPP

You could also say: It is only the digital world that shows us in black and white that many advertising concepts have had their day. Online campaigns provide us with data and we can trace what works and what does not in a transparent manner we’ve never seen before. The conclusion arising from the above-mentioned click and conversion rates and the increasing spread of ad-blockers can only be: We have to change something.

Industry Giants Establish Coalition for Better Advertising

Ironically, the world’s largest advertising platforms have joined together and formed a coalition to make advertising better: The Coalition for Better Ads. Among others, Google, Facebook, News Corp, Axel Springer, the IAB, many ad-tech providers and many advertisers have agreed that the future of digital advertising needs to improve. Unpopular formats such as automatic pop-ups with loud music were removed right away.

However, another aspect is much more interesting. The creation of the Coalition for Better Ads serves as an important signal to our entire industry: We are listening to our users – and we understand that things just cannot go on in the same way. Together, we want to set new standards for the advertising of the future: with customer experience at the heart.

That is the basic question that we all need to answer together: How do we bring originality back into advertising? How can we get customers excited about advertising, create added value and exceed customer expectations? The responsibility lies with us as a full-service provider, as well as with ad technology providers, publishers and of course, with all advertisers.

Digital 2020 Is a Constant Journey and Never a Destination

We all need to work together to prepare for a future that will consist of a more personalized approach and a more complex media mix. Strong and authentic content coupled with compelling storytelling, maximum user focus, efficient technology for creation and distribution, and a powerful team that brings all of these together in one unique solution are the critical ingredients to ensure success.

Notorious standard concepts with which we have been familiar since the 60s and which today are delivered in a mass production fashion have become worn out. Digital 2020 requires unique advertising concepts that are well thought through and constantly improve. This is where the challenge lies for all those involved: Advertising in the coming decade will be a constant journey. It will be only those who face up to this challenge without fear and full of enthusiasm that will survive.

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