Media owners are being warned that they need to increase their investment in personalisation and technologies that improve consumer experience, or else face declining advertiser revenues.
The SMG Media Futures 2016 survey highlights some major discrepancies between the level of expected growth in some media compared with advertiser expectations, with the likes of the outdoor industry, which saw strong growth in 2015 hoping for 7.6% growth, while advertisers are projecting only 1%.
Source: SMG Media Futures Survey. Click to enlarge.
Radio and television also face disappointment according to the report with radio owners projecting 4.2% growth compared with 0.1% from advertisers, while TV – hoping for 0.5% rise – is expected to see a spending drop of 2.5%.
“TV might be facing a downturn,” Chris Nolan, CEO of Starcom Mediavest told Mumbrella. “But what these figures suggest is that as media adopt personalised and interactive capabilities, it will be this that significantly drives future growth.
Nolan: media owners need to focus on investing in personalisation in 2016.
“What we believe is that with traditional media there will be only modest growth, with media owners and advertisers aligned with 2.6% and 2.8% growth projected,” he said, reflecting on the total ad market expectations for 2016 for Australia.”
The annual SMG study of marketer and media owner expectations draws out what are likely to be the major drivers of growth in 2016 and finds that it the media closest aligned with customer experience (CX) that will be the real winners.
“It is the areas that allow advertisers to drive their customer journeys harder. That is what is driving these things from a marketer perspective,” he added.
Source: SMG Media Futures survey. Click to enlarge.
“If you look at paid spend growth this breaks out a bit more and we see social media, digital video, mobile all up by double digits, while other areas like paid search is expected to only be up by 6%,” said Nolan.
The SMG report notes outdoor and broadcast media are tipped to invest a combined $100m in moving their mass offerings into digitally enabled experience channels, offering greater personalisation and improving the results for advertisers.
“It’s actually hard to get this right,” said Nolan. “The investments are being made but there is possibly a capability gap where marketers say that customer experience is their most exciting opportunity, 51% say that, but only 6% say that they can do that successfully.”
“There is a recognition that we have got to do it,” he added. “There is a view that we, as an industry, are not delivering on customer experience well enough yet, but what we need is new talent and new skills.
“What many are saying is that to actually deliver against that (CX opportunity) 78% are saying they need to invest more in people and skills. They are in fact conceding they need to invest in people and skills ahead of technology – that to me is the really interesting part.”
Nolan argues with the growth of programmatic media and a new found focus on consumer experience by agencies the industry is reaching a “tipping point” around the space when it comes to what is expected on the media owner side but can drive growth in years to come.
“We are reaching a tipping point around mass addressable media,” said Nolan. ” We are seeing the likes of TV and outdoor who are tipped (in 2016) to have low to no growth but with investment we might see them grow as they adopt these technologies.
“Then in 2017 and 2018 they will be the ones that grow but the key will be mass addressable media.”
However, the media agency boss, whose clients include Suncorp, Metcash and Lion Foods, also warned the industry still had a lot of work to do in the space and that part of the problem was a strategic disconnect among marketers, their agencies and media owners.
“We are definitely not there yet,” he said. “We have recognised it is important but we know we don’t have the talent and skills in place to do it.
“The other one that is interesting is that 51% of partners – i.e. publishers and media owners – feel disconnected from marketers’ overall strategy.
“It’s no-one’s fault but everyone has to play a role in addressing this – marketers need to be coherently and clearly talking to their strategy, or at least be clear on what their strategy is.
“Agencies need to facilitate that and help them articulate that to media but then the media need to actually have the capability in-house to understand it and know what to do with it. That’s what the research clearly says.
The SMG Media Futures survey includes responses from 135 of the top 500 companies in Australia.