In 2013, marketing and advertising spending got off to a slow start due to all the uncertainties in the marketplace and economy. Remember the sequestration? The threat of recession? The Christmas that almost wasn’t?
Thankfully, when GDP accelerates, we see business and consumer confidence rise and advertising spending goes up, too. “2014 is off to a good start already, and we expect to see this continue,” said Bruce Biegel, Senior Managing Director of Winterberry Group, the research and marketing consultancy, at the “Outlook 2014″ luncheon of the Direct Marketing Club of New York (Thursday, January 9th), sponsored by Alliant.
This year, Bruce and Winterberry Group “see people diving right in.” According to their trend data, magazine spending continues to be flat, direct mail spending stayed steady, but newspaper spending “Is the best it’s been in years, but is significantly down from a decade ago,” he said. “If you wonder where all that digital funding is coming from – it’s from the drop in print advertising.”
Display advertising and email both had very good years and will see increased growth, he said. “Display is evolving and includes mobile and online,” he said. “In digital, we are starting to see spend approach adoption for the first time — digital spend is 23%, and it used to be 10%. We are starting to see the market put the money in the media consumers actually use.”
The big driver of display and other digital this year, he predicted, will be the rise of programmatic marketing. “We are used to search being automated and efficient to execute, but display is not as easy as search. It is a convoluted and complex ecosystem,” Bruce said. “The ad:tech market set out to solve that program last year, and it is still solving it. I’m confident that if we can make search easy with a programmatic and automated approach, we can do the same for display.”
Programmatic approaches are now widely adopted throughout the ecosystem, Bruce said, quoting from Winterberry research released in November 2013. “It is a lot of live, real time bidding on an exchange,” he said. However, while many people think of it as real time bidding, it is more than that. It’s about how you execute the campaign. The type of auction, the type of payment, the negotiated rate and more.”
“Right now, 40% of the display market is programmatic. The real change to get the last 60% has to come from a change in attitude and approach of the marketers,” he said. It will happen, he predicted, because the efficiencies in the programmatic approach benefit all players in the ecosystem – the agency who needs to improve efficiency and reach because they no longer get commissions for media; the publisher who needs to increase reach and custom ad buys while keeping operational costs low; and the marketer/buyer who needs to reach consumers more efficiently and effectively.
“Media buying now moves from property to audience,” Bruce said. “Find the audience, don’t wait for them to show up. We need to make the Internet a strong pool of leads.
“The Internet is not ready for one to one marketing, due to PII and privacy issues,” he said. “However, we solve that problem by marketing to segments of audiences who are like-minded.”
What will this evolution to a programmatic approach take? Bruce listed five factors:
“Building a future state architecture is hard,” he said. “You need an omnichannel change agent. CMOs are not going to fund projects that are planned to take longer than the average tenure for their own role. Marketing organizations have to think beyond their existing mandate in order to prepare for the future of the business.”
For more information on the 2014 Outlook from Winterberry, download Bruce’s full presentation here.