Historically, tech developments have tended to destroy local revenue sources, writes Roy Jeans - but now tech will help drive its revitalised growth
It currently seems that from a brand’s perspective whatever the media question, the answer is invariably Facebook and/or Google. The new generation of twenty-something planners and buyers has understandably grown up steeped in the solutions that the Big Tech companies offer. They consume their output on an hourly basis; are comfortable with them; and instinctively and immediately absorb any product developments.
Add in behavioural changes where the consumer is often reacting more quickly to events than the advertisers trying to sell to them, and we now have a generational schism between senior marketers and the consumer, as well as a technological one.
Historically, clients used advertising to shape and strengthen brand presence through what is now quaintly called MSM. The consumer was then expected to follow the advertiser’s lead, and to purchase the good or service. The current flood of monies into Facebook and Google has quickly upended this approach, with mixed results at best.
Factor in the increasing - and valid - concerns across a whole range of Big Tech issues, and it is no surprise why many major advertisers are publicly reconsidering their strategies. In the last year alone we have had the following: the ongoing debate about both fake news and “post-truth” news; extensive public discussion about how to combat Big Tech’s systemic tax avoidance; the consistent over-stating of audiences (strange how they are never under-reported); the continued posting of hundreds of videos concerning such diverse subjects as the promotion of ISIS, anorexia, serious addiction and suicide; the general loss of our privacy – without our permission; selling advertising to agents of foreign governments – with Russia the most visible; and alleged election interference on both sides of the Atlantic. Apple is currently being sued in New York for allegedly deliberately slowing down its older models to encourage the purchase of its upgraded products.
These ongoing issues have jumped from being merely the concerns of our relatively narrow media world of planning and buying, and are now firmly in the editorial columns of our national newspapers, as well as the corridors of government - hence, for example, the imminent arrival of GDPR.
The result is that this debate about the role and responsibility of Big Tech is now strongly in the public consciousness, and is gathering pace every day. Last week our own government raised the (almost certainly unworkable) possibility of using taxation to punish tech companies that consistently fail to control their content. There is also a growing call to simply tax the turnover of Big Tech, rather than their geographically re-routed, and frankly opaque, profitability.
In tandem with Big Tech’s revenue growth - and clearly driven by it - the media agencies are restructuring, and consolidating, as they try to solve the problem of this dominance. If you add in Amazon, who have reported yet another year of stunning ad revenue growth, there are now three globally dominant tech companies who are patently threatening the status quo.
From the advertiser perspective the fundamental question is a simple one - “If the answer is always Facebook, Google, and now Amazon, what value do the current banks of media planners and buyers add every day?” The rise of this troika, allied to the rapid automation of the planning/buying process, not only hollows out existing agency structures, but threatens to potentially disintermediate entire agencies.
There is also an understandable drive from clients to deal directly with Big Tech - despite all the concerns above. After all, in the balance of resources, Big Tech has more money, more profit, and ultimately more usable data than the global marketing services businesses currently acting as their intermediaries.
Of course, Facebook’s recent announcement last that it is changing its algorithms also signals that it is aware of the need to remain relevant to its user base.
Facebook has had a tremendous run, but perhaps these changes signal an awareness that growth has come at the expense of alienating users. You could even argue that Facebook has taken too much money, and by doing so has ultimately damaged its longer-term growth prospects.
One side effect of so much thinking time being devoted to this problem of dealing with Big Tech is that other media solutions seem to have been increasingly overlooked. It may be a cliché, but despite all the recent changes that we have seen, most sales are still local. Advertisers still need to engage with consumers in their own environments, in a compelling and relevant way.
Certain media owners have successfully responded to this challenge, as they grapple with this new landscape. Within radio, Global has lead the way (and has been acknowledged by the wider media industry for doing so). A revitalised JICREG has framed a new approach to accessing regional newspapers, underpinned through galvanised and relevant local websites. Bitposter has generated greater access to the OOH industry through its frictionless data-pipe, which opens up the sector to historically disinterested advertisers.
Companies like DAC and Huq, who combine digital expertise with a focus on local data analysis, are also driving this new approach to hyper-local.
The debate about the role of Big Tech has partly disguised this growing focus on local ROI from the clients. There may well be general ongoing debate about the money trail as it relates to the performance of programmatic buying, but at a local level ROI can be tracked in real time if a client accesses the relevant data sets.
It has been possible in any January for the past twenty years to state that the following twelve months will see the greatest ever media upheaval. This January it may well be true. Structurally the global marketing services groups are trying to respond to the seemingly unstoppable rise of Silicon Valley, as it hoovers up any marginal ad revenue. The massive financial imbalance between Silicon Valley and these groups threatens to disembowel them at an even faster pace than before.
Irrespective of whether either governments, or advertisers, evolve quickly enough, the static (at best) share prices of these marketing services groups reflects investor concerns about their longevity. Automation enables media decisions to be truncated from days to hours, with direct consequences for the workforce. Mark Pritchard’s well documented call for enhanced transparency has only added to this pressure - his upcoming ISBA address will be the most eagerly anticipated in years.
A requirement for a more easily trackable ROI will accelerate the focus on hyper-local options. Whereas historically tech developments have tended to destroy local revenue sources, now tech will help drive its revitalised growth. We have seen the recent revival of both hard copy book and vinyl sales, as the “old world” slowly reasserts itself.
The same is true for the world of local media, underpinned as it is now with focused digital data. This mix of genuine concern about the ethical universe that the Big Tech companies prosper within, allied to greater clarity regarding ROI locally, will help drive this shift.
2018 will see the re-introduction of the value chain that connects investment into local media with the ROI that it generates. It may well play its part too in the continued restructuring of the agency sector as it continues to meet the Silicon Valley challenge. We will also see the renewed rise of hyper-local specialists who will be able to increasingly connect the consumer to the advertiser’s media investment. 2018 will be the year of hyper-local.
Roy Jeans is the chairman of Communication Partners, and advises both Bitposter and Pintarget