Ahsan Sheikh warns against taking a digital-only approach.
One thing we can all agree on is that the rate of change in consumer behaviour in the last decade has been unprecedented compared to any other in the history of mankind. Technology is the key driver behind new developments in consumer behaviour, which in turn affects marketing methodologies and media. We have observed the insurgence of TV when print was dominant and now the insurgence of digital when TV is dominant.
In this article, I will try to examine whether digital is the only way forward or is there something else? In the process, I will highlight marketing fundamentals that remain evergreen and those that have evolved and will continue to do so.
Those born at the end of the last century will remember a time when a rare email would drop into our inbox, causing a great deal of excitement. Today, we receive a crazy number of notifications every minute, causing a huge amount of clutter in our minds. As a result, the attention span of succeeding generations is becoming ever shorter. The current average attention span is five seconds compared to 12 minutes about 10 years ago. People are now more excited when they receive a real card rather than an e-card. Today, the closer we get to be real and physical, the greater the impression we leave on our consumers. This is key; the more real it is, the more effective it is.
In my opinion, true disruption happens when digital and physical (or real) come together. Digital only has its limitations. There are several case studies, including Amazon.com opening physical stores and Barnes & Noble opening digital stores. Both companies realised the significance of having both a physical and a digital presence. In the new media world order, no single media or sales channel can help grow brands; it will be the optimal use of each channel that will be critical.
The sophistication of online digital brands and retailers is well documented. They are able to track consumers easily. Furthermore, digital retailers understand the consumer journey extremely well and are able to “hold the consumer’s hand” until they close the deal. The data that digital retailers own will be increasingly critical. Conversely, the traditional mega brands (for example, Unilever Coke and Pepsi), despite their extraordinary brand equity, are indirectly helping these digital retailers become bigger and bigger. I foresee a day when digital retailers will launch their own brands and compete with these brands. In fact, this is already happening thanks to features such as Amazon Recommends. Hence, it is critical for traditional brands to either jointly own data or develop their own data sources.
The key to growth will be a shared reliance on both physical as well as digital sales and communication channels. Today, almost all brands are focusing on increasing their digital spends without clearly evaluating the role of each media in their brand’s success and although digital penetration is increasing, its effectiveness is still not clearly established. Forty-seven percent of online consumers currently use some form of ad blocker and the effectiveness of, and trust in, ads in the digital space on the remaining 53% is doubtful. According to an article which appeared earlier this year in Forbes, the topmost reasons why consumers block online ads are because there are too many (48%); they are annoying or irrelevant (47%); too intrusive (44%); contain viruses or bugs (38%); they do not want ads personalised (22%).
Paradoxically, in the first half of 2019, more than a quarter of the top 100 OOH advertisers were tech companies. Apple was the third-largest spender in Q2 2019 and Amazon and Facebook were the sixth and seventh largest respectively. Given that digital brands have more data and a better understanding of media consumption habits, it is interesting that they are investing, on average, 50% of their media budgets in physical and traditional channels. Digital brands clearly realise the value of ubiquity that OOH brings. Conversely, traditional brands are shifting their entire focus to digital, thereby compromising the critical significance of traditional sales and media channels. Traditional media, especially OOH, contributes to developing consumer trust, confidence and interest. OOH campaigns when designed from the perspective of a local consumer can be very powerful for brand health.
In the US, according to the Out of Home Advertising Association of America (OAAA), advertising revenue in the medium grew by 7.7% in Q2 2019, the highest growth OOH has seen in any quarter since 2007. The OAAA further reported that digital OOH accounted for almost a third (31%) of the total OOH revenues in Q2 2019. Indeed, it is largely due to the growth in digital that OOH has remained one of the few traditional advertising formats to have experienced growth. We observe the same trend in Pakistan, with DOOH contributing to the unexpected growth of overall OOH media advertising.
Contrary to the general belief, a recent study by Nielsen and OAAA indicates that OOH is among the most cost-effective relative to other traditional media channels. The study measured consumer response to various offline media (and online banner ads) and 64% of the survey participants confirmed that they conducted an online search as a result of having seen an OOH ad. About four out of 10 visited the Facebook page of a brand for more information or to post a comment.
Essentially, traditional media, especially OOH, is most effective in driving consumers online to either get more info or to the online brand store for instant purchases. Globally, DOOH spending accounts for about 30 to 40% of overall OOH spending (estimated to be approximately $16 billion in 2019), making OOH the only traditional media that is still growing strong. OOH, especially DOOH, offers what has become increasingly difficult for marketers to do – capture busy consumers’ attention in the midst of media clutter. By combining sophisticated technology with clever content, advertisers can create an emotional and engaging experience for millions of consumers, given that 70% of our waking life is spent outside our home. In fact, according to Kinetic’s recent Commuter Commerce Study, OOH advertising is the key driving force behind online and offline purchases.
In essence, brands must not stick to old ways of defining marketing and media strategies. Consumers are evolving as are media channels. Brands must identify the key local and current challenges and use each media to address the challenge. Relying on digital only can be detrimental, especially in Pakistan where digital penetration even in the top cities is low. We must experiment, innovate and learn from data in the current cluttered digital media space. Consumers are real people and we can only integrate brands effectively in their lives if we can give them a relevant and joint digital, physical and human experience that is memorable. A real phygital experience.
Ahsan Sheikh is CEO, Kinetic Paksitan.