Last Chance Saloon?

Traditional advertising refers to the process of distributing commercial messages through mass media, such as print,TV, radio, OOH and BTL. It is an interruptive form of communication that pushes products and services regardless of whether audiences are interested or not.

Although traditional advertising has ruled successfully for centuries, digital has proven its superiority in many ways – cost-effectiveness, precise targeting, global reach, efficient tracking and so on. In the US, digital advertising has overtaken all traditional media to become the top medium, accounting for a 45% share of ad spend in 2020. This decline in traditional ad spends points to the challenges it faces. Three digital entities have emerged which are luring business away from the traditional ad agencies: management consultancies, technology companies and digital agencies. How they have impacted traditional advertising provides some clues about whether or not the latter will be able to survive.

Consultancy firms are experts in data gathering, analytics and providing data-backed solutions to clients. As such, they are considered trusted partners by their clients. They are set to grow further by adopting forward integration strategies. For example, Deloitte Digital have become a $1.5 billion company. Accenture have added digital marketing capabilities in their service portfolio. McKinsey have recently acquired many digital marketing agencies. Technology companies such as Facebook and Google have entered into the content creation and distribution arenas by investing significantly into them and are able to deliver increasingly engaging consumer experiences. Digital marketing agencies are growing due to their low entry barriers and are attracting the best talent as well as being active participants in content creation and distribution.

Compounding all this is the fact that consumer trends are not supporting traditional forms of advertising, because they dislike its intrusive nature. As Marc Pritchard, Chief Brand Officer, P&G, put it: “Ads are often irrelevant and sometimes just silly, ridiculous or stupid. We tried to change the advertising ecosystem by doing more ads, and all that did was create more noise.”

Big corporations such as Bayer and Unilever have pulled out parts of their business from the ad agencies, preferring to handle these aspects. In 2018, the US-based Association of National Advertisers saw 78% of its membership handling parts of their businesses in-house, up from 42% in 2008. The most critical contributor to this development is the rising cost of marketing due to the exponential proliferation of communication channels and the efforts made to cover them all. Brands can no longer get away with developing three or four advertising campaigns every year. As a result, traditional advertising is facing an existential challenge. Ad agencies will either have to let go of their outdated model or become irrelevant.  

Is traditional advertising dead? Not yet. While the digital and technology players continue to develop their expertise in content creation and its delivery and distribution, the way forward for traditional ad agencies lies not in competing with them but in integrating digital technology into their offerings, thereby providing consumers holistic brand experiences.

Here are six ways they can achieve this.

1. Data-Backed Strategic Planning Capability
Traditional advertising agencies need to integrate data-driven strategies and platforms in their creative processes. They need to have strategists who are experts in data analytics and have the same capabilities consultants at the level of Deloitte and Accenture have,in order to develop solutions for clients, rather than just deliver campaigns. That is the only way traditional agencies will be able to win back their lost position as strategic partners to their clients.

2. Integrate Consumer Comments on Digital Media
In traditional advertising, ad agencies broadcast messages to people who cannot give their feedback or ask questions. This is a major disadvantage. Traditional agencies need to adopt practices such as gathering and analysing consumer feedback. It is another way to stay relevant.

3. Real-Time Ad Testing
It is now possible to gauge the performance of traditional campaigns in real-time, by simultaneously running an ad developed for TV on social media (for example YouTube) and track its performance across various segments; gather watch time data to assess levels of interest, analyse comments and make amendments where necessary. By doing this consistently, ad agencies will receive valuable insights into how well their ads are delivering and what is working – and then adjust their resource distribution to optimise the strategy.

4. Integrate Traditional With Digital
One way to integrate print advertising with digital is by placing QR codes in print ads. This kind of integration is useful when consumers want to see the advertised item in operation. Another way to do so is to include a call to action in traditional advertising, inviting people to log in to various digital platforms and continue the customised experience in digital formats. This is an excellent example of combining the impact of both traditional and digital communications.

5. Evolve With the Consumer
TV viewing is dropping worldwide among younger audiences. This needs looking at in-depth because people are tuning out of TVs and consuming the same content on different devices – a factor that has led to the rise of OTT. Many new advertising opportunities are likely to emerge as a result of the shift from TV to OTT, such as the opportunity to place TVCs on digital platforms where consumers can watch their favourite programmes.

6. New Monetisation Models
There is a new model of distributing content known as Advertising Video on Demand (AVOD) that is gaining popularity. In this model, audiences have to watch online video ads (similar to TVCs) in order to watch their desired content that is free. This model allows publishers to charge their clients on a pay-per-view basis.

Khalid Naseem is Head of Strategy, Firebolt63. khalid.naseem@firebolt63.com