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IAB US offers advice to marketers ahead of digital ‘tectonic shift’

Digital advertisers face a crisis of reinvention amid mounting consumer intolerance

Digital advertisers are facing up to an unholy trinity of challenges, from looming privacy regulations to a talent crisis and ever more demanding consumers, according to a study from IAB US and PwC.

The ‘IAB Outlook: 2022 Digital Ad Ecosystem’ makes tough reading for digital advertisers, and paints a picture of a sector that must rapidly reinvent itself to survive in this rapidly-evolving landscape.

Three challenges are laid out:

  • Waning consumer tolerance for (and expectations of) digital advertising is impacting the composition and size of audiences of ad-supported media and entertainment brands. A consumer-centric evolution is upon us and should include the development of new ad formats/resources/partnerships.

  • Federal government attention, as well as keen focus from this industry, is required to reimagine and prepare for regulatory changes in privacy policies and additional actions by walled gardens.

  • The steep competition and current sense of urgency to attract and grow talent must also be balanced by the need to foster new or elevated corporate DEI policies.

Advertisers are urged to consider whether the consumer “wants this ad message and format from this brand embedded in this specific experience.”

It encourages experimentation that “shortens the purchasing funnel,” an overhaul of measurement and monetization models, and for buyers to keep on top of shifting regulations. There’s further guidance on training and DEI initiatives.

Furthermore, it says that consumers are increasingly understanding concepts such as ‘convenience,’ ‘knowledgeable and friendly service’ and ‘efficiency’ when it comes to what they value most, with the latter cited by four times as many respondents (60%) as brand image (15%) – upsetting the apple cart of brand building.

It points to the elimination of third-party cookies (though delayed until mid-2023) and mobile identifier changes as a “tectonic shift” for industry players, who must reimagine strategic planning and budgeting for future brand growth.

Addressing the consequences of these findings, IAB chief executive David Cohen said: “This report makes it crystal clear that we must acknowledge that consumer expectations are rapidly changing. Irrelevant and increased ad loads are not the solution. They want better, more useful ad experiences. They want us to re-focus on their needs, reimagine ad formats and reinvent what advertising can be. The next creative revolution needs to be about utility, not just cleverness.”

Sue Hogan, senior vice-president research and analytics at IAB, added: “The data is a clarion call to accelerate shoppable and other formats that will allow the consumer to experience, explore, query and purchase. Advertisers and their agencies would be wise to look at the innovations in publishing that focus on anticipating consumer needs and shrinking the number of clicks to provide what consumers want. Digital advertising needs that same kind of intent and reinvention to thrive – or risk losing scale.”

This crisis in consumer relationships is exacerbated by a shortage of talent, with a desperate scramble for new recruits in the face of intense competition threatening to undermine recent strides made in pushing diversity, equity and inclusion.

Key takeaways from the report include a need for both federal government and the advertising industry to prepare brands for coming regulatory changes around privacy to ensure that future growth prospects are not curtailed.

To build back trust advertisers are encouraged to avoid irrelevant and intrusive promotions and a ‘lift-and-shift’ approach, such as squashing 30-second TV spots down to six seconds for digital platforms. Instead, advertisers are encouraged to adopt a consumer-first approach by putting themselves in the customers’ shoes.

The report was informed through interviews with 20 industry leaders, with input from IAB’s own research, offering a cautionary warning that the current digital ad spend boom cannot be taken for granted.

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