Six challenges and opportunities facing marketers and their agencies in 2016

Hamish Pringle is strategic advisor at 23red, former IPA director general, and has had five successful business books published. With an agency career spanning 26 years, he’s worked on more than 50 brands.

As 2016 gets underway, what might we expect of this leap year? What hurdles will marketers and their agencies have to jump? Here are predictions of six of the challenges and opportunities we face.

1. 2016 is going to be a year of economic uncertainty and slower growth

The slowdown in China has yet to run its course. The UK stock market is well down since May. The US hasn’t recovered fully.

Source: IPA/Markit Bellwether Report Q3 2015

The IPA Bellwether Report, which is a good economic indicator because its sample is drawn from marketing people who have to anticipate demand, has shown a weakening over the past three quarters.

Source: IPA/Markit Bellwether Report Q3 2015

It wouldn’t be surprising if the UK economy slowed during 2016 and in this context we know from experience that many brands will cut their budgets and this in turn will soften media rates. This presents a great opportunity for those marketers who understand the relationship between share of voice and share of market.

2. 2016 is going to be a year of political uncertainty

The Conservative government has a slim majority and, despite the weakness of the Labour opposition in parliament, faces significant challenges as evidenced by the Lords' refusal to pass the legislation on tax credit cuts. The elections for London Mayor are too close to call between the Conservative and Labour candidates. The UK/EU negotiations will continue to be fraught right up until the referendum in June 2016; currently sentiment is shifting towards ‘Brexit’.

The wars in the Middle East look set to continue, despite diplomatic efforts, and the potential for terrorist attacks will continue to make people nervous. Retailers, restaurants and leisure outlets in central London and other major conurbations will not have done as well this Christmas as they might, and this nervousness will continue during 2016.

This will merely accelerate further the trend towards safer online shopping and in-home entertainment.

3. 2016 is going to be a year of increasing convergence between social media platforms and bricks and clicks

Facebook now owns Instagram (April 2012), Oculus Virtual Reality (March 2014) and WhatsApp (October 2015).

Google changed its holding company name to Alphabet and now houses Google, Android (August 2005), YouTube (October 2006) as well as Nest (January 2014).

Yahoo owns Flickr (March 2005), AdInterax (October 2006), Rivals.com (June 2007) and Tumblr (May 2013). LinkedIn has bought SlideShare (May 2012) and Lynda.com (April 2015).

Will 2016 be the year in which Pinterest either makes a big buy, or a big sale?

Meanwhile Amazon has just opened its first Amazon Books shop in Seattle. In April ‘Bricks’ wine merchant Majestic Wine bought online rival Naked Wines. ‘Omnichannel’ retailing for ‘master shoppers’ – the terms used by the John Lewis Partnership - will become normal.

Since the UK is massively over-shopped, especially in the supermarket sector, it wouldn’t be surprising if one of the weaker multiples such as Morrisons succumbed to one of the online giants.

4. 2016 is going to be a year of increasing extension of the capabilities of mobiles and robotics

Almost without noticing, everyday life has become infiltrated by artificial intelligence. Oyster cards on London Transport have moved from controversial to commonplace within a few years. Online shopping and home delivery are getting ever slicker, and as Amazon Prime has shown, ease of use increases expenditure.

The Civil Aviation Authority has published a list of licensees for Small Unmanned Aircraft, aka ‘drones’, of which 1,304 are active. Amazon Studios Limited was granted its license on 9 December.

The Daily Telegraph reports that Nanyang Technological University in Singapore has just introduced a robot receptionist called Nadine, based on its creator, Prof Nadia Thalmann, pictured together above.

Remote control of home heating via a combination hardware and software devices such as Nest and Tado is already getting established.

And there are several apps/devices which can lock and unlock your door, create virtual keys for guests, and tell you who comes and goes, all from your smartphone. These include newcomers such as August, Kevo, Goji and DoorBird and traditional players trying to digitise themselves, such as Yale.

Look forward to vertical integration via mergers and takeovers between the upstart digital players and the traditional locksmiths with their huge databases of installed hardware and trust within the housebuilding trade.

5. 2016 is going to be a year during which sex will continue to lead online innovation

It’s said that Panasonic VHS vanquished Sony Beta-Max in the video cassette format war because the Californian porn industry had adopted VHS and had an installed base of equipment. And the trend continues. In August 2015 The Drum published ‘The Big Turn On’, its documentary on the fast-growing ‘sex tech’ industry. In doing so it showed us what a powerful driver sex has been in developing and innovating in communications technologies.

‘Hook-up’ apps have become normalised and it’s increasingly common to meet couples who found one another on Tinder. In July, Tinder introduced verified accounts for celebrities, and during 2016 we’ll see increasing segmentation of online dating.

Where the relationships sector leads, others follow and brands like SelfieJobs in the recruitment sector are already mimicking the Tinder-style technology.

During 2016 we can expect increased integration and aggregation of personal data so that individuals using dating and employment sites will not only be able to see friends in common, but see family relations, academic and employment history in a holistic profile.

6. 2016 is going to be a year during which Osborne’s property strategy will begin to work

George Osborne has embarked on a long-term strategic solution to the housing shortage which focuses more on the redistribution of the existing stock, and reducing price pressure in the process.

He’s reduced the supply of hot money from emerging markets seeking a safe haven in London by introducing punitive taxes. Secondly, he’s taken the heat out of the upper end of the market by changing the stamp duty rules, making it much more expensive to buy a property above the £2m mark. Thirdly he’s changed the tax regime on buy-to-let making it a much less attractive investment.

The result of the latter is a large number of owners slowly but surely liquidating their portfolios, many of which are comprised of flats. Net result is many more affordable properties coming onto the market.

Meanwhile an enforced relaxation on the planning process, combined with the Government’s help-to-buy programme, is encouraging the major house-builders to capitalise on their land banks. All this means good news for those industries which rely on house moves for their stimulus.

Forewarned is forearmed, and thus dealing with these six significant challenges should be less of a leap in the dark.

Hamish Pringle is strategic advisor to 23red. He tweets @hamishpringle

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