Guy Phillipson's departing message from the IAB UK: For 2020 vision – think small
“I’ve yet to find a real use for the Internet. No-one searches for our products by name and no-one buys them online. Just get the telly right and the marketing director’s happy”.
Believe me, that is a genuine interview quote from a major blue chip marketer, which I dug out from when I first joined the IAB back in January 2005. It doesn’t exactly fill you with confidence, does it? They weren’t all as negative as that, of course, but you have to remember- back then- we just had banners and search, with limited rich media for the 40% of users who actually had broadband, delivering 1Mbps.
But as we all know, search caught on big-time, and with the advent of social media, video, programmatic, and especially mobile, digital advertising’s share of media has grown tenfold from 5% in 2004 to 49% in 2016. And with a fair wind, total ad spend should break £10bn for my last year in the CEO hot seat.
So, internet advertising is really big. But as we look towards 2020, perhaps we actually need to think small.
Mobile Advertising driving the entire media market
Do you remember, year in year out after the iPhone arrived in 2007, some smart alec wag at every conference would whine, “when’s the year of mobile?”. Well exponential growth is a funny thing; anything can double annually from a very low base without anyone noticing much. But once mobile hit a billion in 2013, growth was not just rapid, but large! And in 2016, I can tell you that ALL digital ad spend growth is mobile, and it’s driving the whole media market. Desktop spend is flat and will go steadily backwards, such that by 2018, Enders Analysis forecast mobile search and display will account for £6.7bn versus £4bn for desktop (with classifieds completing a 2018 total of nearly £12bn). And the split will widen further as we reach 2020.
This means that in a couple of years, advertisers should be routinely allocating at least a quarter of their entire media budget to mobile advertising, which will become the new battleground from brands. The lion’s share of mobile time is new digital time, and share of voice across all the major social channels will be vital, as will tailored branded content, and progressive use of location data.
The average UK household now contains over eight connected devices and a couple of passive tellies. And with 50% of outdoor advertising going digital this year – the population will be outnumbered by screens many times over by 2020. Which means over 95% of all advertising impacts will occur on screens, and for brand advertisers that means video heaven. But whilst the 30-second TV spot will still be an important showcase, marketers will have to combine six second shorts, silent outstream ads, skippable pre-rolls and vertical video to deliver a campaign with sufficient frequency.
Even with Brexit, we have to follow the European data rules
With the tougher, new General Data Protection Regulation (GDPR) rules on the horizon and due to come into force in May 2018, you could be fooled into thinking Brexit is a great opportunity to swerve the regulation – but that makes no business sense. Under GDPR, all personal data, including so-called third party anonymous browsing data - which has been the lifeblood of behavioural targeting for a decade - will be subject to specific, prior consent. But by adopting the rules, the UK based operators can not only trade legally in the European market, but the UK should be awarded “adequacy” by the EU for porting personal data to, for example, the US, where the biggest media owners reside.
On the plus side, GDPR will put a premium on publishers’ first party data, and they should all now be very busy registering all their readers in preparation for GDPR, and better yields!
As for advertisers, their first party customer data gets promoted from gold dust to…er... platinum dust. As programmatic grows from 60% of display in 2015 to 90% by the end of the decade, I can see more and more companies buying display in-house with their own tech, the way they’ve been trading PPC search for years already. And for the majority who choose to go via an agency, the clients will be calling the shots with enhanced, transparent deals - and even choosing the tech.
And what about search itself? It will become the largest single channel spend for marketers this year. And looking at the forecasts, search advertising should break £6bn on its own by 2020. It’s the original programmatic ad discipline which completely turned marketing on its head. What a gift to marketers that consumers can simply ask for what they want(literally with voice activated search) and the client only pays for the ad when the customer clicks. No wonder it caught on!
So, what excites you most about digital marketing?
How times have changed since I asked that question in 2005 to the digital refusnik quoted at the top of this article. Ten years later when I asked the same question to 25 senior marketers, this reply showed the value of enlightenment and proven ROI.
“We’ll use the data, not just for marketing, but to deliver better products and respond to demand. This is a revolution, which will truly meet customers’ needs at a profit. It’s transformational.”
Amen to that. Sounds exciting, doesn’t it?…Perhaps I should become a marketer again one day.
Thank you and au revoir
On a personal note, I’d like to thank everyone in the UK digital advertising industry for making my 12 years as CEO of the IAB such an exhilarating and rewarding time. It’s been a privilege to work with such brilliant members and colleagues to grow the most advanced digital advertising nation on earth. I plan to stay in the industry, so it’s just ‘au revoir’ from me for now.
Guy Phillipson was the CEO of IAB UK (today is his final day in the role) and will become chairman of iCrossing in the near future.