It’s official, for the first time in history we are in the midst of a digital advertising boom. Industry spend on digital advertising has reached an all-time high at £7.2billion and established players are either engaged in a head-to-head battle or consolidating, picking up smaller companies to strengthen and grow the business. This explosion of spend was never more evident than at this year’s Cannes Lions, where ad technology firms and social media giants were centre stage for the first time – a clear sign that the focus is shifting from traditional advertising to digital and social platforms.
It arguably began when we saw telecoms giant Verizon acquired AOL for $4.4billion dollars in an effort to boost its mobile video and advertising offering. Initially appearing as a small vertical integration, in reality it is a move that puts the global telecoms company in prime position to compete against heavy-weights like Facebook, Google and Yahoo and had everyone waiting with bated-breath for their next move. However, it really started to heat up when, fresh off the back of the acquisition, AOL confirmed it was purchasing Millennial Media for $238 million. This will serve to strengthen AOLs position in mobile advertising and there is no denying that they’re building up a strong team to take on the advertising market from all corners of the ring.
In the meantime the rest of the industry is currently in a land-grab, clamouring to take a piece of the market share and get in front of connected-consumers wherever they can. The biggest advertising disruptors have come from social media platforms who have built a large subscriber base. Twitter was the first to come out with ‘promoted tweets’ and is now essentially operating as an ad network – one that allows advertisers to promote their tweets onto other websites and apps. Starting with partners Flipboard and Yahoo Japan, Twitter has developed an ad distribution model that will only continue to grow as countless apps and websites already have twitter embedded into their online properties.
Similarly, Pinterest is following in the same footsteps by introducing a ‘promoted pins’ API. The first band of ad tech partners are lined up to develop services that will make it easier for brands to plan paid as well as free posts on Pinterest, but most importantly reach its 73 million user base. This comes hot on the heels of Pinterest’s buy button, a feature that enables consumers to purchase products straight from pins in the app. With mobile apps now generating almost 50 per cent of mobile transactions for major retailer’s already, Pinterest’s buy button coupled with promoted pins will only raise that number exponentially.
Let Consumers Lead the Way
Every marketer and advertiser alike is desperate to reach the all-important youth market. With a reported 100million users, 70 percent of which are under 25, Snapchat is currently the front-runner and the generation’s social media platform of choice. Until recently it wasn’t touching the advertising market in an effort, I suspect, to stay ‘authentic’ – but that’s all changed. Just before Cannes Lions, Snapchat CEO Evan Spiegel declared his plans to take on the advertising world. In a controversial move, he challenged the ‘horizontal’ mobile video format for both content and ads claiming that vertical videos on Snapchat generate nine times more engagement.
What these contenders all have in common, is they are audience-led. They built their user base to the billions and are easing advertising onto their platform in a way that isn’t distracting for the consumer. Native ads, in particular, are grabbing consumer attention and there is a growing body of evidence showing that overall brand recall and interaction is higher when the ad experience follows the natural form and function of the platform on which it’s placed. Finding that balance between knowing your audience, delivering highly personalised ads and achieving revenue-generating results for brand advertisers is critical to their success. Facebook struggled with it since it introduced ads, with consumers especially voicing their dislike for irrelevant ads showing up in their newsfeed. While it’s started to find that happy medium, it’ll be interesting to see who follows in their footsteps.
Room for New Blood
As the social media giants continue to compete in the advertising arena, the hot and hungry start-ups should not be overlooked. Entering the ring are the likes of companies such as Israeli trend tracker TayKey, which plugs its software into more than 50,000 social sources — such as YouTube, DailyMotion, and BuzzFeed — to provide insights to marketers who can then target their advertising based on what is trending for their desired audiences. Fighting the corner for the little guys is advertising platform, Centro, specifically designed to be used by smaller advertising agencies that find it harder to develop relationships with the bigger platforms due to minimum spends and set-up fees.
The competition is real and the fight is only just getting started. As the land of ad-tech continues to expand, technology advances and spend increases it will impact all facets of the industry. New contenders are entering the ring every day while existing heavy weights are fighting to make their presence felt. By this time next year, some companies will have gone public or been acquired, many will have tapped out and the rest will still be fighting for survival. The age-old advertising model of ‘follow the consumer’ will never change, but as we move from traditional advertising platforms to the world of digital and social, we’ll need to see the players throw a few more punches before putting money on in the next industry champion.