The 2016 edition discusses six macro trends believed important for study, including ad blocking; the integrity of digital supply; mobilisation and the expansion of app use; TV's transition to over-the-top (OTT); the application of data to marketing; and the expansion of e-commerce.
Rob Norman, chief digital officer, noted that the velocity of change makes for a dizzying environment for marketers, but the agency has identified what it believes to be enduring truths.
“We are not now, nor have we ever been, in ‘steady state’ with digital advertising,” he said.
Norman added that data and technology have changed advertising for the better, even in video. But ads stop working when they’re avoided and when the ecosystem allows fraud, or when strategies don’t follow the consumer to apps and commerce anywhere.
“Though there is more still to understand about ad-avoidance trends, data does suggest the time is now to share in a profound sense of responsibility, transparency and vigilance to ensure the ongoing engagement of consumers with brand communications,” he said.
Speaking to Campaign Asia-Pacific, Mark Patterson, CEO of GroupM APAC and chairman of GroupM China, said that although most of the study’s findings confirmed observations about the industry and did not come as surprises, it was still useful to approximate programmatic growth and distill actionable insights from the findings.
“This is because programmatic measurement of marketing data is a necessary precursor to integrating substantial volumes of data into media placement decisions,” he said. “This affects how clients collect and apply their own data, which can be a source of substantial competitive advantage.”
Patterson said it also affects the way agencies are run, such as having an impact on training and hiring practices, as well as improving standards of brand safety and data security.
The media network predicts digital advertising in 2016 will comprise 31 percent of measured advertising investment in media, up from 28 percent in 2015 and representing a 14.4 percent increase to surpass US$160 billion.
The investments are aimed at reaching nearly 2.3 billion adults expected to use the internet in the year, and increasingly executed programmatically. In 2015, 37 percent of display ad investment was transacted programmatically, up from 21 percent in 2014.
For the Asia-Pacific region alone, digital advertising in 2016 is expected to make up 36 percent of measured advertising investment in media, to surpass US$62 million, representing a 23 percent increase from 2015.
In 2015, 10 percent of display ad investment was transacted programmatically, up 100 percent since 2014 (5 percent).
The effectiveness of these investments is impaired by problems with the integrity of digital supply including fraud, viewability and measurement, which past reports have explored.
This year, the report also seeks to add clarity to the issue of ad blocking. Some correspondents reported a lack of hard facts on the state of ad blocking, but 19 countries reported figures on the percentage of users with ad-blocking technology installed on their devices.
Countries with the highest percentage of consumers using ad blocking tech included France, Poland and Austria—each reporting greater than 30 percent of users.
Adam Smith, Futures director, said the rise in consumer adoption of ad-blocking technology violates the inferred consumer contract with content owners, which enables advertising investment to support content development.
“For this reason, and its potential to inhibit brands’ ability to reach their audiences, it merits close study and preventative measures,” he said. “We have much further to go in understanding the true impact of ad blocking as estimates of lost inventory are scarce.”
Patterson believes countries with languages based on Roman characters may have seen ad blocking efforts rising faster than those countries with languages based on pictograms.
“But ultimately, I believe that these countries are simply moving at different speeds towards the same destination,” he said. “The consumer sentiments that gave rise to ad-blocking are universal—and therefore the same solution can be applied in all cases.”
Patterson said marketers need to be mindful of the end-user’s perspective, and consider the value of content marketing through engaging audiences with authentic narratives that are editorially relevant.
“This underscores respect for the ‘value covenant’ between users and advertisers, and it is a form of responsible advertising that should be integral to the marketing mix,” he added.
On the e-commerce front, Patterson highlighted that China, which accounts for a third of the world’s online retail market, determines the rate of global growth.
Growth is slowing globally; in 2014 it was 31 percent, and in 2015 it dropped to 24 percent. The primary reason for this, he said, is that growth in China is moderating from a plainly unsustainable 40 percent in 2015.
“It is also interesting to note that e-commerce prevalence is a not merely a function of wealth, but of local infrastructure, culture and retail landscape,” he said.
Patterson pointed to Japan and Italy as examples of rich countries with moderate e-commerce appetites, while e-commerce is by contrast much more ubiquitous in markets such as China, Taiwan and South Korea.
Other highlights from the report include:
- Integrity of digital supply: Impression and non-impression-based ad fraud remain concerns, and risk varies by market. Working with trusted partners, use of pre-bid controls in unknown markets, development of specific contracts and reliance on verification tools and vendors is recommended.
- Use of apps: A majority of smartphone users have between 30 to 50 apps installed, and this rise of app usage is a challenge for advertisers. Emerging, more interactive, app-native ad formats hold promise.
- E-commerce: Globally, e-commerce is expected to reach US$1.81 trillion this year (8 percent of global retail), up from $1.57 trillion in 2015. E-commerce strategies enabling transactions anywhere and anytime are on the rise and will become the norm.
- OTT TV: TV consumption is increasingly non-linear, particularly with younger audiences. However, correspondents reported comparatively minor shifts in investment due to a prevalent lack of understanding about non-traditional formats and lack of standardised audience measurement around digital video. Next year, the agency expects live streaming of video on Facebook and other platforms to be a significant topic.
- Applying data: Correspondents reported that the accessibility, the collection and the application of data from owned and third-party sources remains an imperative and a challenge for many clients.