Following a number of big announcements for the marketing industry in the second half of 2018, the coming 12 months will see significant pieces fall into place, with hiring expected to start for Amazon's HQ2 in New York City, major marketing deals coming to fruition and legacy brands accelerating their focus on direct services to combat the rise of disruptors.
Underpinning these shifts will be heavier investments in data and e-commerce, with marketers turning more frequently to outside partners for help — but not always from the traditional agency suite. The demand for high-impact, purpose-driven creative messaging, delivered through a number of evolving channels like connected TV, will prove essential in distinguishing brands from competitors.
"Everybody has digital technology, everybody has access to capital — and so now the differentiation is the brand," Keith Johnston, a research director at Forrester, told Marketing Dive.
But the window to make an impression with consumers will also be short and crowded this year, as outside factors like increased regulatory scrutiny of digital platforms, the ramp-up to the 2020 presidential election and the possibility of an economic downturn loom large. The need to improve growth and profitably during this period will ultimately guide more marketing decisions, creating new tensions while accelerating trends that became readily apparent in 2018.
"This means that advertisers will continue to cut costs wherever possible — agency fees, production costs and media spend — while investing in in-house capabilities to execute simple digital and social deliverables," said Michael Farmer, chairman and CEO of Farmer & Co. and the author of "Madison Avenue Manslaughter."
Pieces falling into place
The aforementioned Amazon HQ2 in New York — which could break ground later this year if all the necessary approvals come through — a push toward agency in-housing and big deals like IPG buying Acxiom will disrupt the landscape of agencies, platforms and, of course, the brands powering them in 2019. Indeed, the roles of players across the ecosystem will change, with marketers wearing more hats related to technology and growth while also asking partners to simplify their offerings and focus more on data services.
"Everybody has digital technology, everybody has access to capital — and so now the differentiation is the brand."
Research director, Forrester
Not all transformation will be positive: Ad holding groups like WPP will continue to tighten up and squeeze the most out of their portfolios in fiercely concentrated turnaround attempts, according to Farmer.
"WPP's shift to [consolidate] and streamline its operation is indicative of what is already been happening at the other holding companies," Jay Pattisall, a principal analyst at Forrester, told Marketing Dive. "The implications are: marketers will hire holding companies first and agencies second."
That means more agencies must offer integrated enterprise technology platforms, as is the case with the Publicis People Cloud, per Pattisall. Consultancies, on the other hand, will take advantage of a bumpy period of agency transition to win over clients. On that front, a potential MDC Partners acquisition by Accenture will be one to watch in 2019.
On the client side, CMOs will feel pressure to juggle myriad roles — around growth, learning and information — all while centering their brands more squarely around "purpose." With the potential for a recession in the near future, savvy marketers will be presented with further economic challenges, but also opportunity.
"If you're willing to invest during a downtime, you can leave your competition behind," Johnston said.
Everyone will try to 'Just Do It'
Speaking of purpose, more brands in 2019 will try to replicate the success of Nike's "Just Do It" campaign starring Colin Kaepernick, which has opened the floodgates for creative possibilities — but also new risks.
"There are no 'off limit' topics anymore," Danielle Lee, Spotify's global head of partner solutions, said in comments to Marketing Dive. "'[W]hen the backlash comes (and it will come) you must be prepared to engage with the audiences you have made uncomfortable or even offended and unapologetically stand in your truth."
High demand for braver marketing will spur brands with strong core values to expand on them, offering more comprehensive, actionable programs.
"Consumers are really looking for: what's the information beyond the purpose? What can I actually do?"
CMO, National Geographic
"Consumers are really looking for: what's the information beyond the purpose?" National Geographic CMO Jill Cress told Marketing Dive. "What can I actually do?"
By providing consumers with concrete steps for improving the world and themselves, brands will be able to convert devoted fans into a type of micro-influencer, according to Cress. Similarly, an often overlooked aspect of purpose that savvy marketers will tap into in 2019 will come from within company walls.
"Employees want to know where their companies stand," Lee said. "Sitting on the sidelines is no longer an option."
By instilling a business with a clearly defined set of values, leaders will be able to energize their talent and closely link divisions like product, marketing and sales to drive stronger results.
"Really great marketers are going to use [purpose] to get out of these siloed situations," Forrester's Johnston said. "I think CMOs are going to use that as an opportunity to bring the C-suite together."
CMOs tapping into purpose might help them rebuild trust with consumers, but the same can't be said for digital platforms which, after a year of being battered by negative headlines, could see regulatory crackdowns.
Facebook is currently being sued by the attorney general of Washington, D.C., and is at the same time under FTC investigation for potentially violating a user consent decree cut with the agency in 2011 — two significant consequences of the Cambridge Analytica scandal. The latter issue received fresh attention in late December amid revelations that Facebook shared sensitive information, including users' private messages, with certain companies.
"I would expect to see something from the FTC [in 2019] — there are some fairly big things at stake here," Alison Pepper, SVP of government relations at the 4A's, told Marketing Dive. "Depending on what the FTC finds, violation of a consent decree can potentially come with very large monetary penalties."
But all players in the marketing ecosystem, not just digital platforms, will need to be on guard in 2019. In the U.S., more states will attempt to write laws akin to GDPR or the California Consumer Privacy Act (CCPA) in what will be an alarming development.
"From a compliance point of view, this could be a huge nightmare," Pepper said. "It could be unbelievably convoluted how different states decide to enact their own versions."
Due to this, more companies will push for a single, comprehensive U.S. privacy law. A few executives, including Apple's Tim Cook and trade bodies like the ANA, already have. Frustrated consumers, on the other hand, will begin to take more dramatic steps than social media outcry if these problems go unaddressed.
"I guarantee you there's going to be some sort of class action lawsuit out there, where the data was being used incorrectly," Doug Chavez, SVP of e-commerce and digital at WPP's Geometry, said.
An e-commerce 'tipping point'
Outside of purpose-led creativity, e-commerce will become the centerpiece of many marketers' business strategies in 2019. The channel's been steadily rising to that status for years now, but Kantar Consulting and Profitero recently found that 76% of surveyed marketers are increasing their investments in e-commerce this year to capitalize on an estimated $3.5 trillion opportunity in online retail.
"We're seeing more and more categories here at a tipping point ... when they go from just 2% or 3% [of investments toward e-commerce] to the potential of 10 to 15%," Malcolm Pinkerton, Kantar Consulting's VP of e-commerce and digital insights, told Marketing Dive. "How do they start to properly cope with competing with the likes of Amazon? How do they properly cope with Alibaba, and how do they start building proper direct-to-consumer models?"
For traditional marketers in categories like CPG, meeting the consumer demand for e-commerce services will mean more than figuring out convenient ways to sell things online. More products and packaging will need to be expressly designed for these functions and for agile supply chains. Tide's Eco-Box, the first product out of Procter & Gamble's fabric care e-commerce innovation group, serves as an early experiment that will only become more common.
"P&G typically isn't seen as a leader in the e-commerce innovation space, but they sure beat many to the punch with this one," Jon Reily, VP of commerce strategy at Publicis.Sapient, told Marketing Dive in emailed comments.
"Moves like this will get people talking … but ultimately will not be a huge leap forward for what CPG's truly want; a one-on-one relationship with the customer with a 'No Amazons' sign out front of the tree house," Reily said.
Traditional brands take a page from DTC's playbook
Born in the online world, direct-to-consumer (DTC) brands have altered how people purchase beauty products, mattresses and many things in between, cutting out the retailer middleman and letting marketers fully own their customer relationships. While the explosion of DTC brands in recent years reflects the power of cult followings, the agile model that has spawned success stories like Casper and Glossier is quickly going mainstream.
"DTC brands have disrupted the entire retail ecosystem, and in the year ahead we can expect that to evolve from a disruption into a new marketing standard," Sarah Martinez, Verizon Media's retail VP and industry lead, told Marketing Dive.
"Large retailers can take a page from DTC in 2019 by becoming more agile and leaning into mobile."
VP, Retail, Verizon Media
While DTC brands blossomed online, many plan to expand their physical presence through pop-up shops, storefronts or placement deals at big-box retailers. Over the next five years, former DTC pure-players are forecast to build out 850 brick-and-mortar stores, per commercial real estate firm JLL.
In response to the industry disruption, traditional marketers are set to increasingly adopt elements of the DTC model. Procter & Gamble last month acquired a direct beauty brand catered to consumers of color, and Nike continues its sprint into the space with infusions of data and technology.
"Large retailers can take a page from DTC in 2019 by becoming more agile and leaning into mobile," Martinez said.
To stay competitive, retail will need to emphasize its customer-first focus and adapt to the model's nimble, convenient and personalized approach. One sign that the space is charging toward further competition is DTC brands' shift from prioritizing customer acquisition to retention. More brands are thinking deeply about what loyalty and lifetime value mean for their business, exploring how content, memberships and exclusive products can engage customers beyond slashed prices.
OTT and connected TV seek starring roles in ad budgets
While over-the-top streaming and connected TVs have forever changed how consumers watch movies and linear programming, advertisers are still trying to determine the best ways to reach viewers and wondering if the scale of broadcast TV can ever be replicated. Answering these questions will be top of mind in 2019 as cord-cutting continues.
Companies across traditional media, tech and other sectors will angle for a bigger role in streaming media — including Disney, AT&T and Amazon — bringing new business models and ad inventory along the way. There's little question that brands will join in. The challenge for marketers will be in deciding where to invest out of a dizzying array of OTT services and streaming-ready hardware.
"Understanding that dynamic of how platforms are prioritized and which ones viewers go to first — that is going to be a big part of the conversation in 2019," Adriana Waterston, SVP of insights and strategy at Horowitz Research, told Marketing Dive.
Questions will abound, such as whether cord-cutters will respond to targeted ads and whether programmatic will port over for deploying ads. The quest for a streaming content metric will take on new urgency as traditional TV measurements lose meaning in an increasingly on-demand environment.
The year to come could also provide a reckoning as competition heats up.
"In 2019, we will be able to tell which services are successful, which will fall back," Brett Sappington, digital entertainment research director at Parks Associates, told Marketing Dive.
The promise and peril of data
In 2018, data was in the crosshairs, whether belonging to European regulators armed with the newly implemented GDPR, to marketers concerned about the quality of commercial data or to consumers wary amid various privacy controversies. Despite all this, it was a banner year for the space, with U.S. firms spending more than $19 billion on third-party audience data and solutions to better understand this data — a 17% increase from 2017, according to the Interactive Advertising Bureau (IAB).
Amount U.S. firms spent on third-party audience data in 2018Source: IAB
In 2019, growth will continue on two fronts. While GDPR affected companies that do business in the EU — causing a wave of investment in technology for data security and transparency — American companies will begin preparing for the CCPA, which takes effect in 2020.
"There are lessons we can learn from how GDPR was implemented and prepared for as we get ready for CCPA," Orchid Richardson, VP and managing director of the IAB Data Center of Excellence, told Marketing Dive. "Consumers are more aware about the use of their data and companies need to be more ethically responsible about how they handle it."
Richardson expects a key area of data investment to be identity as companies seek to find their customers across media and across platforms.
"I think they will be focused on building better products and better personalization, so that when they talk to their consumers and audiences, they're delivering exactly what that audience wants," she said.