The advertising headwinds have been gathering. The $7.4B lost to bad ads. The chronic underperformance. Major firms pulling millions from media budgets. Consumers actively avoiding ads. And yet the interruptions continue.
There are bright spots: great storytelling from some brands, better channel orchestration, and the pragmatic application of programmatic. Advertising fueled the remarkable rise of mobile games, kept publishers alive through a tumultuous transition, and created countless moments of free entertainment.
But something had to give. The CMO’s budget is not growing fast enough to support the different and new priorities (customer experience, analytics, the ability to interpret/anticipate rapidly changing customers, digital transformation, etc.). More money needs to address empowered customers that expect more, demand more, and tolerate less. It has begged the question, can that money be spent better?
For a long time, there wasn’t a good answer to that good question. But that is changing in great part because the distance between creating a brand and delivering on that brand promise experience-by-experience is closing…and closing fast.
CMOs are taking on a broader, more strategic role in CX — increasing investment and mindshare to an area that is nearer and dearer to the customer and has a direct and powerful link to growth. Simply put, the math creates a compelling shift of spend from advertising to experiences that affirm the brand, build affinity, and trigger spend. The move is on from maniacally focusing on customer acquisition to balancing investment across acquisition, retention, and enrichment — especially as restless, high-expectation, low-tolerant customers can churn upon a single poor experience.
This is just crass math. It does not yet factor in the new world of digital platforms emerging that shifts the engagement focus from interruptions to conversations, where technology is finally wrapped around the human context versus having humans withstand or navigate fractious experiences and application silos. We are heading towards a world where virtual agents will truly work on behalf of an individual; orchestrating across different providers and experiences (e.g., airlines, hotels, transportation) to create graceful, natural experiences centered on human needs and behaviors.
The combined impact of crass math and future digital experiences does not extinguish advertising — but it does inform its necessary direction.
We will see a small correction in the advertising market. We will see the re-emergence of basic and beautiful storytelling. We will see brands develop content — conversations in context of virtual agents — anchored on customers’ preferences to create awareness and spark interest in a natural way (read: advertising). We will see a more aggressive war between agencies and management consultants for CMO spend. And we will see attrition in agencies that hold onto interruptions too long.
We explored this important and complex dynamic with James McQuivey, Keith Johnston, and Shar VanBoskirk in a recent webinar – you can watch it on demand here. As you can imagine, we had a lot of questions. I encourage you to watch in and go deeper with our research that is telling a remarkable story (without interruption).