Horst Stipp – Advertising in 2020

Horst Stipp, EVP, Global Business Strategy, Advertising Research Foundation (ARF)

Before outlining thoughts on “what could/should ‘advertising’ look like in 2020” and “what do we need to do now for this future” a few comments on predicting and analyzing future trends.

Cloudy Crystal Balls

Given the poor track record of prognoses in fields ranging from economics to change in media use and adoption of technologies, caution is in order.  As the pace of technological change appears to accelerate even more, predictions will be even harder going forward. Think of the impact tablets have had in just a few years. Some technologies that will affect marketing and advertising in 2020 have probably not been invented yet. In addition, there are many other unknowns.

Prognosis Bias

In this culture, in business, media (and maybe also in academia?), there is tendency to reward those who predict big changes ( a “revolution”), offer “surprising” or controversial findings, and express certainty about the future (rather than a range of scenarios). I recommend an article in the New York Times Magazine “The virtual science of high-tech forecasting” by Jim Frederick, from December 19, 1999. It shows how forecasters think it is very important to say “something definite” in order to get quoted and get new clients. The author suggests that research evidence and what the forecaster “really thinks” is seen as less important. This project provides an opportunity to address such biases and, to quote from Jerry’s letter, “provide analytic rigor”.

Importance of Research

Having expressed a note of caution about predictions, it is important to stress that the approach proposed here – research-based insights from diverse perspectives and disciplines  –  is, in my opinion, not only the best, but the only valid way to approach this topic. While research has limits (for example, consumers rarely can tell us what they want and how they will use something new), it must serve as the foundation. Further, new tools (“big data”, social media metrics, buzz, etc) are helping researchers to reach better insights and the multi-disciplinary approach helps overcome the limitations of individual fields.

With these caveats and thoughts on methods to address the issue, here are three hypotheses on the future of “advertising”

Innovation in advertising and marketing

It seems likely that a number of current trends will continue

  • Innovation in digital advertising (Examples: search advertising, “hybrids” turn social media content into ad messages, etc.)
  • New distribution channels (smartphones, tablets, streaming audio, etc.); more mobile/location based advertising
  • Interactive ad forms that provide  more links to additional information
  • Consumer generated and co-created advertising; a more important role for the consumer, personal networks/friendship groups , for crowd-sourcing and word of mouth
  • A wide range of ad forms, from expensively produced to quite inexpensive
  • Focus on advertising forms that are not perceived as “obtrusive”, that don’t “interrupt”. (This could mean more “entertaining” ad forms as well as more integration of commercial messages into content, “story-telling”, etc.)
  • Highly targeted (incl. personalized) and customized advertising (in addition to more broad-based strategies)
  • Simultaneously multi-platform advertising strategies

If these trends do indeed continue and other new forms are being developed, it is essential to conduct more research to test the new forms, validate their effectiveness, and explore how to enhance their impact. At the same time, we need to review established forms of advertising to address the same issues given the changes in technology, media, etc., and explore how they work in combination with new forms. In short, we need to know more about how all forms of advertising work.

As discussed at Wharton Future of Advertising meetings and at many ARF conferences, the most urgent problem today is the lack of good measurement for many of the new distribution channels and a lack of valid data that limit marketers’ ability to make well-informed decisions on advertising strategies.  As the future is getting more complex, a major effort in this area is becoming even more urgent.

More emphasis on the role of emotion in advertising

Marketers have long sought to understand the role of emotion in advertising.  As neuroscience is progressing and neuromarketers are developing new tools to measure emotion, many advertisers are concluding that biometrics and neuroscience have the potential to uncover emotional reactions better than most other methods and are producing new insights.

The ARF’s “Neurostandards Collaboration” project was conducted in 2011 in response to members’ interest in and questions about neuroscience-based techniques.  The project recommended more validation of the methods used in this new field and we have witnessed a lot of progress since its inception. It appears that more learning and further technological progress will expand the use of these methods and generate new insights on what drives advertising impact and how to make advertising more effective. The ARF is addressing this issue through a new project that examines the various methods that are used to test ads, from “traditional” to neuroscience.  The goal is to both assess the value of various measures and to better understand how advertising works.

Need to examine definitions of “advertising”

As markets, technology, media, and consumer behavior change, marketing and advertising evolve. We have been seeing a constant evolution in marketing and advertising that will undoubtedly continue.  The last decade saw the emergence of new “digital” advertising and marketing forms and formats, and “old” media like television and print also developed new forms.

Do these changes mean that we need to re-examine how we define “advertising”?

Several of the innovations outlined above appear to challenge some traditional definitions of advertising.  For example, if advertising is defined as a “paid message” or as “non-personal communication”, some of the new forms don’t seem to fit well.  As a result, we should examine definitions of advertising and marketing now to build a better analytical framework for the future.  (In fact, the ARF has recently started to re-examine the ARF Model of Advertising Effects with these considerations in mind.)  However, despite the innovations in advertising as well as changes in markets, technology, society, and consumer behavior, such an analytical framework should not ignore that human needs and desires and the purpose of advertising have not and are unlikely to change very much. Thus, there will not only be change, but also enduring and stable features. Again, the multi-disciplinary approach chosen for this project is well suited to address this challenge.