The Marketing Manager's Yearbook 2008
Advertising
Future Threats and Opportunities for Brands
Hamish Pringle considers the technological, social and economic trends affectingand their likely impact on future relationships between brand and consumer. 
In 2006 the IPA commissioned the Future Foundation, a leading forecasting consultancy, to carry out a major
project. A think tank representing the spectrum of IPA member agencies was dealt the task of identifying the
top 40 trends that could impact most signifi cantly on the business in the next decade. Of these, the 12 key
trends have been grouped as follows.
Technology trends
Increased bandwidth allows richer content, and more of it, simultaneously. This, and the inherent interactivity
of all these new technology platforms, has huge implications for brands. It enables much greater contact and
multiplication of ‘touch points’ between customers and companies, and this means millions of ‘moments
of truth’. Each of these contacts can reinforce and keep the brand promise or undermine and break it.
Broadband facilitates the price comparison websites and online transactions that enable people to do in
minutes what would previously have required so many days and weeks they would have given up trying. This
represents a big threat to companies who fail to deliver good customer service, and especially those who
underestimate the downsides of out-sourcing key functions. There’s an urgent need for companies to develop
sophisticated integrated databases from their legacy ones in silos, and create a genuine customer relationship
management platform that can facilitate online customer service transactions. The nightmare of ‘Helpline Hell’
must be converted to ‘Helpline Heaven’ as a matter of priority.
Online ‘clicks’ are changing customers’ shopping patterns with a particular impact on higher value purchases
such as holidays, white goods and other durables. Nowadays, many prospective purchasers do all their
research online, narrow down to their preferred make and model and then go straight to the retailer. This puts
a heavy reliance on the quality of service that the buyer encounters there. This culling of the shortlist before
physical contact has ever been made has intensifi ed competition. What is increasingly disconcerting retailers
of consumer durables is the relegation of their expensive high street shops to the status of showrooms. It’s just
too easy to research a DVD player on the internet, make all the price and quality comparisons, delivery charge
included, and then go into a retail outlet just to make sure that the look and feel are right, before returning home
to make the actual purchase online.
Social trends
The number of businesses open outside of regular business hours, on either a ‘clicks’ or ‘mortar’ basis, grew
massively in the late 90s in response to growing consumer demand for greater fl exibility. This demand was
being led by more dual income families, longer working hours, and increased affl uence, all creating greater
participation in more markets. This demand is still strong today, but now it is being driven by a desire for
self-fulfi llment, and the cramming of more leisure activities into the same amount of free time. With greater
affl uence consumers are spending more time out and about rather than in the home. The ability to make
buying decisions instantaneously, at the point of receiving commercial advertising messages through mobile
devices, means the new media and channels have literally ‘time shifted’ the possibility of communication
and purchase to any time of the day or night. This presents companies with signifi cant logistical challenges
including distribution, staffi ng and late-night security.
Meanwhile consumers are potentially breaking down the traditional commercial advertising infrastructure.
Social networking websites such as Facebook, MySpace, YouTube and Bebo could allow them to bypass
both the client and the media owner. Consumers can create their own form of advertising, but free of the
commercial imperative. There is a growing consumer ability to pick and choose how much information to
receive and when to receive it, using blocking software on their computers and PVRs to schedule their TV
viewing and avoid commercial breaks. There is evidence that younger people’s media habits are evolving to
a fundamentally different style from those of their parents, with media multi-tasking the most obvious factor.
Forward-thinking brand owners are therefore working on the assumption of a transition from ‘opt-in’ to ‘optout’
from ‘interruption’ to ‘engagement’ and from ‘push’ to ‘pull’ as the core tenets of the future consumer
communications model.
Economic and political trends
Traditionally, there has always been a strong correlation between GDP growth and growth in commercial
advertising expenditure. Not surprisingly, there is a strong likelihood that this pattern is set to continue. If
economic prospects are positive, then the same is more than likely to be true for commercial advertising.
However, the Future Foundation forecast suggests that the sector will grow ahead of the rate of infl ation at
a rate of over 6% until 2012. One hypothesis to explain this is the increasing share of the market going to
‘search’ advertising. Its measurability has enabled thousands of SMEs to increase their investment in marcoms
with confi dence.
Longevity is one of the most profound demographic shifts shaping society, now and into the future. Not only
are we living longer, more affl uent and healthy lives, we are also reproducing less. The ‘baby boomers’, now
in their late 40s and 50s, will account for an extra 5.2 million consumers in the 45–74 age group by 2016,
representing disproportionate buying power in many markets. Youth segments will decline by over one million.
Not known for its interest in the older consumer, or even the middle-aged worker, the business is only now
gearing up to this new challenge. It’s clear that companies will need to understand more fully the attitudes and
behaviours in their particular market and geographies if they are to survive in an ageing population of buyers.
A macro threat to brands is a daunting one, that of governmental legislation and regulation. Daunting, because
it’s a danger area high on rhetoric and political advantage and low on intellect and data. For politicians, an attack
on advertising is one of the most attractive of all electoral gambits: it’s very cheap – no research required, just
an opinion; it’s very low risk – no votes to be lost in attacking advertising; and it generates enormous publicity.
But damage is being done. The UK media regulator Ofcom has calculated that there will be a loss on total
broadcast revenues of £39m a year as a result of their decision to ban all advertisements for food and drink
products that are high in fat, salt and sugar in and around all programmes of particular appeal to children under
the age of 16. Under this pressure and in response to consumer interest in ‘higher order’ issues, increasing
numbers of companies are seeking to respond to the growing regulatory and social pressures to deliver on
their ‘triple bottom lines’ relating to profi t, people and planet. All brands now need to have a combination of
rational, emotional, ethical and political values and a fully formed corporate social responsibility strategy.
Forecasts from the World Travel Organisation suggest that the current level of international mobility – 15
trips for every 100 head of global population – will increase to 21 by 2020. Clearly the patterns of travel
are disproportionately weighted to the affl uent West travelling around the globe, but we can expect greater
movement from the Eastern economies to the West both as tourists and business people. This mobility
presents challenges to brands as people compare prices across borders, for example, Abercrombie & Fitch
has opened with $=£ pricing in its new London store. People’s experience of brands whilst on holiday or
business trips abroad can be very powerful, perhaps enhanced by the heightened senses stimulated by an
unfamiliar and exciting new environment. The growth in global mobility, coupled with global internet connectivity,
makes it harder and harder to protect brands against piracy, theft, or unfair competition. The counterfeiting
industry in countries like China is huge and there’s hardly an Eastern European nation where tourists cannot
fi nd convincing replicas of the major luxury brands. This undermines the prestige of these brands, making
them less attractive to their high net worth afi cionados.
But by 2050, forecasts indicate that China will have the world’s number one economy, with today’s developing
markets, including India, Brazil and Russia, also in the top fi ve. Western brands need to recognise the full
potential impact of India and China. Already there are many examples of the ‘factory’ end of the business being
farmed out to these emerging economies, but how long will it be before they create powerful brands of their
own and move from sub-contractor to international marketer and competitor?
This is an exciting and challenging period in which to be a marketer. The report The future of advertising and
agencies: A 10-year perspective provides some guidance as to the issues, if not the solutions, which, as
always must come from the creative commercial thinkers in charge of brands.