2014 Is All About the Benjamins, Forecast Shows
The future's so green, direct marketers have to wear shades of optimism and fatter wallets in 2014 and beyond.
That was the take from Bruce A. Biegel, senior managing director of the Winterberry Group, speaking during the Jan. 9 luncheon at the Direct Marketing Club of New York. His presentation, "Annual Outlook: What to Expect in Direct & Digital Marketing in 2014," mostly covered emerging trends, with a quick recap of 2013.
Biegel's picks for top 2014 trends are: content marketing, postal price hikes threatening direct mail, increased programmatic display ad buying, enhanced attribution driving more "digital spend," social targeting with customer relationship management (CRM) data going mainstream, online and offline data continuing to merge, campaign management platforms evolving to support omnichannel execution, video, marketing talent changing, and consolidations and "significant" companies going public.
In Biegel's report, green arrows represent growth, blue boxes show no change and red arrows, pointing downward, are decreases in marketing spending in 2014.
"We've got pretty much all green going on this year," Biegel says.
The largest growth, in terms of dollars, will be in U.S. "Direct and Digital" Spending, at $140.7 billion—a 5.5 percent increase over 2013 levels. Pulling out just the "digital" projections—including mobile, search, social, display and email marketing—Biegel forecasts a 14 percent increase, equaling $50.6 billion in ad spend. "Traditional" media—comprised of television, magazines, outdoor advertising, radio and cinema—will grow at 0.9 percent, or $124.6 billion. This will happen amid a 2.8 percent rise in the American economy, he says.
"People are saying, 'You know what?'" Biegel says, "'Things are better.'"
Trends dominate his market analysis, because organizations aren't necessarily ready for market realities yet, he says. For instance, "empires will fall" when silos disappear and compensation packages based on antiquated metrics prove impractical.
For another example, Biegel projects building out an organizational architecture for the 2013 trend of programmatic ad buying, which many equate with real-time bidding (RTB), will take three to four years.
"What CMO is going to say, 'I'm going to fund a project that's probably going to be here longer than I am,'" Biegel asks?
However, he says marketers are starting to place money where consumers are consuming and are beginning to pay closer attention to market trends.
As a result of the lower price of programmatic ads, agencies and publishers will "need operational efficiencies to restore their margins," Biegel says. In the meantime, data-driven display ads are shifting to audience-driven experiences.
"Audience recognition in a cookieless world is what people are working on in 2014," Biegel says.
To make that work, companies will need unified data strategies, with someone at the top of the organization "who owns" the process, he says.
Breaking down the trends:
- "Content matters a lot," Biegel says. People don't consume data, they consume content. What was known as an advertorial is now "native advertising," which Biegel jokes is a "much cooler word." Citing an eMarketer study that predicts $2.29 billion in "U.S. digital sponsorship ad spending" in 2014, Biegel forecasts even more dollars will go toward sponsored and native advertising.
- When postage rates increase by 6 percent on Jan. 26, it may "accelerate the marketing spend shift to digital alternatives," according to the research. Biegel says some companies may find the new numbers won't add up for them, which is a shame. "Direct mail should be growing," he says. "Because it works."
- Programmatic display ad buying will continue to rise in 2014, Biegel says. Programmatic RTB accounted for $3.56 billion, or 23 percent of display ad spending in 2013. That will go up in 2014 to $4.45 billion, or 20 percent of display ad buying, according to the outlook.
- Attribution and online measurement standards will arise, causing more "digital spend." Biegel emphasizes that "viewability metrics" will result. Ad cost will increase with reduced inventory. The quality of the ads, including their placement, will drive performance. (For instance, marketers will probably not pay for ads "below the fold" that don't get viewed.)
- Social targeting with customer relationship management (CRM) data going mainstream will make this channel's performance rival that of search. It will become a major prospect pool that will "perform more like direct mail," Biegel says. Facebook, Twitter, Yahoo and eBay already offer such targeting capabilities, he says.
- Online and offline data are continuing to merge. Marketers will use better tools to accomplish this task, such as the improved attribution and measurement mentioned in Trend 4 and programmatic RTB tactics from Trend 3.
- Campaign management platforms will evolve to support omnichannel execution. In addition to merging online and offline data (Trend 6), marketers will need to integrate channels and formats to support campaign and program execution. This is where Biegel feels breaking down silos really needs to happen.
- Television and video platforms are evolving and mobile, meaning marketers need to think about "cross-platform video advertising," Biegel says. Going back to programmatic RTB (Trend 3), the outlook predicts data linked to the ads will spur consumer engagement. "It's more about connectedness and less about features."
- Direct marketing talent will be hired for strategic goals and less so for procedural roles, "just like we did in manufacturing," Biegel says. Increasing reliance on analytics and programmatic RTB mean marketers need to know how to steer those technologies to accomplish their goals. Biegel sees this as the beginning of a multi-year trend.
- 10. Consolidation, strategic acquisitions and large public offers may happen in 2014, according to the research. For established companies, he says, this is the year to acquire a startup.