The UK advertising industry is booming and, despite some challenges, there are many reasons to be positive about its future. ExchangeWire speaks with Fredrik Borestrom (pictured below), president of the IAA UK Chapter, about some of the challenges that the advertising industry is facing head on, including Brexit, GDPR, the skills crisis, and the opportunities that exist within emerging channels and platforms.
ExchangeWire: Should we be concerned about the impact of Brexit on the UK advertising industry and UK advertising operations within Europe?
Fredrik Borestrom: People are the reason behind the UK’s success as a player in the global advertising market. In 2016, London was home to three times the number of migrant marketers than Paris, Amsterdam, or New York – and more than a third of this talent was from the EU. To ensure the £21bn industry keeps growing in this country, after Brexit the UK will need to ensure it continues to have access to the best and brightest talent from around the globe.
To stay competitive, the government needs to ensure it secures the right trade deal with the EU, allowing easy access to the UK for talented workers. At the same time, the advertising industry also needs to focus on recruiting skills from beyond Europe, most notably from the U.S. and APAC. Creating a wide and diverse cultural mix will help strengthen the UK’s position as an advertising leader, helping it secure global accounts where local knowledge is valued.
Is the advertising industry undergoing a skills crisis? What can be done to attract new talent?
The advertising industry needs a wider skills set than ever before. From data analysis through to creative thinking, steadfast leadership and strategic planning, all rounders with specialised skill sets are required to maintain the high standard of advertising in the UK.
To attract new talent, the industry needs to use its persuasive abilities to reach out to professionals who may currently work in other industries and share the benefits of a career in advertising. Workers in areas such as science and economics have data skills that are now desirable in advertising, so, by widening its net, the industry can secure expertise from the largest possible hiring pool.
Agencies, publishers, and brands share the responsibility to plant future seeds of growth by appealing to graduates, offering entry-level career development programmes and working with top universities to help young people forge lifelong careers in the industry. Once they have recruited this talent, professional development schemes, sharing leadership insight, and mentoring can help drive success and nurture skills as team members move forward.
Is the industry getting closer to achieving transparency? What work still needs to be done?
The issue of digital advertising transparency has reached a pivotal moment and it is equally incumbent upon brands, agencies, and publishers to prove they operate responsibly and openly within the ecosystem. For buyers, it may mean having greater visibility of each operator within the media-buying process and their fees, and engaging in an honest discussion of their aims and creative goals early in the process.
Industry initiatives, such as ads.txt, which help buyers discover which supply-side partners are authorised to sell premium inventory, are working to reduce ad fraud. RTB 3.0 will encourage the supply side to use signatures to authenticate steps of the real-time bidding transaction, creating a traceable path to verify critical data such as domain, publisher id, and a timestamp of the bid request. It means advertisers will know exactly where their inventory comes from, while publishers will be reassured their inventory is securely sold.
With the introduction of GDPR, how do you think this will drive a change to advertisers’ data strategies?
Transparency is a major demand for audiences, too. By being clearer with consumers about how their data might be used, advertisers can ensure their campaigns only reach people who want to see them and are delivered in the preferred channel. GDPR should turn the tide on annoying or disruptive ads, falling email open-rates, and the rising use of ad blockers. The regulation should improve data quality by encouraging audiences to share better-quality information, as they will be reassured it will not be used improperly.
However, while quality will be king, it’s likely there may be less data available for advertisers to utilise. Instead of relying on vast logs of historical information, marketers will have to focus only on the information that audiences grant them for a specific purpose, and what they can understand on a contextual basis, for example, the content a visitor is currently looking at, the time of day, and weather conditions.
GDPR also means that advertisers may be more cautious of sharing data within the ecosystem. Although online marketing has traditionally been a tangled web of providers, advertisers may begin to consolidate their digital supply chains, reducing the number of people who have access, to ensure it is only shared with consent.
Do you think data-driven marketing is undermining creativity? How can creativity be nurtured?
The ‘Mad Men’ era of the 1960s is often thought of as the golden age of advertising, as creative was front and centre, and advertisers would use their instinct alone to determine how to persuade audiences. Today, advertising is more data-driven, and has an almost scientific precision. With innovations such as A/B testing, artificial intelligence, and machine learning, advertisers understand the type of content to which audiences respond, when creative needs to be refreshed, and the messages most likely to inspire conversions.
But, despite the value of data, creativity is still the foundation on which advertising success is based. Every person involved in the advertising process needs to think creatively; and so brands, agencies, and publishers all have a responsibility to nurture this by fostering an environment where new ideas are welcomed, inspired, and protected.
Advertising in the UK continues to grow, but the trend in spend across channels is becoming more diverse – what do you see as the main drivers of this, and how do you expect the patterns to evolve?
UK digital advertising is continuing to grow at a steady rate of 3.5%, which demonstrates the resilience of the industry during a period characterised by uncertainty around GDPR and Brexit. Looking forward, the success of advertising depends on creating communications that have a contextual relevance to audiences. Marketers are well aware of this challenge and, in response, spend is becoming widespread across a range of channels and cross-channel campaigns are becoming the norm.
Mobile is attracting a significant amount of investment; last year, in Q3, one in every four pounds spend on advertising was ploughed into this channel. This is likely to continue well into 2018, as video and social media offer excellent returns and campaigns tend towards device agnosticism.
As campaigns begin to join up with digital audio, spend will be a particularly interesting trend to monitor, as creative becomes more relevant to audiences, reaching them ‘in the moment’ and helping deliver on sales.
It’s also interesting to see that marketers are still making the most of print media as part of their cross-channel campaigns. Print media will be a core part of marketing budgets long into the future, as it continues to offer marketers the opportunity to align their brands with a trusted publication.