Trust Is The New Currency.
Today humans live in a hyper-connected matrix that is always on, regardless of what device they use. Technology drives human advancement, and the rapid pace of change is blurring the lines between the “digital” and the physical world. Every facet of our lives has some form of technological foundation that is becoming smarter and/or more powerful.
In business terms, this change is called ‘digital transformation’. Essentially it is a foundational transformation that is disrupting the way business, society and economies interact. The biggest change is that digital transformation puts customers at the epicentre of business. Today consumers enjoy more power and influence than they’ve ever had before.
At this transformative time, research shows that humans are becoming a lot less trusting. The 2019 Edelman Trust Barometer reveals a crisis of “faith in traditional authority figures and institutions”. This at a time when technological development brings with it significant opportunities but is not without risk.
Trust is important because it enables faster innovation, and increased human adoption of technology. Trust is the enablement of progress, but one in which all players need to assess and contribute to the building of trust. At a time when trust is declining and is simultaneously a key future driver, the big questions marketers need to ask themselves is what they’re doing to break, or build, trust with the people who matter to them most.
Consultancies Will Dominate
Everyone’s talking about the death of advertising and big agencies, but this doesn’t reveal what comes next. The recent acquisition of Droga5 by Accenture Interactive has caused quite a stir, but has been a long time coming. I’d say that Droga5 won with this one, getting a pretty good deal!
I’ve always maintained that consultancies could wipe out agencies by simply offering the same services at a heavily discounted fee — they have the resources to do this, but not necessarily the talent, which is why an acquisition like Droga5 makes sense.
I believe consultancies will win the race because of how digital transformation is increasing the rapid rate of innovation. The big consulting firms have had huge experience in change management at a time when most CMOs have lost their way, thanks to ad agencies that are failing because they’ve failed to transform their own business models.
Marketing is automating while becoming more fluid and pivotal in the overall business strategy. It’s no longer about unmeasurable and fluffy metrics like “brand equity”, “engagement” or “eyeballs”. The role of marketing now is understanding customers like never before, through data and insights. And, of course, by building personalised communications with the aim of garnering trust and further understanding. Companies that do this well will become the customer-centric leaders of tomorrow.
Consultancies tend to be more insights-driven. They facilitate change easily and are abreast of emerging developments. The big consultants ‘hold’ their client’s business strategy, a role that agencies have failed to conquer.
But where consultancies fall short is in execution, often leaving this up to the clients themselves. That’s why the Droga5 acquisition makes perfect sense for Accenture Interactive — it shores up a dominant position. The logical next step for them would be to acquire data companies and platforms, as well as employ deeper technological, analytical and creative thinking skills.
The return of Google
Not that Google has gone anywhere, but its advertising revenue has definitely been affected by the big social media companies. Yes, I know their ad spend is increasing, but this is due to clients spending larger portions of their budgets online. Budgets that, less than a decade ago, Google could have captured almost entirely.
Social media ad spend will decrease, in proportional terms (that is as a percentage of online ad spend), in the coming years. Why?
Increased competition — it’s becoming expensive to advertise on social media platforms.
Returns achieved on social are being called into question. Companies struggle to put a value on a ‘like’, ‘share’, or ‘comment’. ‘Reach’ is already a dead metric, and is meaningless in my opinion. Online action or engagement already counts for so much more than reach.
Audiences are becoming fed-up and disengaged with all the advertising. Advertising inflation is at an all-time high.
The audiences are moving, and when audiences move, so do budgets.
Given this, it is only natural that social budgets will shift back to performance marketing platforms like AdWords, where a return is more measurable, more real, and audiences are more engaged.
Unlike social media companies, Google has such a strong moat as a business — there are few, if any, search businesses that can compete with it (in the Western world).
The bottom line?
The marketing sector is going through a time of unprecedented change. But with this comes great opportunity. The level of change we are experiencing will recreate marketing for the better. A transformed business lives in service of its customers, and so too should marketing.
Basically, technology is just helping us humanity hit the reset button. Advertising is responsible for a lot of damage to human trust. Now’s the opportunity to put things right, put customers at the centre of everything, and now to treat humans like humans.