Data and technology will be the big winners in 2018, according to a new global study by Group M, which predicts that brands will continue to switch their spend into customer engagement techniques in a move which DM industry champion Judith Donovan believes could also benefit the humble mailshot.
Globally, the report anticipates growth in the ad industry of 3.1% in 2017 and 4.3% in 2018, an increase of $23bn next year.
But while global GDP will rise, triggered by increasing consumer demand, fixed investment, industrial production and exports, the ad industry’s share is predicted to fall, albeit only from 0.7% in 2017 to 0.69% next year, as investment is switched to data and technology for consumer engagement in digital.
“For every dollar that migrates to digital media, we estimate 25 cents goes to technology and data. This is not counted in a now antiquated concept of working media investment,” said Group M futures director Adam Smith. “We also know that in periods of low inflation, marketing money gets reallocated to promotion; this is a cyclical challenge, not a structural one.”
However, the widening skills gap will prove a double-edge sword, as competition will lead to an increase in wages, spurring investment in productivity and helping inflation to finally surpass central bank targets, the report said.
Six countries are expected to drive 68% of incremental investment next year: the US, China, Argentina, Japan, India, and the UK.
UK ad investment growth is propelled almost entirely by “pure-play” digital, with Group M predicting the sector will grab a 60% share in a market that remains relatively stable but short-term focused as Brexit looms.
Even so, digital faces huge challenges, with the combination of market saturation, changes to the definition of personal data under GDPR and concerns over brand safety
Group M predicts the out of home industry could grow, with the combination of location data with purchase, social media and viewing behaviour presenting an increasingly compelling proposition. It predicts outdoor will grab a 6.3% share of adspend in 2018 – the highest it has been since 1993.
Bizarrely, the Group M report fails to make a single mention of the direct mail industry, despite the fact that it continues to hold its place as the third largest sector in terms of spend behind digital and TV.
And direct marketing industry champion Judith Donovan believes direct mail has a real opportunity to shine. Writing exclusively for Decision Marketing, the chair of the Strategic Mailing Partnership states: “I believe direct mail and marketing persuades consumers more than advertisements on websites.
“With direct mail, it’s much more personable and tactile and taps into the emotional side of things for consumers – which can be the difference from someone discarding the communications altogether or becoming a regular customer.”
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Why GDPR could finally make online ads accountable
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Direct mail shines like a beacon in ‘post-truth world’
Data in the driving seat as DMA names new board
Arch rivals to join forces for direct mail industry summit
Clients offered huge deals to run direct mail trials
Industry comes out fighting to lift direct mail revival
‘Dame’ Donovan vows to fight for direct mail future
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