GROUPM ‘STATE OF DIGITAL’ REPORT:
TIME WITH ONLINE MEDIA TO SURPASS LINEAR TV IN 2018
E-Commerce to Grow 15% in 2018, Representing 10% of Retail
NEW YORK AND LONDON, May 3, 2018 – GroupM, the media investment group of WPP, released a new report, “State of Digital,” offering intelligence on consumer media consumption and advertising investment trends worldwide. Among a series of publications by GroupM prognosticating media marketplace futures the world over, the new report focuses on the impact of technology and digital capabilities on consumers and advertisers.
GroupM tabulated consumers’ time spent with each media format, globally, and calculated average time spent with media overall. In 2018, consumers will spend an average 9.73 hours with media, up from 9.68 hours in 2017 (figures weighted by media investment). Additionally, GroupM predicts time spent with online media will overtake time spent with linear TV for the first time, globally, in 2018. Online will have a 38% share, TV 37%, and the balance spread primarily across print and radio.
Increased time spent with online media supports ongoing e-commerce escalation. Thirty-five countries supplied 2017 e-commerce data to GroupM revealing cumulative transactions worth $2.105 trillion, growth of 17% over the prior year. GroupM predicts 15% growth in 2018 to $2.442 trillion or about 10% of all retail.
For the report, GroupM also examined programmatic (automated) ad investment trends. On average across reporting countries, 44% of online display investment was transacted programmatically in 2017 versus 31% in 2016. This will rise to 47% in 2018. For online video investment, programmatic is smaller; 22% in 2017 versus 17% in 2016 and predicted to rise to 24% this year. (GroupM weighted its calculations by the size of the countries’ advertising economies.)
GroupM also surveyed WPP’s vast network to better see the forest for the trees on industry hot topics.
Blockchain: So far, there is scant evidence of practical application. “Blockchain’s main attraction is its distributed ledger which tells everyone everything and thus presents the opportunity to reduce inefficiency or cheating. However, its Achilles’ heel is the need to keep every participating computer updated with everything all the time, and that’s too slow for a real time world,” states Adam Smith, GroupM’s Futures Director.
AI: Conversely, respondents reported ample development and scaled deployments with Artificial Intelligence (AI). “Arguably, today’s most advanced marketing tools are the advanced algorithms helping brands analyze which creative or media placement is performing the best, at scale and speed,” states Smith. “Among many future applications, we expect AI to helpfully emerge in fighting fraud that evades conventional rules-based solutions.”
Data: Regarding marketer application of data to media investment, respondents cited ample room for improvement. Clients are increasingly aware of the value of owned/acquired data, but are often risk-averse to harvesting, storing and distributing it. In many smaller countries, available data is poor. Most U.S. clients are using first-party data to activate digital media, and they’ve frequently invested in enterprise data management platforms (DMPs). Other markets are not so far along for varying reasons. Marketers most often using first-party data are performance-oriented, e-commerce driven, and typically in auto, travel, hospitality, banking, or sometimes supermarkets with well-managed end-point of sale systems.
Digital video competition: Because measurement of premium video audiences across platforms is woefully inadequate in every market, GroupM asked respondents to simply estimate the share of TV incumbents versus digital insurgents. Legacy TV players are believed to hold three-fourths of all video hours but less than a third (29%) online video hours.
Metrics & viewability: GroupM believes that effective advertising must be in view and/or in hearing, and we take a leading position in setting industry and commercial viewability practices. Constituents reported some industry works-in-progress to enhance measurement of omni-platform video audiences. As this progresses, viewability continues to be debated with some contrarians suggesting 100% in-view ads in mobile environments can sometimes be intrusive and can be negative to consumer experience and thus brands.
In-housing: Respondents said this is more often talked about than done, but several countries reported hybrid arrangements – typically, clients taking on strategy but leaving execution to agencies. Most in-housing involved the biggest clients doing the simplest programmatic functions.
Price inflation: Respondents cited two inflation drivers: high demand for premium, brand-safe content and poor measurement of OTT and mobile platforms; the scarcity of measurable inventory drives up prices.
The “duopoly:” No look at the global digital landscape would be complete without acknowledgement that Google and Facebook continue to be the key growth drivers. Google search is critical to clients, and YouTube is increasingly important for scaled, “premium” video. Concerns over the quality of programmatic inventory in the Google Display Network persist, but remedies are being pursued. Facebook’s success is partly due to the delivery of younger audiences via Instagram. The surge in large-advertiser investment in 2016-2017 also helped double Facebook’s share of digital investment ex-China.
“Automation and talent are the big themes in advertising’s current revolution.” said Kelly Clark, CEO, GroupM Global. “One of the downsides of specialization is the increase in specialists who know more and more about less and less. We have to use automation to liberate brain-power, so talented people can look across the entire media ecosystem to help clients optimize short-term results and create long-term brand value.”
GroupM is the leading global media investment management company for WPP’s media agencies including Mindshare, MediaCom, Wavemaker, Essence and m/SIX, and the outcomes-driven programmatic audience company, Xaxis. Responsible for more than US $108B in annual media investment by some of the world’s largest advertisers, GroupM agencies deliver an advantage to clients with unrivaled insights into media marketplaces and consumer audiences. GroupM enables its agencies and clients with trading expertise, data, technology and an array of specialty services including addressable TV, content and sports. GroupM works closely with WPP’s data investment management group, Kantar, and together they account for almost 50% of WPP’s group revenues of more than US $19B. GroupM delivers unrivaled marketplace advantage to its clients, stakeholders and people.
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