How digital media will change our lives in 2016

CEO of Switch Digital, Lee Stephens
By CEO of Switch Digital, Lee Stephens | 6 January 2016
Lee Stephens

If there is one thing the Australian media love to do is talk about themselves. Now is the season for 2016 predictions about the future of our industry, particularly how digital media is going to change our lives as consumers, marketers and media buyers.

There are already a slew of articles around 2016 including the dominance of mobile, the rise of video and the impact of our first digital natives, the millennials. These are all interesting, but what can marketers do in a practical sense with such obvious predictions?

Here are lesser-known trends that can help you make a difference in 2016:

1. Paid search is important, but growth is slowing rapidly

While paid search remains a key driver of advertising results, particularly for acquisition marketers, growth in the US for paid search almost halved in 2015 to an estimated 12-14%. Still solid growth, however, the change reflects three main trends. Firstly, the paid search industry is almost fully mature. Secondly, consumers’ increasing online access via mobile has made monetising search more difficult. Finally, Facebook is enjoying significant revenue growth and share gains because of its relationship to mobile and new ad formats.

2. Native advertising becomes credible

Unless you have an inherently cool brand (think Red Bull), most native content attempts have landed somewhere between lame and cringe-worthy. Added to this, distributing native content is expensive. The result – bad content that no one sees…probably a blessing. Yahoo! Native Ads, Buzzfeed and Outbrain have changed the investment metrics of native advertising. Growth is booming. Importantly, these providers police the quality of content to ensure a positive consumer response. Expect 50%+ growth per year until 2018.

3. Marketing managers will spend more money on technology than IT managers

Programmatic trading, re-marketing, consumer profiling and data platforms have created a media industry that looks more like an outpost of Silicon Valley. Every transaction involves a clip of the ticket for software platforms and technology providers. Expect more of the same in 2016, particularly around mobile. According to Accenture, by 2017 most IT expenditure will originate from marketing departments.

4. Australia’s top five publishers will innovate or perish

The market dominance of Australia’s top five publishers is long past. The next tipping point facing the big end of town will be process driven. It will not be profitable for media agencies to buy media outside of programmatic trading for digital media by the end of 2016. Currently, a media agency has a team for programmatic trading and a team for non-programmatic trading for the same advertiser. As clients demand more transparency across programmatic, margins will be squeezed and agencies will trim non-programmatic positions. This trend is already in play. Digital publishers will not survive without a strategic path towards 100% programmatic sales within 2 years.

5. Australia’s advertising and media agencies set for a generational change

Danny Bass’ appointment to IPG Mediabrands, Kevin Malloy’s retirement from Publicis and John Steedmans’ second retirement from MediaCom are part of a major generational shift across the Australian advertising landscape. Generation X are being given the reigns to a much more complex and data driven industry. It’s a world where media agencies are recruiting mathematics graduates and clients want to understand your “technology stack”. By the end of 2016 we will see the majority of leading roles held by older GenX operators who have grown with the digital revolution.

This year will not be better or worse than 2015. It will be the progression of an industry going through a structural revolution where digital media is the vanguard for the entire media industry. Hold on and enjoy the ride!

By Lee Stephens
CEO of Switch Digital

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