The cycling is all downhill from here

I have been one of those guys who has been beating the drum for digital advertising since the mid-1990s; a rhythm that most agency chiefs and advertisers have heard with bemusement the way a parent might listen to a child who thinks they are playing with a rock band in front of a sold out audience.

I’ve stepped up to the microphone and shouted that “online is the future” for all of these years (decades!) only to be met with near constant derision or incredulous replies that let me know clearly that most think it’s “interesting,” but brands will never be built on the Internet and the ~US$500 billion in ad sales will always mostly come from above-the-line channels.

Over the past 10 years, online budgets have been growing a bit (in some cases more than a bit), but the prevailing sentiment has still been that television will always be the primary driver and all of this computer stuff has failed to move the needle in any measurable way, despite the plethora of analytical tools available to examine said needle.

Whereas optimism has peaked now and then with a few new efforts that, in turn, piqued curiosity from marketing and agency managers, the cyclic ups and downs of results have caused major brands like P&G to pull their funding away from platforms such as Facebook, with numerous others following suit.

Now, the data has come in that says traditional advertising is moving downward in record numbers and is unlikely to roll back upwards this time, for the first time.

You may have seen WPP’s stock plunge 11.5% in August on news that ad spending is experiencing a significant slowdown to the extent that traditional advertising dropped to its lowest point since the global recession circa 2009.

In fact, it is projected to fall 7% this year and keep on in a free fall throughout 2018 while online has pushed overall advertising in the US up 8% just this past quarter. It actually accounted for 128% of that gain, thanks mostly to Google and, of course, Facebook with its over 2 billion active monthly users (yup, 27% of the population of the planet – and rising).

Digital advertising is growing at a rate of 28% and is beginning to have a significant influence in the way audiences expect to consume content anywhere.

Although Facebook has been experimenting with mid-roll ads in their videos that interrupt the experience, the storytelling, and the emotion in a manner that the production companies have not yet accounted for (unlike with television), most online videos have absolutely no interruptions (unlike with television).

This “freedom” that comes from watching on Netflix, Hulu, YouTube, Amazon Prime, Snapchat, Periscope, and so on is causing the viewer drop off of traditional television.

The response? Starting in September, channels like Fox Sports will begin to experiment with YouTube-modeled 6-second spots during broadcasts of their highest-rated programs:  games, including Major League Baseball (MLB), Major League Soccer (MLS), and the National Football League (NFL) in an attempt to mollify audiences that have increasingly less patience while still attempting to put out memorable branded messaging to pay for everything.

Because there will be less inventory and competition, they are raising the fees to around US$75,000 per micro-ad. The question is whether or not advertisers will see and understand the value and queue up to book the spots.

The real issue that matters to us agency folk – and possibly one of the reasons agencies have been so reluctant to push digital – is that it cuts into media buying and even production profits.

While listening for the death knell of traditional agencies is absolutely premature, this is the first time that the trends show that there should be very real concern that things have to change significantly if they are to see a future.

So far, they’ve been able to dismiss the “Is this the end of advertising as we know it?!” headlines, year after year, because it was mostly speculation, but as with the warnings about climate change, they don’t want to be the skeptical Republican Texan politicians that scoffed to the point they were caught with their pants down when Hurricane Harvey came a-callin’ and wiped out the 4th largest city in the United States.