What You Can Expect for Adland in 2012
It’s that time of year when we dust off our crystal ball and forecast what marketers, media and agencies can expect in 2012. We lay out some tantalizing possibilities, such as Coors Light’s taking the No. 2 beer slot and the blossoming of “multisensory” foods, and provide insight into some ramifications of the presumed initial public offering at Facebook.
How’d we do last year? Great, except for the prediction about a lull in auto reviews. Needless to say, we didn’t see GM’s $3 billion one coming or a Chevy creative pitch just 17 months after the business landed at Goodby Silverstein & Partners.
MARKETERS
ALCOHOL
The big action is in light brews; all eyes on Bud Light and Coors Light.
After slogging through another down year, major beer marketers will be looking to climb out of their rut with product and advertising launches. The biggest to watch might be Bud Light. Under new ad agencies McGarryBowen and Translation, the brand is expected to add some sophistication to the humor it has relied on for years.
But Coors Light, which is within striking distance of overtaking Budweiser as the nation’s No. 2 seller, could turn out to be the major story in 2012.
Anheuser-Busch InBev is also banking on higher-alcohol Bud Light Platinum to win over younger drinkers who have been gravitating to spirits. A lot of money is at stake, with Platinum’s debut expected to be supported by expensive advertising, including at least one Super Bowl spot.
MillerCoors is expected to roll out a fresh campaign for struggling Miller Lite in the spring. The pressure is on both the brewer and agency DraftFCB to return some momentum to the brand.
Craft beers continue to capitalize on consumers’ taste for adventure, with new varieties seeming to appear weekly. Further growth is expected, although a ceiling exists somewhere for these more expensive brews. Will we see any slowdown in 2012?
AUTOMOTIVE
General Motors to rev up Chevy; digital media to boom in sector.
Coming off a stellar 2011 and a massive media-agency review expected to wrap early this year, GM — the world’s largest automaker (and third-largest advertiser in the U.S., with outlays of $2.86 billion in 2010) — is pushing Chevrolet. The division, which moved 4.8 million units worldwide through November 2011, is primed to expand; it’s reinforcing its presence in China, South Korea and South America, and Sonic is already in short supply.
Expect currency instability in the eurozone to complicate the mandate of Volkswagen, Europe’s No. 1 carmaker, to take the same position worldwide. Most Japanese players think inventory shortages caused by the earthquake and tsunami should ease in the first quarter. Honda said that it plans a significant upgrade for the Civic.
In media, think digital and big-event TV. This year’s Super Bowl has another pileup of automakers, with five in so far. “On the TV side, it’s the can’t-miss stuff that’s TiVo-proof — the National Football League, PGA Golf — and we’ll have a large presence in the 2012 Summer Olympics,” said Dan Creed, VP-marketing for BMW North America. Spending will shift, he said. “We’ll still do some print and newspapers, but you’ll continue to see our social-media presence grow.”
CONSUMER PACKAGED GOODS
Showdown ahead as marketers try to hold the line on price increases.
This year will test whether price hikes among household and personal-care marketers will hold or whether a continued weak economy will lead them to beat a retreat that could eat into profits and budgets.
Marketers have largely signaled that they’ll hold the line on spending in absolute terms or as a share of sales in 2012 vs. 2011. At the same time, the sector is likely to keep shifting funds and focus toward digital marketing. Unilever and Procter & Gamble Co.are expected to send large delegations to the Consumer Electronics Show in Las Vegas later this month.
Price increases have resulted in private-label growth as consumers cut back on branded products. According to SymphonyIRI data from Deutsche Bank, prices on such items rose 4.5% in the four weeks ended Nov. 27, while sales growth slowed to 2.1%, compared with 2.8% in the third quarter of 2011.
P&G is betting that it can rekindle laundry detergent with Tide Pods liquid-detergent tablets. Its launch was delayed six months, to February, because of retailer demand that exceeded initial projections, P&G said.
FAST FOOD
Want some transparency with that burger? Category to take high road.
According to Technomic, the restaurant industry expects to eke out 0.5% growth, mostly from fast-food and fast-casual chains. But growth is growth, right?
Overall, fast-food groups will continue to duke it out for customers seeking lighter or perceived healthier fare and better dining environments. Several companies, including Chipotle and Panera, have benefited from the movement. Chains will also be pushing marketing messages that broadcast transparency about ingredients and food-sourcing, and those with more than 20 locations will be preparing for the impending requirement that they include calorie counts on menu boards.
As in the past several years, even top chains with positive same-store sales are concerned about the tough economic times.
Titan McDonald’s will keep “watching any potential shifts [and] any uncertainty in [consumers’] lives,” said Neil Golden, chief marketing officer of McDonald’s USA. Look for a new marketing effort from Burger King. It has been running product ads, but the campaign from McGarryBowen is expected to be a branding push.
No. 3 burger chain Wendy’s — poised to move into the No. 2 position — has made changes to its burger lineup and will reportedly offer breakfast. Taco Bell is also jumping on the breakfast wagon.
NONALCHOLIC BEVERAGES
Soft drinks on the hunt for low-cal sweetener that really tastes great.
Marketers will be focused on low and zero-calorie products, with Pepsi Next rolling out nationally and Dr Pepper Snapple Group testing 10-calorie versions of A&W, 7Up, RC, Canada Dry and Sunkist. Dr Pepper Ten is already available nationwide.
Executives at the Beverage Digest “Future Smarts” conference repeatedly raised the topic of reduced-calorie beverages, agreeing that positioned and marketed correctly they have big potential. Still, a natural, low-calorie sweetener that tastes good in a range of products has yet to be discovered.
Larry Young, CEO of the Dr Pepper Snapple Group, predicted the discovery of such a revolutionary sweetener in the next two to three years, given the research and funding dedicated to the cause by major companies.
“The idea of lower-calorie intake is good,” said Kelly Clay, president-CEO of Admiral Beverage Corp., a PepsiCo bottler. “The key to this for me is, can you communicate what it is to the consumer?”
PepsiCo will be closely watched in coming months. Last year, Diet Coke dislodged Pepsi as the No. 2 soda brand. In addition, a series of management shakeups made Frito-Lay alum Al Carey the CEO of PepsiCo Americas Beverages, while insider Simon Lowden and newcomers Brad Jakeman and Lorraine Hansen took on senior marketing roles. PepsiCo has been reviewing its business plan and is widely expected to commit more money to marketing.
PACKAGED FOOD
Industry will monitor Kraft split; Blitz of new products seen ahead.
Attention will be riveted on Kraft Foods, which by the end of 2012 should have completed its division into two companies. The plan, in which higher-margin global snack brands will be separated from slower-growing North American grocery brands, is an attempt to give each business a sharper focus. If the marketing giant is successful and the arrangement works, pressure could be on companies such as PepsiCo to execute similar splits.
Product introductions will be another trend. Kraft said it will launch 70 products or extensions in 2012, and General Mills plans 50. Campbell Soup is putting more emphasis on taste and less on sodium-reduction, which dominated its recent agenda. Kellogg Co. will soon bring a popular, chocolate-flavored U.K. cereal brand, Krave, the U.S. (more business for Leo Burnett). Expect more marketers to join Kraft , H.J. Heinz and others in offering smaller, lower-priced packages to attract penny-pinching shoppers.
Phil Lempert of Supermarketguru.com says marketers might have to start paying attention to how food sounds. “Multisensory perception will be one of the new ‘food sciences’ in 2012,” he said.
RETAIL
Big chains will wrestle with new management, CMOs and agencies.
Four of the retail category’s top spenders are kicking off the New Year without CMOs: J.C. Penney Co., Target, Kmart and Old Navy. Expectations are that, with the holiday season now wrapped, appointments will soon be made.
Eyes will be glued on J.C. Penney , Sears and Kmart. Each has shaken up its agency roster in recent months and could be bracing for more changes. J.C. Penny and Kmart have added Peterson Milla Hooks, Target’s former agency, raising questions about their relationships with Saatchi & Saatchi and DraftFCB, respectively. Sears has shifted business to McGarryBowen from Y&R .
This could also be a make-or-break year for several major players. Penney’s new CEO, Apple alum Ron Johnson, has vowed to “not improve but transform” the aging company. Analysts are impatient with Sears and Best Buy. The former reported losses for the first three quarters of 2011, while the CEO of the latter was selected in a poll by financial media outlet The Street as the retail chief who should be fired in 2012.
MEDIA
TV
With so many viewing options, can TV continue to defy gravity?
There is some concern emerging on Wall Street and among others that Big TV, after fetching great prices in both the scatter and upfront markets, won’t notch similar gains this year. After a strong rebound from the 2008-09 recession, TV may have less room to grow. Though media executives beg to differ, some analysts have said there are signals that scatter — ad time purchased close to the air date — is cooling. When scatter pricing softens, advertisers tend to spend less in the upfront.
National TV has been a pretty sure bet, soaking up revenue even as the nation’s financial health struggles and less tech-agile media such as print, radio and local TV suffers. Some now think that TV will have to depend less on ad-revenue growth and more on operational savvy. Networks will obsess on getting credit from advertisers for people who watch their dramas, comedies and reality selections via mobile devices or streaming video online, or through digital video recorders more than three days after broadcast.
With so-called smart TVs, sellers must find a way to wring equal revenue from traditional scheduled viewing and that done via digital means.
Print keeps struggling with digital as industry eyes Time Inc.’s Lang.
Tablets and other devices offer the biggest reason for optimism: Hearst Magazines President David Carey recently predicted that the company will more than double its paying digital subscribers by the end of the year, to more than 1 million. But both magazines and newspapers are likely to lose share of overall ad spending, leaving them fewer resources to cover higher costs and the necessity to innovate.
Time Inc. will begin to test the rewards of installing Laura Lang, who knows a lot about digital but little about magazines, as CEO.
The New York Times Co. is expected to try the same thing, scouring digital businesses for a successor to CEO Janet Robinson, who left abruptly at the end of 2011 amid persistent declines in share price and widening print advertising declines.
Newspapers also hope to realize benefits from erecting pay schemes on the web. The Times’ pay meter — priced so that the cheapest path to unfettered digital access is a weekend print subscription — has already delivered its first Sunday home-delivery increase in five years.
And Congress may well authorize the Postal Service to abandon Saturday delivery, which would prompt some weekly magazines to spend the second half of the year planning alternate delivery schemes, earlier deadlines or an extra day of delay between them and their readers.
OK magazine has adopted a schedule that puts nearly a full week between its close on Thursday and its arrival on newsstands the following Wednesday.
MOBILE
In 2012, look for mobile to stop being all about shiny new devices.
With smartphones and tablets from a range of manufacturers flooding the market, this year’s focus will be to get content, commerce and advertising to consumers on whatever device they happen to be holding.
Apple has officially lost its grip on the U.S. smartphone market, with Google’s mobile software Android now running on nearly half of all smartphones in the country, according to ComScore. This year could also see regulators green-light Google’s $12.5 billion acquisition of handset-maker Motorola, which would take the online-ad giant even deeper into the phone market.
A deal between Microsoft and the world’s largest phonemaker, Nokia, will come to fruition this year, creating the third major mobile platform to compete with the existing titans.
Considering that so many Americans are snuggled up in front of the TV with their trusty mobile devices, more networks and even advertisers will finagle their way onto the second screen to supplement the shows and ads.
Further illustrating the blurring lines between mobile and TV, Verizon Communications’s nearly $4 billion deal with cable companies such as Comcast, Time Warner and Cox will set the stage for all-in-one media bundles for consumers, who could see TV, mobile phone and internet services on one bill. And with more purchases and product research being drawn from mobile devices, brick-and-mortar retailers will have to launch an assault against eBay and Amazon .
SOCIAL MEDIA
Facebook IPO will be watershed if company can demystify metrics.
It’s pretty safe to declare that Facebook’s IPO will be the offering of the decade, much like Google’s was in 2004. While exact timing of the offering is uncertain, SEC regulations regarding public filings by firms with more than 500 shareholders require Facebook to open its books on April 30.
That will be a watershed moment for the internet, as well as for the ability of Facebook to convert a global social phenomenon into a scaled business. Whether it can demystify its metrics to the satisfaction of brand advertisers and start to gnaw on Google’s share of the digital spending pie is another story. EMarketer projects that Facebook’s global ad revenue will reach $5.78 billion in 2012.
The launch of Google+ was the biggest social-media story of 2011, and the unfolding of its destiny will be right up there this year. The platform has been described as a ghost town: all the architecture of a viable social network, along with a user base of 40 million as of October, but minimal engagement.
Yet Google itself says Google+ isn’t so much a traditional social network as it is a set of innovative functions allowing consumers to interact and share content. The company has yet to put its full weight behind the endeavor, and it has cards to play, such as fully deploying Google+ functionality on new Android phones and baking social signals from Google+ into search.
After spending much of last year courting marketers, Twitter enters a critical phase in 2012. While it has demonstrated that promoted tweets can be effective tools for viral campaigns, the company has a long way to go in proving it can reach scale while preserving the user experience. Twitter launched its self-serve ad platform late last year, which is a step in the right direction, but the program is still in beta.
DIGITAL
Four major trends to watch for in digital media in the year ahead.
The engine of digital media — online display advertising — is firing on all cylinders. After several lean years, it was up 22% in third-quarter 2011. So if the good times are back, why are sellers of traditional digital media — including portals, publishers and ad networks — struggling? Two big reasons: Facebook; and real-time bidding technology that lets agencies and brands buy audience across the web.
The reality is that growth in digital-ad spending isn’t happening in display, and that’s hurting everyone — from the traditional powers of digital media to the online arms of media companies. Brands don’t want banners; they want deeper engagement through social media. With that in mind, we see four big trends in digital media for 2012:
1) Battle for “premium.” The question of who owns Yahoo should be resolved soon, but more important is whether Yahoo (with Microsoft and AOL) can create a so-called premium ad category by gating off inventory in private exchanges. If the approach works, expect a flurry of alliances between publishers to create scale for advertisers this way.
2) Accelerated consolidation. The battle to own the pipes for digital advertising is on, and Google is in the pole position. Expect Google to complete another sizable deal to fill out its product offering. Microsoft, which has spent the last three years obsessed with search, will also get back into deal-making by buying AppNexus for its exchange and real-time buying capabilities. Adobe will also play in this space, as will MediaOcean and perhaps a scaled data player, like Axciom.
3) Companies over features. Advertisers and agencies cannot do business with hundreds of different startups. This year a bright line will be drawn between those that can solve sticky marketing problems and those with features that might address part of the problem. Some will fire their sales teams and integrate into ad platforms like Google, AppNexus and others. Some — those with the least traction — will just quietly go away.
4) Muddled economics. More money will flow into startups chasing ad dollars, with ubiquitous “funds” adding to the venture-capital froth. Newly public and highly capitalized Facebook, Glam Media and Zynga will have the firepower to work with large brands, making competition even tougher for traditional publishers.
AGENCIES
CREATIVE AGENCIES
Ownership issues and digital turf battles will continue at agencies.
Ad spending will continue to grow in 2012, but more slowly, as some marketers adopt a cautious attitude about launching campaigns in a fragile economy.
That means shorter timelines for creative agencies to develop initiatives — what used to be given months to complete may now be expected in days — and the need to be ready to connect marketing activities with cultural memes or events that generate consumer interest.
For creative shops, in particular, the ownership issue will come to a head, with turf battles about who does what when it comes to digital creative, social media and PR. The questions will not only spur infighting and damage collaborative efforts between agencies but also complicate the process of entering award competitions. Creative awards are enjoying a bit of a renaissance with regained importance as more clients get involved in the process, illustrated by the spike in marketers attending the Cannes Advertising Festival of Creativity.
Cross-pollination of talent will have digital expertise heading to full-service shops and those with broader backgrounds seeking specialty work. But with a limited pool of trained creatives, the industry will boost recruitment from outside the field, increasingly turning to the tech, consulting and fashion sectors to source agency staff.
MEDIA AGENCIES
Media shops will look to leverage talent from creative, digital shops.
This will be the year of measurement and analytics. It’s a tireless attempt to home in on behaviors and target audiences, both online and off. The tendency is also in step with brands’ desire for real-time measurement, especially in social media, as evident by a small crop of measurement or “listening” assignments last year.
Clients are enlisting media agencies, with their strength in data and new technologies, for search-engine optimization and digital-measurement tasks. Agencies are quickly acquiring the capabilities that will enable customized programs for clients that need to invest in digital strategy.
And with smartphones reaching penetration rates of more than 50%, mobile planning and buying, as well as app creation, are becoming part of digital departments. This year, agencies will also begin to integrate more digital and mobile experts into their traditional buying and planning teams, bringing in nontraditional talent from creative and digital shops.
DIGITAL AGENCIES
After spate of major acquisitions, industry will seek to digest them With fewer agencies of scale still privately held, the big holding companies will spend the better part of the year sorting out past acquisitions rather than buying shops to plug the digital gaps in the services they offer. Exceptions: geographic expansions to help fill out the glogal map. Aegis, left with only media and digital agencies after selling its research company, is a possible acquisition target.
Publicis Groupe is evaluating how its almost $3 billion worth of digital-agency acquisitions can make the holding company, including “traditional” siblings like Leo Burnett and Saatchi & Saatchi, more digital. WPP, too, will have to consider Possible Worldwide’s limited success one year after it rolled up digital agencies to create the global network to compete with Publicis’ global behemoths Digitas and Razorfish.
Digital pure-play agencies face a greater threat from the technology side of the client-services business. After Sapient’s success in agency services, more IT consultancies are eyeing digital-agency work.
PUBLIC RELATIONS
With identity crisis averted, PR looks for right content mix.
Knee-deep in social media for the past few years, the PR industry has had plenty of time to mull over the role of digital in an otherwise traditional PR environment. Agencies have realized that social is just an addition to the strategy, media-relations and crisis work they’ve been doing for nearly a century. PR agencies are not transforming into digital agencies. Identity crisis averted.
Even so, content creation and management continue to be important components of the marketing and revenue mix, augmenting traditional earned-media and PR campaigns. Nontraditional hiring will continue as a result, with agencies bringing in creative talent with video-production expertise.
As clients attempt to reach new consumers and engage with them globally and via multiple channels, they seek more support from corporate communications and branding — as opposed to product-centered — marketing. The shift is one of many that emphasize the hiring of industry and marketing specialists vs. generalist PR talent. For example, multiple agencies have hired Ph.D.s in the health care sector and executives in the technology industry.
Last, global expansion and investment in the BRIC countries is finally paying off for larger PR firms.
CHINA
Media spending set to rise in China, but so is media inflation.
The question hanging over the country is not how much ad spending will grow in 2012 but whether it will be enough to overcome media inflation.
“The affordability of building a brand [in China] is becoming more and more stretched,” said Tom Doctoroff, CEO of JWT Greater China and director of North East Asia.
Media spending in China is forecast to rise by about 17%, according to Group M, but has been outpaced by soaring prices — driven in part by government restrictions on TV advertising that have crimped inventories.
Targeting popular formats such as dating, reality and talent shows, the State Administration of Radio, Film and Television has ordered many “overly entertaining” prime-time programs off the air. The regulator also banned commercial breaks during dramas. The moves forced one powerful provincial satellite station to hold a do-over of its advertising auction, which resulted in prices that were 50% higher than the previous year.
The crackdown is thought to stem from heightened sensitivity as the Communist Party prepares to transfer power in the spring. Such transitions are always accompanied by strict guidelines on media content as part of the attempt to avoid any whiff of messaging that is out of step with the “harmonious society” party line.
“You’re going to see a less exciting content environment in anything that is mass media,” Mr. Doctoroff said.
Meanwhile, marketers continue to flock to digital. China has the world’s biggest online population, nearly 500 million, with rural residents spending about as much time online as their urban counterparts, according to data from Starcom MediaVest Group.
Ad Age Staff
