The Day Brands Will Follow Adidas and Ditch TV Advertising

In the scenario of brands leaving TV advertising, advertising agencies are expected to change their business model

Analysts once surmised that digital advertising would make TV advertising obsolete. Indeed, digital was growing massively over the past 2 decades, and it continues growing by borrowing the TV’s most important feature: Content. The more the digital medium grows, the more it disrupts interesting content on mobile, video and Over-The-Top (OTT) platforms. Relative to billboards and TV advertising, digital advertising also holds better measurement abilities and is significantly cheaper.

Although digital advertising is the only, highly growing medium in advertising, and despite analysts’ predictions, TV advertising spend is not declining but rather remains stagnant.

TV is still the most significant medium in terms of global ad spend, and advertising agencies are encouraging advertisers to maintain traditional advertising while providing comprehensive strategic and creative services.

Since agencies’ business model is based on media commission, they are becoming more digital-oriented to cope with brands’ digital needs on the one hand, but are still relying on TV spend as their major income source on the other hand.

Predictions about advertising are largely consensual, revolving around the speculation that TV is expected to remain stagnant, or slowly grow, while digital is expected to show an impressive growth. Eventually, digital advertising spend is not growing at the expense of TV advertising in a zero-sum manner.

However, broadcast TV channels do deal with zero-sum game issues, especially in markets where broadcast TV reached saturation. In such cases, more channels are competing on the same ratings’ pie and therefore lose income.

This trend even transcends to non-competitive markets with the penetration of Netflix, a long-tail of additional OTT services and the change in viewers’ habits. The Israeli market sets a great example, as reality TV hits such as The Voice and The Big Brother that once surpassed the 30% ratings average easily are far away from reaching it in 2017.

For reaching the same reach on TV, advertisers need to spend more up to a point it is becoming too expensive and somewhat ineffective. This logic may explain why Adidas has recently announced it ditches TV advertising and focuses on mobile advertising instead. In return, Adidas hopes to quadruple its earnings from e-commerce sales in the following 4 years.

Adidas takes an audacious, yet calculated, risk. However, such act holds 3 major consequences.

First, by ditching TV advertising Adidas also ditches its older target audience, while planning to compensate the future income loss with an increased e-commerce activity and lower point-of-sale expenses.

Second, Adidas is probably the only mega brand that declared it would stop using the TV medium. Although Global consumer goods corporations like P&G did allocate more for digital, they still advertise massively on TV. It is likely that after such crucial decision, other companies might take the same approach on the local and global scale.

Third, this act affects directly on advertising agencies’ business model. While Adidas is capable of buying digital media independently, it does rely on advertising agencies for strategic and creative services. In this new marketplace, agencies would fight on digital budgets and might even charge for their services, the same way consulting companies are charging their clients for billable hours.

Currently, Adidas remains a pioneer and other brands are yet to follow. However, if Adidas move indicates a new trend, we are expected to view an accelerated growth in the three growth engines of digital advertising — Mobile, Video and OTT.

Is Online Gaming in 2015 Going Free?

It’s no surprise that the online gaming industry is growing faster than the ever expanding universe. In fact, it is forecasted that the online gaming industry will reach $81.6 billion by 2016! That being said, you can only imagine that the number of online gaming companies will be flooding the gaming world in the upcoming year. What companies need to focus on now, besides creating a killer game, is to advertise correctly and efficiently. This means creating quality banner ads that will bring in your next customer. Why? Because banner ads are your secret to building brand recognition. Because social games generate so many pageviews, banner ads are the biggest part of advertising revenue for the industry.[1] Companies must reinvent themselves for 2015 and begin to create digital advertising strategies that work. And here’s how:

Free-to-play business model (F2P)

Face it. No one likes to feel obligated or committed to anything they haven’t tested or tried first. This is especially true when it comes to social gaming. And while you may think that charging for your game upfront may be the key to generating revenue, it’s not.

2015 is the year of the F2P, or free-to-play model. This model is based on the concept that free games will help attract customers and try new things with zero commitment. Once the player gets hooked, then it’s time to monetize.

The purpose is to design the game so that it provides never ending needs to the user. You provide them with the resources they need to start and then begin offering them in-app purchases once they start to get to higher levels. And this isn’t too hard to believe or understand. I mean, people pay for entertainment all the time, so why wouldn’t they pay for entertainment that is convenient, fast, and supplies instant gratification.

F2P has become so important in the gaming world, that top industry leaders are even making it a point to mention that the game is free on their banners. Have a look:

f2pfinal.jpg

Mobile in-app ads

According to a recent study done by Newzoo, it is believed that revenue from mobile gaming is predicted to surpass console gaming in 2015.[2] This means that game developers better include a thoughtful approach to banners when it comes down to their mobile marketing strategy.

Even though you may think that users don’t often click on the mobile ads, there is still a much higher click-through-rate for in-app banners as compared to desktop web ads (1% compared to 0.1%). This is especially true when it comes down to creating native ads, which Facebook is dominating right now. Make sure you invest in your mobile in-app ad and make sure that your impressions are not being wasted. Show the right banner to the right person at the right time, and watch your next prospect become your next user.

inapp2

Use Media Intelligence

I can’t emphasize this point enough. I don’t care how big you are or how ahead of your competitors you are, you must ALWAYS know what your competitors are doing and what’s going on in the industry.

With Media Intelligence tools such as AdClarity, you can get a birds-eye-view of the entire online gaming industry and always have one finger on your pulse to stay one step ahead.

Let me give you just a taste of what Media Intelligence can do for you.

Just by looking at the mobile advertising (I can pick between display and mobile) strategy of Plarium, I can see all the traffic sources they are advertising on. Pages and pages of traffic sources that undoubtedly provide me with some of my own new potential traffic sources to gain more traction for my game.

plarium

I can also check out what creatives my competitors, or top leaders in the industry, are using for their own campaigns and build off of what works best for them and avoid their failures. Let’s take a look at what Playtika does with Slotomania to get some ideas for our own creatives and banners.

slotomania

With Media Intelligence you can find new traffic sources to work with in order to extend your reach and get more users, find new partners to work with, discover the best campaigns and creatives, and build off of the success of others, virtually eliminating the need for A/B testing.

Conclusion

Yes, 2015 is going to be one heck of a year for the online gaming industry and who could blame them. But if you want to succeed in what currently is and what will continue to be a flooded market, you’ve got to make sure that your digital advertising strategy is distinct, accurate, and precise. Focus on creating effective banners that resonate with the users. Make sure you create an interactive environment for them, put the right call-to-action, and, most importantly, not waste money on creatives and campaigns that your competitors have already proven not to work.

So come on digital gamers, let’s make 2015 a good one!

 

About AdClarity

AdClarity is a Marketing Intelligence tool which provides online marketers with actionable insights about their competitors’ advertising activities. Driven by big data and proprietary behavioral content discovery technology, AdClarity unveils brands’ campaigns, ad creatives, impressions, and spend data across multiple channels, including Display, Mobile Web, Mobile Apps and Video. Data is collected across 20 geographies and covers over 50M URLs daily while discovering over 40K new campaigns every day. The AdClarity product suite is used by over 7,000 media and advertising professionals globally in Fortune 500 Brands, Agencies, Ad Networks, and Publishers.

 

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[1] http://www.businessinsider.com/zynga-revenue-analysis-2011-9

[2] http://www.internap.com/2014/12/01/top-five-online-gaming-industry-trends-2015/