Advertising enters 2021 in a state of accelerated change

Seismic shifts in media consumption and work patterns along with the widespread adoption of e-commerce are set to drive further transformation

As new media channels emerge as a result of digital transformation across sectors, advertisers and agencies are looking for opportunities in these new channels of communication. For example, connected cars and smart fridge screens offer new ways for brands to connect with consumers. The technical and data-driven nature of digital channels is giving rise to a proliferation of specialist agencies. For example, new influencer marketing agencies have formed due to the volume of social media now in the marketing mix. But this specialisation can also result in a fragmentation of agencies for a brand, which means that project management skills for advertisers will be crucial. There has been a noticeable shift from outsourcing to insourcing for some skill sets, with agency staff working within the brand and vice versa. An increasingly deeper level of resources and talent is also being moved in-house in some quarters – often powered by brands wanting to retain control of their primary data. Classic marketing-services contracts are also changing, moving closer at times to a partnership model with a selected lead agency, with the procurement of specialist agency services around the edges for particular campaigns. The sector is also under increasing regulatory scrutiny. Regulators are also adopting innovative technology to aid with a strategic increase in proactive regulatory enforcement. The UK's Advertising Standards Authority (ASA), for example, now uses online avatars, with profiles designed to reflect the browsing characteristics of children, to proactively investigate the targeting of ads relating to gambling, alcohol and high in saturated fat, salt or sugar foods. The ASA also uses social intelligence tools to strategically monitor ad content online and has made no secret of wanting to be "leaders in AI-driven advertising regulation".

Tech driven campaigns

Tech is also shaping individual campaigns and ad copy. Artificial intelligence (Al) is being used for content personalisation, predictive analytics for customer insights, and to target customer decision-making, optimising programmatic advertising and media buying. Predictive advertising uses historical data and machine learning to target audiences and optimise advertising copy and media spend to increase engagement. Some agencies are using Al to identify pitches to engage with and to track and predict which brands may do well from the pandemic and, therefore, have the budget for marketing. "Deepfake" technology can be used to re-edit ads or create new ads without the need for talent to attend a shoot. Machine learning is enabling personalisation and localisation for multi-territory campaigns. Looking ahead, 5G may open up wider opportunities for marketing using interactive video, and virtual reality has the potential to enhance advertising – such as by offering virtual tours of products or holiday locations being advertised. The use of these types of tech gives rise to interesting legal issues that the industry must properly consider. For example, who owns the copyright in ad copy written by an AI tool and who is responsible for any IP infringement that may result from it? The allocation of rights and liabilities within the contracts entered into between suppliers, agencies and advertisers is important to get right before such tech tools are adopted within campaigns.

Not 'all about tech'

While technology is driving much of the change, the industry also faces many other major issues. Transparency is one of these challenges. Advertisers are demanding advice and reporting focused on the return on their investment of agencies and campaigns. This is easier to assess with digital advertising as measurability and performance metrics are all enabled by its digital nature. Chief marketing officers are requiring their agencies to build new platforms to enable the multi-campaign and multi-channel reporting they want, if their current systems do not provide it. Transparency concerns have also inspired media owners to consider new uses of technology for ad-buying platforms, particularly where TV media is concerned. Diversity and inclusion is also a hot topic within the sector. MediaCom UK, the advertising body ISBA, the Advertising Association and the Institute of Practitioners in Advertising have joined forces in the UK to develop a tool to track representation in the industry for TV ads (in front of and behind the camera). Before the industry can improve its diversity record, it first needs to collect some real data to understand the scope of its problems. The tool will then also measure the effectiveness of future industry diversity programmes. Plans are afoot to extend the tool to other media channels also.

On the horizon

There are some legal developments on the horizon that could further shape the industry and the marketing mix used by advertisers. In the adtech sphere, there is a great deal of data sharing, which regulators including the UK Information Commissioner's Office (ICO) are unhappy about. Tools are used to supplement consumer profiles or data compilations and the objective is to build a profile of an individual which is as granular as possible. This generates General Data Protection Regulation (GDPR) compliance and transparency complexities. There is a huge shift coming to these practices with the removal of third-party cookies by Apple and Google, the delayed new ePrivacy Regulation (with its rules for cookies) and results of the ICO's adtech investigations expected (which were delayed due to Covid-29 interruptions). More broadly, the EU Consumer Omnibus Directive, which aims to broaden the scope for consumer protection and the penalties for businesses that breach it, will also affect advertising due to its requirements for increased online transparency around online reviews and search-ranking criteria, as well as a requirement to notify consumers when prices are personalised. The ICO's new updated Code of Practice for Direct Marketing in the UK is also due for release in 2021, and is likely to contain new guidance on in-app marketing, custom audiences/lookalike marketing, viral campaigns and more.


Anna Williams Partner, UK +44 20 7105 7174

Victoria Parry Partner, UK +44 20 7105 7272