Digital Trends to Watch in 2020
A new decade is the perfect time to look both backward and forward. By any standard, the past ten years in the digital media landscape have included monumental changes – some positive, others less so. As we look at 2020 and beyond, we see no signs of the digital environment slowing down when it comes to change, innovation, and even potential conflict.
With that in mind, we present Harmelin’s fourth installment of Digital Trends to Watch – our curated selection of trends you should pay attention to now, and that you’ll be hearing more about in the coming months. While this 2020 list only scratches the surface, these are eight important aspects of the digital ecosystem that will impact your business moving forward.
1. TECHNOLOGY WILL COMPLICATE THE CUSTOMER EXPERIENCE
In 2018, we witnessed the demise of Toys “R” Us. While this may be a testament to Amazon’s dominance, it can also be attributed to missteps leading to poor consumer perceptions, which in turn led to the need to close its stores. Toys “R” Us failed to invest in the customer experience. The death of Toys “R” Us was short-lived, though, as the company (under its new parent company Tru Kids Brands) reemerged with two new locations just in time for the 2019 holiday season. So, what made the new Toys “R” Us different from the old? Simply put, the company moved away from warehouse-type stores and is now focused on customer experience. This makes sense because customer experience (or CX for short) is now at the center of almost everything we do as marketers.
Typically, we might think of CX as only a customer’s interaction with a brand’s website or a customer service rep. These are important, but not the only aspects of customer experience. CX is the sum total of every interaction a customer has with a business, including advertising. Between paid, owned, and earned media, there are so many touchpoints in a customer’s interaction with a brand. Given the technology advancements of the past decade, these touchpoints have grown far more numerous than anyone could have anticipated.
At the core of excellent CX is creating a brand experience that feels personalized, across channels, for each consumer. When a consumer feels like an experience is unique to them, they are more likely to make a purchase, become or remain loyal, or recommend a brand to others. Personalization and customer experience are ultimately driven by the need for consumers to not only feel like they can interact with a brand when and how they want, but for brands to be proactive and predict individual consumers’ needs.
So how can marketers take steps toward personalization? One way is to activate the wealth of available marketing data and tailor messaging specifically for each audience segment. The types of data available to marketers vary, but can include anything from demographic, behavioral, and psychographic data to point-of-sale, voice-of-customer, surveys, weather, and economic data.
With a suite of proprietary tools and platforms at our disposal, Harmelin can generate and identify trends in website analytics, create custom audience segments and path-to-purchase analyses, work with creative partners to develop specific messaging for an audience, and ingest data to help our clients make sense of their business information.
2. AUGMENTED REALITY CONTINUES TO GROW IN NEW & INNOVATIVE WAYS
The growth of augmented reality (AR) is no surprise. Usage in the US has grown nearly 100% in the past two years to 68.7 million users and is expected to grow 85 million users by 2021 (eMarketer). The two primary aspects of AR, known as Face AR and Space AR, allow consumers to explore and alter their surroundings in unique ways. From watching a shark swimming in front of you to seeing how a piece of furniture looks in a room, or turning yourself into a baby with a Snapchat filter, AR is becoming a mainstay in how people interact and experience with the world around us, and with brands too.
Okay, AR’s cool, but what impact will augmented reality have on brands and marketers? The most common application of AR is via lenses and filters within Stories on platforms like Snapchat, Facebook, and Instagram. However, brands are also beginning to innovate in the AR space. Hyundai recently partnered with Live Nation to create an augmented reality experience at the Music Midtown festival in Atlanta. Music fans were able to interact with a 3D model of a Hyundai car and live stream certain music sets in 3D from the comfort of their own home.
We will likely see a proliferation of similar efforts surrounding other big events. Imagine the NFL selling AR tickets to the Super Bowl and giving users the ability to stream the game with exclusive 3D camera angles on their coffee table. Or NBC could allow users to point their phones up and down to get an up-close look at the size and scale of the rock climbing wall at the 2020 Tokyo Olympics.
Retailers are beginning to incorporate AR experiences for their shoppers. British retailers Topshop and others are leveraging AR Mirrors as virtual fitting rooms, and home stores such as Home Depot and Ikea use AR to virtually paint walls and display furniture in a shopper’s living room.
On a smaller scale, brands can build AR experiences and promote them with paid digital advertising. Panera Bread has already taken the phrase “playing with your food” to a new level by partnering with sports site Bleacher Report to launch an AR breakfast wrap from a paid ad to Facebook, Instagram, Snapchat, or via the phone’s native camera. Users can play with the breakfast wrap in 3D, view nutritional information, and share on their social network of choice.
New and profound AR applications are being developed every day. Right now, brands and advertisers can take advantage of the most common Stories application on social media, and work with Harmelin Media to develop paid advertising campaigns to develop and promote more sophisticated AR sponsorships and experiences.
3. THE ECOMMERCE & PHYSICAL RETAIL LINES BLUR
Physical retail is far from dead. But with eCommerce approaching 25% of total retail sales it is critical to keep up with the accelerating growth in the eCommerce space While we all view Amazon as synonymous with eCommerce, Google is entering the space as well. The search giant has recently introduced Shopping Actions. This platform integrates into Google Merchant Center and facilitates consumers’ ability to purchase directly from Google in much the same way they would on Amazon. Shopping Actions also provides retailers with access to Google Express, a competitor to Amazon’s Prime product.
Historically, the “Big Three” could be summed up in the following way: Google knows what you want, Facebook knows who you are, and Amazon knows what you buy. But Google and Facebook are trying to change that paradigm – they also want to know what you buy. Google specifically is using their suite of advertising products and platforms including search, YouTube, and Images to push consumers to buy through Google. This will be an uphill battle, as Amazon is the number one search engine when it comes to consumers researching products. Google, though, has another plan of attack for eCommerce. But not in the way you might think – it involves physical retail.
In January of 2020, Google acquired a company called Pointy. Pointy produces a small box that connects to stores’ barcode scanners or POS system. Google is leveraging Pointy’s technology to power their “See What’s In Store” feature in its search results. It also powers Google Shopping Ads where consumers can make a purchase via Google directly or through a retailer’s website. But Google’s hope is that Pointy will give consumers an additional option in their shopping path-to-purchase by connecting online and physical retail. Ideally, Pointy and Google will help retailers enhance their buy online/pick up in store offerings and will incentivize users to shop physical retail. Equally important, Harmelin’s eCommerce team expects Google to integrate Pointy within its advertising stack, eventually allowing advertisers to better track, at the product level, how online advertising influences in-store purchases. This is something that Amazon has shown neither the ability nor desire to replicate since generally their motive is not to drive consumers in-store.
That said, in recent years Amazon has been expanding into physical retail. In 2017 they acquired Whole Foods, and as a result, users can now ask Alexa to add items to their Whole Foods shopping list and Prime Members get special discounts. More recently, Amazon has opened Amazon 4-Star, Amazon Go, Amazon Pop-Up, and in a sort of an apropos way, Amazon Books. These stores are driven to improve the customer experience. Amazon Go allows consumers to go cashless for a seamless checkout experience. Amazon 4-Star locations only feature products with a rating of four stars and above on Amazon.com. These stores also lean on beautiful, experiential, and “Instagrammable” store design.
So this begs the question: what is eCommerce? Is it Amazon? Is it Google? Is it online shopping? Or, at its foundation, is it a way to simply discover products online which can then be purchased in a variety of ways? Our take – it’s all the above, and Harmelin’s eCommerce team is quickly adapting to these shifts by focusing not just on Amazon and Google but on social platforms, influencers, affiliates, and brand site experiences too. As other retailer marketplaces and platforms like Walmart, eBay, and Shopify are investing in their own self-serve advertising tools and physical retail locations, advertisers must break down their own silos between physical retail and eCommerce and put more of a focus on customer experience both in-store and online. We fully expect the online-to-offline and offline-to-online trend to accelerate in 2020 as retailers look to give consumers multiple paths-to-purchase, shopping options, and experiences.
4. INFLUENCER MARKETING WILL NOT SLOW DOWN
With the rising popularity of influencer marketing as a viable and successful advertising vehicle, experts are predicting that the industry will become a $15 billion market by 2022. “Influencers” are individuals who have built an organic following and strong brand voice primarily on social media, and influencer marketing aims to get brands and products in front of the influencers’ niche audiences who trust their opinion. According to data from MuseFind, 92% of consumers trust an influencer more than an advertisement or traditional celebrity endorsement. While early influencer marketing programs focused on celebrity endorsements, the landscape is shifting to focus on micro and nano influencers, who have anywhere between 5,000 to 100,000 followers. Micro and nano influencers often possess significant credibility within their niche areas, which makes them a more trustworthy source to their followers than macro influencers or celebrities. A study conducted by Collective Bias found that just 3% of consumers would consider purchasing a celebrity-endorsed product, while 30% would buy a product endorsed by a non-celebrity influencer. With influencer marketing, we can reach our clients’ target audience in new and innovative ways.
As we move into 2020, the influencer marketing landscape is growing faster than ever before. Some brands are trying influencer marketing for the first time, and other experienced brands are expanding their investment as they strive for a more mature influencer marketing practice. Though most influencers use social channels to communicate with their audiences, we expect in the coming year that marketers will see influencer marketing as its own media channel with its own specific strategy, and not just an extension of a social media campaign. Consumer use of social platforms, particularly Instagram, continues to evolve into a “discovery” resource to help users make decisions and provide inspiration for their lives. Influencer marketing allows brands the opportunity to deliver relevant information to eager audiences through the means of transparent endorsement.
Harmelin Media has invested in a robust influencer management, discovery, curation, communication, workflow, and analytics platform. This platform allows us to seamlessly execute influencer campaigns by identifying the best influencers to work with for each advertiser, building out complete strategies, and reporting out on the most appropriate metrics for each campaign. While many influencer campaigns are national efforts, the discovery and curation elements of the platform are extremely important and allow Harmelin to activate regional and local influencer campaigns as well.
Whether a brand is looking to generate awareness, drive conversions, or increase purchases, an influencer marketing campaign can play a key role in the overall marketing playbook. We strongly believe that influencer marketing is a growing channel that can help our clients achieve their business goals.
5. TIKTOK – A VENDING MACHINE OF UNLIMITED SNACKABLE VIDEOS
Maybe you’ve seen the short, quirky videos re-shared on your Twitter or Facebook feed. Maybe you heard Lil Nas X or the Kombucha Girl, discovered the numerous YouTube compilation videos, or recall the Good Morning America feature story. TikTok is behind all of it.
At the end of last year, TikTok boasted over 100 million app downloads and close to 30 million monthly active users (MAU) in the US, up 85% from last year. Almost 70% of those users are between the ages of 13 and 24. According to Statista, Facebook has 247 million MAU in North America, Instagram recorded 100.5 million MAU in 2018, and Snapchat reported 210 million daily active users (DAU) as of 2019 Q3. While the giants still have a massive user base, TikTok has shown stronger growth year over year.
Although the US numbers are modest compared to other social platforms, engagement is on the rise. US users open the application 8+ times a day, spend 46+ minutes per day on it, and contribute to 37 billion monthly video views. We now see celebrities, brands, and organizations with younger audiences using it as a necessary extension of their media efforts to further connect with consumers. Post Malone, the New York Jets, and The Washington Post are only a few that have hopped on the TikTok train.
Will advertising on the platform ramp up as quick as the application’s rise to fame? We believe it will.
TikTok currently offers ad units that provide deep digital engagement and over-arching reach of its entire user base, such as the Brand Takeover and Top View. In 2018, the application started offering advertisers an opportunity to push brand messaging through their most popular and well-known feature: The Hashtag Challenge. Advertisers and brands who take advantage of these offerings will benefit from the reach of TikTok’s 500+ million global users. Additional paid units include In-Feed and Branded Lenses, which are comparable to Facebook’s, Instagram’s, and Snapchat’s in-feed placements and face filters. They also can attach specific targeting capabilities to enhance the value of each user.
As we mentioned above, TikTok is a major competitor to the likes of Snapchat, YouTube, and Instagram. Despite TikTok’s quick global adoption, it still currently lags behind the major social media applications in the US… but maybe not for long.
6. ESPORTS CHALLENGES THE OTHER MAJOR SPORTS LEAGUES
This past year, esports quietly surpassed $1 billion in global advertising revenue. For those not familiar with the term, esports is a form of sport competition in the video game world. While the North American esports market is smaller compared to other international markets like China and the European Union, US esports advertising is expected to reach $200 million in 2020. Activate, a technology consulting firm, projects that in the next few years, US esports viewership could climb as high as 84 million people. To put this in perspective, Activate also estimates that in the same timeframe, Major League Baseball will have 79 million viewers.
The growth of esports is being fueled by television, internet streaming, and social networks. Disney-owned properties such as ABC, ESPN, and DisneyXD have already moved into esports. WarnerMedia’s TBS has partnered with the ELEAGUE to air events and competitions. Arguably though, the largest driver of esports has been platforms like Amazon’s Twitch, Facebook Gaming, YouTube Gaming, and Microsoft’s Mixer.
So, who is the esports audience? According to Activate, 62% of US esports viewers are aged 18-34, and Harmelin expects this audience to skew more toward GenZ – or the younger end of that 18-34 age range. This audience is more receptive to esports than traditional sports, with 56% saying esports is more relevant to their generation.
Advertisers can align themselves with the esports audience in different ways including TV spots, contextually relevant online banners and in-stream pre-roll, sponsoring events and teams, and in-stadium signage. One of the most popular ways of aligning with esports is by partnering with streamers as influencers in much the same way advertisers align with Instagram, TikTok, and YouTube influencers and creators.
Harmelin expects esports to become a mainstay for advertisers wanting to reach a younger audience. In 2020, we expect streaming platforms like Twitch, Facebook Gaming, and Mixer to continue their growth. It is also likely that many advertisers will leverage streamers as influencers and content creators in order to speak to their audience in authentic and enthusiastic ways. One thing is for sure; in a few years, esports might be as big or bigger than the NFL, and advertisers must be ready with their ad dollars.
7. THE STREAMING WARS GET FIERCE WITH MORE FRAGMENTATION
By mid-2020, four of the most valuable companies on the S&P 500 are expected to introduce streaming services. Apple, Disney, Comcast, and AT&T are all throwing their hats in the ring to partake in the new age of TV. These media powerhouses are spending billions to compete with established players such as Netflix, Amazon and Hulu in what’s become known as the Streaming Wars.
We expect the industry to go “all in” on internet TV this year, mostly because there is no other choice. Per a survey by Hub Research, 63% of broadband internet users watch their favorite show online. As more consumers watch TV via streaming services, providers are under pressure to produce unique, premium content that drives both membership and viewership.
With the pressure on, content providers are pulling out all the stops. There has been a flood of low cost or “free” offerings, such as Apple TV+ free with a purchase of another device, Disney+ free to Verizon customers, and HBO Max upgrades free to AT&T/HBO customers. We expect similar value-add deals to be offered between NBC Universal’s new Peacock service and Comcast. Also in 2020, we predict even more aggregation – including traditional providers integrating content from streaming providers, platforms being bundled together, and cable providers offering cheaper “mini-bundles” to keep customers from defecting.
Though the Streaming Wars are just getting started, we’ve already seen major players like Sony PlayStation Vue pull out of the race. On the same day Sony pulled out, AT&T’s WarnerMedia announced its plans to launch HBO Max but projected it would take five years for it become profitable.
Why so long, you ask? The streaming business is expensive – both to providers and consumers. For providers, it comes down to content, and quality content costs serious money. Netflix reportedly spent an estimated $15 billion on original content in 2019. They, including others, are also battling for show rights. Two of Netflix’s top shows are going elsewhere – Friends to HBO and The Office to Peacock (for $500 million, mind you).
As these companies spend fortunes licensing and producing content, their cash flow deficits will inevitably grow as well. Like WarnerMedia, we predict providers will continue to take losses early on to gain subscribers but will eventually need to consider price increases or ad-supported options to help subsidize costs.
For consumers, streaming is expensive as there is no one-stop shop. Fragmentation has forced users to combine services from multiple providers in order to access the content they want. We do not expect cord cutters to ever pay $100+/month for TV again though, since high costs were the reason they cut the cord in the first place. Research suggests there is a ceiling to the consumer appetite for subscription-based services. We are already seeing streamers cut costs by sharing logins, hopping between free trials, and paying for subscriptions long enough to binge their favorite show and then cancel.
As marketers, we expect this fragmentation to hit linear television the hardest. In 2020 and onward, it will be harder to reach consumers as they move away from traditional linear viewing. We will have to look elsewhere to reach the ever-growing “unreachables,” including ad-supported linear, online video, out-of-home, and audio, all of which continue to play a pivotal role in the marketing mix. For non-ad supported linear, we can get creative with product placements or look for unconventional ways to align with content.
While we don’t know how or when the Streaming Wars will end, we do know there will be no shortage of TV to watch in the meantime. 2020 will be the Year of Streaming, though we don’t expect to see any major winners or losers just yet. In a few years, once the dust settles and providers have their user bases, the price of competition will force streaming price increases. Once the price tags grow, that is when we predict we will see the Streaming Wars losers emerge as consumers reshuffle their subscriptions to find the best balance of cost to content.
8. THE DEATH OF THE COOKIE… OR TRACKIN’ AIN’T EASY
Senate hearings regarding social media, enterprise data breaches and mistrust of technology companies have all led to a cultural conversation regarding data. How is “my” data being used by businesses to track and sell products to me? What information do these companies have on-hand about my behavior?
Many consumers are unaware to what degree they are identifiable to a marketer, but a desire for transparency and knowledge is prevalent across both tech companies and consumers. Industry-wide changes and major announcements from Google and Apple continue to impact marketers’ view on their advertising effectiveness, requiring even more nuance when measuring performance.
Since 2017, Apple has deployed and expanded upon their Intelligent Tracking Prevention (ITP), an increasingly rigorous Safari tool. This tool was originally launched to control first- and third-party tracking on a user’s browser, limiting the amount of data that is knowingly or inadvertently shared with parties other than the site. By default, Safari blocks third-party tracking and only allows first-party cookies that are used for session browsing (keeping a user logged in, for example). These cookies were originally deleted by Safari after 30 days of non-use. Various workarounds have been developed by technology companies (Google, Facebook) to measure their own attribution through first-party cookies that share similar functionality with third-party tracking cookies. This resulted in the Apple’s newest iteration of ITP, which shortened the length a cookie was stored to 24 hours. This in turn has led to a shortened conversion window that drastically limits the attributable timeframe for a digital campaign. Interactivity with websites that have Facebook widgets integrated into site experience require a user to log back into their social account if the specific domain has not been visited in 24 hours.
Google’s stated roadmap is that by 2022, the tech giant will formally stop accepting any tracking outside of their proprietary Privacy Sandbox. This will minimize the volume and usage of third-party cookies and bolster the usage of their own first-party data sets. The Privacy Sandbox attaches a unique ID for advertisers to monitor delivery and conversions.
With a move to transparency and a shift in importance for the cookie, the major technology players (Apple, Google, Facebook) are positioning themselves to be more valuable within their own walled gardens. For example, within the Google platform the click will have more importance in diagnostic measurement than it has had in the past 10 years, favoring the performance weight for the Google-dominated paid search landscape. Any platform that weighs performance on last-click sales (Amazon, Walmart) will paint a picture of performance that will likely not consider the wider world of the in-market media mix.