Outlook 2019: Unintended Consequences
Four trends in media and technology that are shaping the future of audience attention
Welcome to the IPG Media Lab’s 2019 Outlook. Each year, we round up the ideas that excite us for the next few years: new technologies, market forces, and shifts in consumer behavior that are changing the media landscape. Since 2006, the Lab has worked with clients to help them best adapt to disruptive change.
Guided by a forward-thinking perspective, the Lab team explores emerging technologies and their potential to become new media platforms. Our focus on research and strategy enables us to analyze the latest platform developments, understand how they will impact consumers, and advise our clients on how to navigate the disruption they bring. Through a finely tuned vetting process, the Lab team organizes their findings, manages introductions, and recommends these partners to solve client challenges or bring forward new opportunities.
This Outlook is an overview of the trends and topics that we expect to explode into the market in the next few years, why we’re convinced they’re important, and how you should respond. We hope you enjoy it.
Comments, questions, and opportunities to work together are very welcome. Please reach out to Josh Mallalieu, at firstname.lastname@example.org.
2019: Unintended Consequences
Last year we talked about The End of the Beginning, looking at how the major technology platforms are so entwined in our culture and our economy that they are expanding well outside their own industry, in an attempt to disrupt and digitize strongholds of the offline world as far-flung as healthcare and transportation. Those disruptions are yet to come, but before we move forward, it’s becoming clear that we’ll have to address the unintended consequences of two decades of rampant growth and transformation.
Just a few years ago, tech platforms — Google, Apple, Facebook, Amazon, and Netflix in the US; Baidu, Alibaba, TenCent in China — seemed unassailable. They forged direct relationships with consumers and provided them with the devices, services, and connections that rapidly became central to their lives. By creating and owning these new platforms, available instantly to anyone with a smartphone worldwide, they decimated the old gatekeepers, disrupting a century’s worth of business models predicated on scarcity of content and friction of distribution. And while this sounds good in theory — who wouldn’t prefer abundance to scarcity? — the reality turns out to be more complicated.
For one, aggregating so much attention has made them prime targets for abuse. Political propaganda is running rampant on social media, turning platforms once designed to stay in touch with far-flung friends and family into meme factories for disinformation. And never before have we seen previously private information leaked so easily, even from well-meaning sources. While there will be a second act for social media, as we’ll see below, public perception has notably shifted from techno-utopianism to wary optimism, if not outright skepticism. Worldwide, this shift in opinion is enabling politicians for the first time to take a serious look at regulating our tech platforms, and opening doors which recently looked to have been closed.
Public perception has notably shifted from techno-utopianism to wary optimism, if not outright skepticism.
The other change wrought by tech platforms aggregating attention is the disintermediation of other brands. By aggregating consumer attention (and sometimes spend), FAANG in the west and BAT in China have relegated other brands to the back seat, commodity suppliers — whether it’s products, services, or content — to fill their shelves and their feeds. While it’s true that some categories, such as CPG, have always been one step removed from the consumer, their brand recognition used to give them significantly more sway than their distributors. Whether it was Coke and Johnson & Johnson or The New York Times and HBO, it was possible for suppliers to create a brand strong enough that it minimized the distributor’s direct relationship with the consumer. The internet flipped the script, though, handing power to the aggregators — Amazon and Alibaba, Netflix and Google — who provided the best experience for users.
The other change wrought by tech platforms aggregating attention is the disintermediation of other brands.
But now that we’ve seen how easy it is for knockoff products and fake news to infiltrate such massive platforms, trust is being reset. And as they continue to look for new growth in higher margin, more regulated industries such as healthcare and transportation, tech platforms will see ever-increasing scrutiny. It’s not that they will be trusted less than other companies, but that we’re finally ready to judge technology disruptors equally, without the utopian trappings they themselves provided, in the cold light of day. As public perception chills, world governments look to regulation or tariffs, and to ensure that the US and China don’t dominate the new global culture, this reset opens up new opportunities for everyone else. The most trusted brands, who earned their reputation well before this disruption, are now in a position to prove they’ve learned from these aggregators, to leverage their reputation in strategic ways to become major players alongside the tech platforms that have been driving our economy and our culture. How far we’ve come in a year.
Unbundling Search & Social
In the end it was the social platforms who were the impetus for the backlash. While social media’s role in any particular election or social unrest will be left for the historians, it was impossible to live through 2018 without recognizing that perception of social platforms had turned a corner. That corner, to be fair, is that with billions of users, the biggest social networks had come to fully reflect the reality of humanity, with both its upsides and its downsides magnified by the internet. And after a decade of stability, this has raised the possibility that consumers might look to other, calmer platforms to connect with family and friends, read the news, and connect with celebrities and brands.
While it’s unlikely that we’ll see a wholesale replacement for Facebook any time soon, we’re beginning to see the emergence of an archipelago of niche communities, deeply specialized, and highly engaged. Reddit, for one, has been ascendant, despite flying under the radar of most mainstream media. Its structure of moderated discussions around shared interests and voting mechanisms makes it harder for disinformation to spread and for trolls to linger. Houseparty is building an ad-free network on top of a very common millennial use case for video chat — just hanging out. Amazon-owned Twitch is becoming ESPN for a generation who grew up on video games and esports, while ShopShops is recreating the Home Shopping Network for Chinese millennials. Figure 1 is recreating Instagram, but as an information sharing platform for doctors. And it’s notable that, as in days of internet yore, these are mostly users connecting with others based more on shared interests than real-life social connections, something even Facebook seems to be acknowledging with their recent push to promote Groups. These smaller networks don’t require a full feature set, but are thriving in their niches. They’re unbundling pieces of Facebook and YouTube: targeting specific use cases, creating a better experience for those uses, and attracting steadily more users with that experience.
We’re beginning to see the emergence of an archipelago of niche communities, deeply specialized, and highly engaged.
Interestingly, after years of social FOMO, Google was one of the first to sense the shift. Having finally shuttered Google+, they have rapidly expanded the “social” features in core Google products, allowing users to follow local businesses in Maps, and keep up with brands and topics in a new Discover feed on mobile. Notably, these are two ways in which Facebook generates revenue — it’s early days, but if Google is able to capture even a fraction of their attention, their existing ad platform is well positioned to monetize these placements. And while Apple has a historically bad track record with social, they do have a strong position in messaging and news in the US, and could easily embed social features similar to Google’s into their own maps and media apps. It’s possible that, in the future, rather than social being a destination, it’s just embedded in the apps we use most often.
But it’s not just about shifting power from one tech company to another — there is great potential for brands to leverage this shift to create the kind of native social experiences which haven’t been viable for a generation. While Strava remains independent, we see other fitness brands like Nike baking social features into its digital products like Run Club and Training Club, and Peloton building a network from the ground up around their fitness content. Amazon’s Ring is leveraging their large install base to enhance security among neighbors, and could challenge NextDoor for the kinds of small-scale networks that naturally form in our neighborhoods. And China’s iQiyi is embedding Reddit-like discussion of its TV shows right alongside the content itself, creating social network levels of engagement around their original content. The new networks may be smaller, but this purpose-driven approach makes it a natural strategy for brands looking to build long-term relationships with consumers.
This purpose-driven approach makes it a natural strategy for brands looking to build long-term relationships with consumers.
But if the unbundling of social is coming from external threats, with search, the call is coming from inside the house. While Google will remain the king of web search for the foreseeable future, the balance of power might shift as consumer behavior evolves to include voice search and visual search. While Google is a part of this shift, any change in behavior opens new opportunities for competitors to grab market share.
Though Siri was first to market, Alexa was the spark that lit the fire in voice search, and Amazon’s fierce competition is what finally spurred Google to action, forcing them to respond or face losing market share. As Amazon cements their lead in product search and looks to grow its ad revenue, it poses an increased threat to Google across the board, and a shift of some search traffic to voice has only given them a boost. Voice search underlines a larger trend towards AI-driven results, where the assistant in question is often making the decision for the consumer, rather than presenting them with options. For brands, this necessitates investing in a good relationship with the platform owner, and helping them build out their ecosystem via skills and actions, to ensure priority access to the consumer.
Voice search underlines a larger trend towards AI-driven results, where the assistant in question is often making the decision for the consumer.
Pinterest was first to market with visual search, and to date often provides better results than Google, currently serving over 600 million visual searches monthly. Snapchat and Amazon are also in market with visual search tools, though at much smaller scales. This year, we expect visual search to break out as a mainstream behavior, as the technology gets good enough to provide actionable information, whether that’s linking to purchase, or saving for a more appropriate context — adding an album to a playlist, for example. Augmented reality from Snapchat, Facebook, and Apple has conditioned consumers to the possibilities of their cameras, and they’re primed to expand those use cases, most of which will first appear through some form of search. To capitalize, brands will need to ensure that their visual branding and physical assets (including packaging, out of home, and print ads) are indexed properly across every visual search provider. And, just as with voice search, investment in the larger ecosystem the platforms are building around AR will likely give brands priority placement and access to new visual search tools as they come to market.
Voice and visual search are revealing a crack in Google’s empire. And though they may be well prepared to compete, just like social, the future of search is looking increasingly diverse.
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Media Have & Have-Nots
As the digital disruption of media matures, converting new users from traditional modes of consumption of their news, audio, and video will necessarily require a new set of tools. The late majority is already consuming some of their media online, but to get them to give up on their subscriptions to print and cable, their terrestrial radio and plastic discs, we’ll need to expand the services on offer and diversify business models. Skinny bundles was a big step, providing something that gave them the “always-on” feeling of live TV that had been lacking in previous offerings. And now we’re seeing increasing investments in ad-supported streaming video services from Amazon, Hulu, Roku, CBS, NBC, and Viacom lowering or eliminating the up-front cost of over-the-top television in a world where industry standard (and ad-free) Netflix can cost more than HBO. The result is that the next few years will see a proliferation of video services at every imaginable price point, and with so much original content that it will accelerate cord cutting for everything outside of traditional sports. This is both a good and necessary step to transition everyone to digital media.
At the same time, the proliferation of news content, the breakdown of old media gate-keepers, and the spread of disinformation are creating a class system of news media. The issue of blending propaganda with real news is already worse than many realize, and is likely to continue unabated, as deepfakes make it as impossible to trust video and audio as it has been to trust text content. Media literacy is a huge part of the problem, with older, and less educated consumers already struggling to separate fact from fiction. A study in the UK found that poorer Britons consumed less news than their richer counterparts, and the news they did receive was of poorer quality. The difference in quality was orders of magnitude worse online. Even worse, a recent Pew study found that only 17% of Americans over the age of 65 were able to tell the difference between fact and opinion. It’s unrealistic and unfair to expect mainstream viewers to quickly understand just how sophisticated disinformation campaigns have been, and how rapidly it’s progressed. With the news business becoming increasingly competitive, the most trustworthy publications are retreating behind paywalls, which can guarantee a certain legitimacy of the content found behind them. And the ones most likely to follow them there, the ones most likely to pay for news, are also the ones with the highest media literacy, the ones who are most able to identify fake news and deepfakes, the younger and more affluent.
The proliferation of news content, the breakdown of old media gate-keepers, and the spread of disinformation are creating a class system of news media.
While these two trends might seem unrelated at first, we’re entering an age of Super Bundles, with major platforms building Amazon Prime-like bundles of media and services for a monthly fee, making it easy to include items that the consumer might never pay for if it weren’t included. So even if they don’t value news quite enough to pay for it directly, those young and affluent consumers might get higher quality news bundled along with their music or entertainment. Apple is expected to release just such a bundle this spring, with music, video, games, and premium news content as part of one subscription. Amazon already has it, of a sort, by offering a free six months of an auto-renewing Washington Post subscription to all 100 million Prime members. There will be others, as other trusted brands respond — not all super bundles will be anchored in media (transportation and fitness come to mind), but those which are will likely include news content eventually.
Meanwhile, there will still be a large percentage of the late majority who will resist paying, having been sold a narrative that streaming will be cheaper than cable. Studies estimate that the average US consumer is willing to spend $38 per month on streaming media, which is unlikely to cover more than three or four subscriptions, or one or two bundles. By comparison, the average cable bill in the US is over $100 per month, so it’s possible there is quite a bit more headroom as streaming replaces pay TV. The good news is there will be ample ad-supported television and news options for those consumers. The bad news is that the experience of those options will steadily decrease in quality, as the most desirable consumers flee to ad-free options, or pay to disable ads in order to access the entertainment content they desire.
We’re approaching the endgame for a longstanding Lab trend, Ad Avoidance: when the most valuable consumers are given the option for ad-free media, they will often take it. It may have been about the annoyance of interruption, at first. But the spread of disinformation on social media, the rise of Super Bundles, and the shift to 5G for early adopters, will give the media-privileged a way to retreat into gated communities of media. And what’s left outside, for everyone else, will be a race to the bottom with more invasive ad tech chasing less desirable consumers.
When the most valuable consumers are given the option for ad-free media, they will often take it.
Brands may not be able to prevent this, but we can mitigate the consequences by returning to the roots of our industry, and offering clear value in exchange for attention or data. To reach affluent consumers, who will likely opt-out of traditional, interruptive ads in many instances, we will have to earn their attention with in-content marketing, sponsorship of premium content, and development of content of our own. It’s well past time for household brands to begin patronizing top-tier creators in the same way Netflix does, in order to gain access to their audiences. Brands who aren’t quite ready to invest in premium content may earn attention through curation — because if there’s anything this explosion of content will need, it’s someone to help consumers feel like they’re seeing what’s most important to them.
The consumers who are looking to pay less for content will be increasingly open to an explicit exchange of data in return for access to quality content. The trick is that in order to maintain brand trust, that data must be protected, and privacy respected to a much greater degree than we have seen to date. As subscription fatigue sets in, and premium consumers look to add a third or fourth option, platforms with better privacy and more respectful ads might win them over. This is why we’re seeing experimentation with ad formats, such as Hulu’s pause ads and Disney’s Freeform Nonstop, which allows users to earn points when they see commercials, and spend those points for an ad-free binge. With the proliferation of options, bad behavior will risk even the most price-sensitive consumers fleeing, especially when companies like Amazon and Disney reduce upfront costs to drive loyalty elsewhere in their ecosystems.
The consumers who are looking to pay less for content will be increasingly open to an explicit exchange of data in return for access to quality content.
Brands need to restore the balance of the data-value exchange
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Every Brand is a Lifestyle Brand
As consumer trust is challenged in media, it’s driving Brand Trust as a primary motivator in every other area, encouraging consumers to double-down on the brands they trust most, growing their share of attention and share of wallet. These trusted brands are being handed unprecedented access to consumers, and granted permission to expand across categories, infusing themselves into areas of consumers’ lives which may only be tangentially related. We used to call brands that did this “lifestyle brands,” as a pejorative — it used to seem ridiculous that a hand soap would dictate your bedroom decor, or that a fitness brand would influence your vacation choices. But in 2019, every consumer brand that matters is a lifestyle brand, its Instagram-able tendrils creeping across categories, and its purpose-driven messaging underlying not only the products, but the media that surrounds them.
In 2019, every consumer brand that matters is a lifestyle brand.
Part of this is enabled by larger trends in how we’re paying for things. In a world where direct to consumer companies enable subscriptions to everything from pet food to floss, it becomes both easy and natural to entice them to expand from one trusted product to solutions for an entire category. Because the payments are automatic and invisible, the products don’t even have to be the best, just good enough, convenient, and aligned to a consumer’s identity. Marketing and positioning plays a huge part in establishing that alignment, along with the design of the packaging and product itself. If a brand wins a customer when they’re in consideration for one category, they can remove consideration from complementary categories, creating the start of their own mini bundle predicated on solving a set of related problems. By aligning with a larger purpose — whether that’s wellness, sustainability, or simply anti-establishment — that purpose can support growth into related categories, and make the decision to add one more product to an ongoing subscription an easy one. In many ways, this removal of consideration is, itself, a service.
But as most companies don’t have a product line large enough to satisfy every need, one way to keep in constant contact can be learned from observing the best direct-to-consumer startups: media can establish a brand as synonymous with a category of needs, allied with a specific identity of consumer, and keep it top of mind on a regular basis. Away outlasted competition in the direct-to-consumer suitcase market because their media aligned with the aspirational travel of hipster millennials: designed for Instagram, but grounded in less-travelled destinations. Sakara hired an entire team of editors and event producers to support the plant-based, clean-eating lifestyle they sell, packaged as a prepared meal delivery service. And Hims uses friendly design and a direct-to-consumer model to remove the stigma that might prevent men from discussing erectile dysfunction or hair loss with their doctor.
Media can establish a brand as synonymous with a category of needs, allied with a specific identity of consumer, and keep it top of mind on a regular basis.
To accomplish this requires a deep understanding of how both current products and services fit into a customer’s life: what problems your best customers will give you permission to solve, and what purpose or mission they identify with which you can align to. If it’s something that can be monetized, it should be productized. Glossier took this approach when they made the leap from being a trendy beauty blog to producing their own line of cosmetics. They used their knowledge of their audience and data on what they responded to on their platform and social media to inform which products to launch with, and what attributes would resonate the most.
When it’s something that can’t yet be monetized, it can be filled with media. This is a way for brands to commoditize their complements, giving away anything that they can’t monetize directly, so as to prevent it from being a vector of competition. Johnson & Johnson’s Baby Center is a great example of this: while Johnson’s Baby is focused on CPG products, Baby Center is an educational and community resource for parents that begins even before conception. It provides a channel to market existing products, but also holds the space for J&J to develop new products and services for parents in the future. By filling that space with media — which our Digital Culture makes basically free to distribute — J&J can ensure they’re in constant contact with their best customers, and can leverage that media to reach them on new platforms, which Baby Center does on Roku and Alexa. Any brand with data on their consumers, combined with an authentic understanding of their audience’s values and priorities can fill the gaps and expand their presence and influence in their customers’ lives.
Any brand with data on their consumers, combined with an authentic understanding of their audience’s values and priorities, can expand their presence and influence in their customers’ lives.
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Every major technological shift reduces the strain of human labor, to both positive and negative effects. Less effort is a net gain, until it builds up enough to start displacing jobs — or rather, shifting jobs from older skills to newer skills. In a spreadsheet, it all evens out. But in reality, the people caught in the shift don’t fare so well. So it’s no surprise that, just as we’re seeing the first driverless cars hit the road, and purpose-driven artificial intelligence is gaining the ability to understand and perform some basic tasks, we’re also seeing public sentiment turn a cynical eye towards the technology industry. These early automated systems will save billions of hours of human productivity, and — in the case of cars — hundreds of thousands of lives. But unlike other recent innovations, automation will also displace large portions of the workforce in a technological transition on a scale that hasn’t been seen since the Industrial Revolution, affecting 800 million people worldwide over the next decade. Combined with the techlash in the media and an incoming global recession, automation is likely to be the first collection of technologies in decades which will be pre-emptively constrained by government regulation. Perhaps rightly so.
Automation is likely to be the first collection of technologies in decades which will be pre-emptively constrained by government regulation.
Today, the most tangible automation most consumers see is in the home, asking Alexa, Google, or Siri to control the lighting, the TV and music, or the thermostat. In our private space, this automation will continue unabated, eventually blossoming into the Jetsons future we’ve been promised as the Battle for the Home spurs investment from our major tech platforms, and the only labor displaced is our own. Google, Amazon, and Apple will be happy to ease the burden of cooking, sleeping, and waking, in order that we might spend more time in their ecosystems consuming media. Amazon and Alibaba in particular are incentivized to help automate our homes, as auto-replenishment of consumables stands to be a platform-level lock-in that will win them thousands of dollars per household per year, and heretofore unseen loyalty in the consumer goods space. A microwave that can re-order popcorn is just the beginning.
Once our home and mobile assistants pick up steam, the expectation of that level of personalized, automated service will spread naturally. The next frontier will be customer service industries: retail, restaurant, hotel, and the like. After all, once we have Alexa taking care of us at home, why wouldn’t we expect her to help us when we’re out of the house? We’re already seeing the seeds of this in Google Duplex, which uses voice assistant technology to automate phone calls for appointments and reservations. While the last generation of startups became an “Uber for everything”, with outsourced services taking care of upper-middle-class adults the way parents take care of their children, the next wave will leverage automation to complete those same tasks. They’ll streamline by first automating the summoning of a human to do the task, and later by using robotics to automate the task itself.
Once our home and mobile assistants pick up steam, the expectation of that level of personalized, automated service will spread naturally.
But here’s where the moral compass starts to spin erratically: lives are saved from car accidents, and certainly more free time is a welcome addition (suspending judgements about how we choose to use that time). But the workers who were just sold on the gig economy stand to be quickly displaced by automation. And this is where the true test of public opinion and government oversight will lie — how much will we allow technology to disrupt, and how quickly? Coming at this time in history, we should consider not only the opportunities automation enables, but also those it erases. While brands rush to adopt new technologies and show off their prowess and insight, we must remember that the workers which automation will replace are also our customers. In 2019, the techlash is confined to Silicon Valley, but soon it may not be. The brands that understand this are already getting ahead of the problem by investing in infrastructure to help alleviate the strain.
In 2019, the techlash is confined to Silicon Valley, but soon it may not be.
How this transition is managed is likely to vary dramatically around the world. In Europe, it may look like strict regulation, which may serve to entrench incumbent interests. In the US, it’s coalescing as denial that the post-war order will ever change, with rampant abuse of that system flying under the radar. And China is investing in a full-court press, hoping to seize this opportunity to take the lead in the global economy. The next decade will require brands to thread the needle of investing in automated production, while selling to consumers displaced by that automation, and navigating a labyrinth of world governments who are often a step behind. Those who successfully navigate this complex system will be rewarded handsomely, having demonstrated not only technical prowess, but a deep understanding of how to earn trust with their consumers.
How the 2019 Super Bowl Ads Reflected the Growing Anxiety about Automation
Thus concludes our global POV on 2019 trends in media futures and innovation. For regional perspectives, please check out contributions from our global team:
How the four trends from our Outlook report are playing out in China’s unique digital ecosystem
How the trends from our Outlook report are playing out across the diverse Asia-Pacific region
How the trends from our Outlook report are playing out across the LatAm region
More regional POVs to come. Stay tuned.
Comments, questions, and opportunities to work together are very welcome. Please reach out to Josh Mallalieu, at email@example.com.
Adam Simon | Twitter: @adamjsimon
Scott Elchison | @tippier