Marketers are facing an array of challenges in 2024, from soft market economics and consumer spending constraints to shifts in the media advertising landscape and escalating budgetary pressures – it’s creating a leaky bucket to end all leaky buckets.
According to Media in Canada, modest growth is anticipated for the Canadian economy, with the S&P Global forecast predicting a sluggish 0.8% growth in 2024 and 1.4% in 2025. This economic outlook foresees subpar in-store demand, a slower job market and an increase in unemployment to an average of 6.1%, up from 5.4% last year. BMO anticipates that the Canadian economy will continue to trail the U.S. for the next year, and the Canadian Conference Board highlights persistent concerns about the cost of living, high interest rates and inflation throughout 2024.
The Gartner 2023 CMO Spend and Strategy Survey (U.S.) reveals that 71% of CMOs lacked the budget to fully execute their strategy in 2023 and 75% felt increased pressure to “do more with less” for profitable growth. In response, 86% of marketers expressed the need for significant changes in how the marketing function operates to achieve sustainable results. Ewan McIntyre, Chief of Research and VP Analyst in the Gartner Marketing practice, notes, “Suppressed budgets, increasing costs, and lower productivity are squeezing CMOs’ spending power.”
Dentsu projects the Canadian ad market will reach $9.3 billion this year, growing to $9.8 billion by 2025 representing moderate growth driven by cultural events like the Paris Olympics and ad inflation. As Canada lags behind American growth, Canadian marketers also face pressure to achieve more with less and demonstrate short-term results for marketing expenditure.
Beyond the hype and headlines of generative AI creative, retail media networks to the reach-rescue and digital channel absolutism, 2024 presents a complex amalgamation of factors that are contributing to advertising deficiencies and challenging overall ad effectiveness.
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Sign up for INCITEWhat sets 2024 apart?
Complexity
The media landscape has become vastly more intricate, both on the front end and the back end. It’s getting harder to bring it all together. It’s not just that there are more channels, it’s about the changing economics of advertising and the increasing interplay between advertising, customer experience and commerce. Balancing numerous channels and adapting to these changes challenges traditional and siloed advertising approaches. Understanding how media works together is crucial for creating incremental advertising effects.
Media inflation
Shrinkflation isn’t only for consumer-packaged goods. Unlike CPGs, it can be hard to discern the impact of inflation on media productivity. In Canada, media inflation ranges from 0.4% to 10% across channels. Ebiquity research shows the highest inflation in the channels that are also getting the most investment while showing shrinking value (other than CTV). This includes TV (9.7%), online video (6.7%), CTV (9.3%) and social media video (6.8%). Additionally, Dentsu reports that Canada ranks sixth in per-capita ad spend at $275 in 2024 (against a global average of $139), reflecting the growing ad load pressure faced by audiences.
Short-termism
A recessionary context and the imperative to link media impressions to conversion are concentrating dollars in performance marketing and retail media networks – keeping the focus on efficiencies. Research by Peter Field for the ICA in 2022 found that Canadian marketers already lean toward short-termism compared to other mature markets. This fact, combined with generative AI and increasing issues related to managing reach and frequency, points to a noisy and transactional ad economy in 2024.
Technology changes
Technological advancements in ad delivery and third-party cookie deprecation are steering the industry toward large platforms using first-party data. This dynamic shift is not only changing where dollars are allocated but also reshaping the relationships within the industry among agencies, media companies, publishers and audiences. The merging of advertising and commerce, along with new omni-channel requirements, is redefining how brands interact with audiences.
Consumer gaps
Fragmentation on the open web, coupled with cookie deprecation and the allure of CTV and retail media networks, directs funds to walled gardens, creating a disparity between where people spend their time and where ad dollars are allocated. The Trade Desk found that 60% of consumer time is spent on the open web while more than 52% of dollars are allocated to walled gardens (and Epsilon and LiveRamp both reported similar disparities). As AI proliferates, media safety challenges will persist on the open web, leading to increased ad avoidance.
Direct mail, it hits differently
While not the sole solution, direct mail stands out for its media value in addressing ad deficiencies.
What we found was that direct mail can act as a real differentiator, delivering against brand, performance and commercial goals while offering high levels of memorability and engagement.
Come together
Developments in marketing automation, first-party data and omni-channel connectivity enable cross-channel marketing integration like never before. Lob’s 2024 State of Direct Mail Marketing report indicates that 56% of marketers (+14% over 2023) automate direct mail using marketing automation platforms and CRM platforms. While direct mail is an excellent stand-alone tactic, marketers need the multiple effects that come from integration. According to Winterberry Group, more than one third of marketers say an improved ability to activate omni-channel campaigns is the top factor in their decision to increase direct mail spend over the next year.
Neutralize shrinkflation
Unlike other media, based purely on media cost, direct mail inflation is one of the very lowest in the industry and extremely stable year over year. It also doesn’t vary by audience like it does with TV. The 2024 State of Direct Mail Marketing report found that 84% of marketers say the channel gives them the best ROI, up 10 points since the 2023 survey, with the greatest growth among e-commerce marketers.
Attention getter
Attention is the first principle of advertising – you have nothing without it. As opportunity to see (OTS) metrics become less useful, attention metrics are getting all the attention. With today’s attention scarcity and digital ad loads having nearly doubled since 2014, Marketreach and JICMAIL found that 63% of people aren’t doing anything else while they’re looking at direct mail. Subsequently, the cost per minute of attention is 40% more efficient for direct mail than it is for social ads. With proven ad recall lift through neuromarketing studies and greater attention, marketers can build brand and improve conversion at the same time.
Safety first
Direct mail is always brand safe and suitable. If you are looking to bypass fake news and ad fraud, direct mail has been proven to increase trust because it is delivered in a tangible format to an inherently safe environment – the home. And right now, trust is an incredibly important factor in advertising effectiveness, with 71% of people saying it is more important to trust the brands they buy now than it was in the past. WARC’s Future of Media report found that while linear TV audiences are shrinking, it still ranks as a top trusted channel. It’s important to look at multiple factors when making media decisions. Channels like direct mail that bring trust, brand safety and attention together provide a desirable value proposition.
More reach please
Marketers seek efficient reach at scale. Reach and frequency are proving difficult to manage in a developing cross-channel media landscape across linear and non-linear TV, walled gardens and digital channels. Direct mail can efficiently create incremental reach through influencer marketing, look-alike data targeting and automated retargeting, which complement TV, digital and even podcast efforts where audiences are shrinking, hard to reach or niche.
Connect the dots
Direct mail, while not a retail media network, is commerce media – bringing advertising, media impressions and conversion together through interactive content, samples, offers, catalogues and more. Direct mail’s ability to match high-value audiences through data and its proximity to buyer decision-making moments (with 9 in 10 buying decisions influenced or made at home) enhance overall time to conversion. It complements retail media networks and layers with other commerce media by filling gaps in brand and customer experience along the customer journey that are often exacerbated by digital-first and DTC strategies that aren’t diversified and don’t reflect the expectations of connected consumers.
Patching the leaky bucket
As the advertising landscape becomes increasingly complex, addressing challenges like media complexity, inflation, shifting industry dynamics, audience fragmentation and ad blocking is crucial. A holistic approach to marketing, considering all channels, is necessary to optimize media dollars in an environment focused on ad efficiencies. Overcoming ad deficiencies requires strategic thinking, attention to emerging trends and relooking at the media mix to patch effectiveness leaks.