Dominic Powers, chief growth and innovation officer for Asia Pacific at Dentsu, discussed the changing advertising landscape during the recent INMA Asia/Pacific News Media Summit, primarily focusing on three themes:

• Contact
• Commerce
• Community

Based in Singapore, Powers notes the media and advertising industry is continuously evolving, accelerated by various economic pressures faced globally.

Factors such as the war in Ukraine and inflation rates have influenced consumers’ choices and consumption patterns. Inflation is not only affecting the decisions made about products from well-established brands but also impacting the subscription services like Netflix and Disney. 

This change in consumer behaviour is having a significant impact on Asian economies, which have been the main producers for most Western consumption. While these economies continue to grow, many barely managed to evade recession. Consequently, the focus on social impact and sustainability has also taken a considerable hit.  

“Consumers are making very different choices around the products that they want to choose and consume. And if we look at that in terms of the media industry and the advertising industry, we’re really facing this existential crisis,” Powers said.  

The advertising industry faces a dilemma as brands seek to maximise the return from every advertising dollar spent. They are looking for the cheapest cost, thereby creating pressure within the industry to find value in advertising. According to Powers, the industry needs to transform from a cost-driven mechanic to a value-driven approach. 

Powers emphasised the need to focus on the human behind the consumer that drives both the advertising and media industries. He believes in using three themes — contact, commerce, and community — as a framework to better understand the trends in the way consumers interact with media and brands.

Content

1. AVOD eats SVOD

The pandemic caused a shift in content consumption to digital platforms, particularly video on demand (VOD). Now, the trend is moving away from subscription-based VOD to ad-based VOD. For instance, in the UK, two-thirds of households subscribe to at least one service. This format offers more opportunities for brands to connect with consumers. High-end brands like Gucci are starting to advertise on paid subscription services.

2. Games everywhere

Video and gaming have become inseparable, with companies like Netflix producing games alongside hit content. Platforms like Hulu, Samsung, and Walmart are building their own walled gardens around gaming. Even social spaces and over-the-top (OTT) services are exploring the gaming sector. Brands now have new ways to engage with consumers, not just millennials and Gen Z but also the older generation (silver gamers). 

“For the publishing industry, this gamification idea of content, of learning is something I think that will take off,” Powers said. 

3. Attention brings back the essence of advertising

Dentsu has been examining the growth of “attention” for over five years. They are beginning to evaluate content and advertising based on the connection that the consumer has with it, and the attention it can attract. Media plans are now being built based on attention metrics rather than just buying placements. This is changing how content is delivered, with longer-form content like the 10-minute TikTok video of Paris Hilton promoting Hilton Hotels, which attracted massive attention.

4. Artificial Intelligence (AI)

Dentsu is leveraging AI to create content, but, Powers emphasised, “AI is not going to replace the human … but it’s something that can definitely help support the work we do and start to change the way we actually work within the creative services industry.” 

So instead, AI may alter the nature of jobs in the creative and advertising industry. It is about evolving with AI and using it as a tool to support and change the way we work within the creative services industry.

5. Web3 now

This is impacting the advertising industry with innovative examples like Dentsu's creation of a collaboration space for clients called Dentsu Nxt Space, which is more interactive than Zoom or Teams. They also created a virtual influencer, Ray, for CapitaLand in Singapore. Ray was designed during the COVID-19 pandemic as a means to connect with consumers and now has a million followers on social media platforms. Dentsu has started using NFT technology as well.

Commerce

6. From going shopping to always shopping

Shopping has become a constant in consumers’ lives. It has been integrated into messaging apps and TV, evolving from campaign-based interactions to spontaneous shopping moments. Consequently, content now needs to drive these shoppable experiences.

7. No way back for third-party cookies

With the gradual elimination of third-party cookies, a key tracking method in advertising since the late ’90s, consumers will be less trackable. In effect, there’s an opportunity to build more direct advertiser relationships through zero-party data (willingly and deliberately shared personal information) and first-party data (information gathered based on interactions with the brand).

8. Retail media shakes up adland and publishers

Brands are starting to build capabilities that power retail media. This is about placing advertisements in front of consumers during the micro-moments that matter most, specifically when they are already shopping or in a retail space. 

9. The rise of the super apps in APAC and beyond

More prevalent in the Asia Pacific region, these apps are becoming significant aggregators of data and consumer shopping habits, making them a rich source for advertising opportunities.

Community

10. Going “live” goes a long way

The trend of going live and experiencing live events has gained traction among consumers as they seek real experiences they can share within their communities. For news publishers, offering live content can be a valuable tool to attract consumers and serve as an innovative advertising mechanism.

11. Responsibility takes center stage

Brands must address the interplay between consumer needs (what people want), sustainable behaviours (what the world needs), and brand equity (what brands uniquely offer). The Value Action Gap, where a brand fails to live up to the actions it claims to support, greatly influences consumer brand choices. It's becoming increasingly critical for marketers to drive social responsibility and change. 

Moreover, the need to decarbonize has become a significant factor in budgeting, prompting tools like Dentsu’s Media Carbon Calculator to measure the carbon impact of advertising campaigns. Brands are being encouraged to use platforms that offer advertising solutions with reduced carbon footprints.

12. Algorithms change the social game

The popularity of content is now based on its value to consumers. Social platforms like TikTok are seeing the emergence of channels focusing on mental health and financial literacy. As such, publishers need to focus on the relevance and value of their content. If the content is correct, it’s likely to gain traction on social channels, regardless of whether major influencers present it. This shift implies a drastic transformation in how the advertising industry operates. 

Media 3.0

Powers presents the concept of Media 3.0, which is centered around the consumer. Brands will soon start to primarily focus on their own media and earned media to drive desired transactions. Publishers are urged to find innovative ways to use data in this landscape. 

The forecast for global ad spend in 2023 is US$729 billion, marking an increase of US$23 billion (3.3%) from the previous year, with digital ad spend projected to grow by 7.8%. However, overall, 2023 is expected to be a flat year for global ad spend, partly due to price inflation. 

On a brighter note, the Asia Pacific region is forecasted to be the fastest-growing market and is expected to accelerate further in 2024, with consumption predominantly driven digitally.

Interestingly, the U.S. ad market’s size is greater than the combined size of the next seven markets, including France, Germany, Australia, China, Japan, Brazil, and the UK. 

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