Advertising and Marketing: A Century of Change

The COVID-19 pandemic that is raging around the world in the midst of a century of change has brought about many turbulences and variables in the external environment. The international situation is turbulent and unpredictable, which has triggered many political, economic, diplomatic and military frictions. Although China's economy focuses on stability, the rapid development of information technology has continuously rewritten the original industrial structure, triggering a series of redistribution of resources and power. The vitality of the economy comes from the market, and advertising and marketing have a keen sense and intuitive presentation of market changes.

How does the advertising and marketing industry, a product of the industrial age, evolve and change in the context of the new era? The author will discuss the historical background and driving factors of the evolution of the advertising and marketing industry, propose the basic framework and core support for the reconstruction of the advertising and marketing industry in the digital era, and predict future development trends.

1. The advertising market is experiencing a “change that has not been seen in a century”

The recurring global COVID-19 epidemic and the emergence of the Omicron mutant strain have cast a shadow over the global economic recovery. Geopolitics and industrial chain reconstruction affect the lifeblood of China's economy. Under the impact of the century-long epidemic, the century-old changes are accelerating, and the external environment has become more complex, severe and uncertain. Policies, markets, consumption...all influence the development and evolution of the advertising industry.

From a macroeconomic perspective. In 2021, China's domestic economy is facing problems such as demand contraction, supply shocks, and weakening expectations due to the impact of the epidemic and changes in the external environment, and the downward pressure on the economy has increased. Macro consumption is weak.

Data from the National Bureau of Statistics show that the overall trend of the domestic consumer market began to slow down in the third quarter of 2021. From July to September, the year-on-year growth rate of total retail sales of consumer goods averaged 5%, and the year-on-year growth rates of online and offline retail sales and online virtual sales all slowed down. Although there was a rebound in the fourth quarter, it still hovered at a low level, which is a big gap from the pre-epidemic period. In the long run, according to the "Economic Blue Book: Analysis and Forecast of China's Economic Situation in 2022" released by the Chinese Academy of Social Sciences, China's average economic growth rate in the three years from 2020 to 2022 will be only 5.2%.

From the perspective of policy supervision. First, some key industries have cut their budgets, mainly involving education, gaming, real estate, Internet finance, medical beauty, etc.; second, the form of Internet advertising has been standardized. Specifically, it includes the rectification of pop-up ads. The "Internet Advertising Management Measures (Draft for Comments)" issued on November 26, 2021 requires that the promotion of goods and services through Internet media be marked as "advertisements" and that video inserts must be closed with one click, and other stricter regulations; third, the potential impact of the "Personal Information Protection Law", affiliate ads and ads that direct traffic to e-commerce transactions may be under greater pressure.

From the perspective of the advertising market. The advertising market, which serves as a barometer of the economy, has also been subject to fluctuations and growth has come under pressure. The growth of advertising revenue of leading Internet platforms has slowed down significantly, and the advertising business of a few platforms has even declined year-on-year. According to the financial performance disclosed by each company, the advertising revenue growth of the three Internet companies Alibaba, Tencent and Baidu in the third quarter of 2021 was 3.4%, 5.4% and 4.2% respectively, which was only single digits, far from the double-digit growth in the same period of 2020; it is reported that ByteDance has also lowered its advertising growth expectations for 2021. The internet advertising market may continue to be sluggish until the first two quarters of 2022.

2. Moore's Law of Information Technology Stirs Up Entropy Increase Effect

Advertising and marketing have entered a new normal. Not only is the external environment undergoing tremendous changes, the advertising and marketing industry itself is also undergoing changes. Information technology represented by big data and artificial intelligence is growing exponentially, which has not only brought about an increase in computing power, but also changed the original order of the advertising and marketing industry.

Uncontrolled communication, a game between information platformization and content fragmentation.

The communication environment has changed. First, digital media has broken down the dam of traditional media centered on "scarcity", and communication has become fragmented but full of vitality. The emergence of digital media platforms has overturned the traditional information dissemination model, driving the unlimited production, transmission and consumption of information;

The second is large-scale information data. Whether it is user consumption or business operations, the new coronavirus epidemic has made online operations the norm. Enterprises use information platforms as intermediaries to achieve online digitization and retain a huge amount of information;

Third, information is intertwined to form a network structure, which not only realizes connectivity and interoperability, but also enables feedback and response. As consumers increasingly rely on digital media platforms to connect with each other, entertain themselves, inspire shopping desires and complete purchases, advertising plays an increasingly important role in driving sales and promoting brand business growth.

Consumers are distributed in a network dominated by major platforms, enjoying convenience while also releasing their demands. When advertising and marketing needs to capture demand in such a communication environment, it cannot rely on a single point, but must rely on the Internet of Everything, such as social media networks, to seize the opportunities brought about by market fragmentation and re-aggregation. Advertising and marketing are increasingly focusing on consumers' behavioral touchpoints in all scenarios and gaining their fragmented attention on major platforms.

Channel failure, commercial channels have evolved from single to multi-dimensional and multi-format. In the "post-epidemic" era, people's lifestyles and consumption habits are undergoing fundamental changes. Especially under the instigation of the "new consumption" concept, advertising and marketing need to accurately connect with consumption stratification under consumption upgrades, and meet the spiritual needs under material consumption, reconstruct consumer cognition through immersive marketing, and meet the objective needs of different consumer groups with new technologies, new models, and new relationships.

Corporate brands need to break away from reliance on a single channel and build multi-dimensional, multi-format business channels. Whether it is an online traffic scenario or an offline experience scenario. For example, live streaming e-commerce plays a role in solving the difficult problem of unlimited conversion of traditional online traffic for enterprises. Brands are accelerating their entry into new e-commerce platforms such as live streaming e-commerce, short video e-commerce, and social e-commerce, and their operating models are also evolving from live streaming by experts to self-broadcasting by brands.

In addition, companies have also been exploring new offline channels. For example, P&G launched an innovative product called Girl Box, which uses artificial intelligence and electronic payment technologies to provide P&G's Always products in girls' restrooms. This not only solves consumer pain points, but also establishes new touchpoints between brands and consumers.

Traditional advertising has become ineffective, and advertising marketing is accelerating its transformation into a new normal. In the industrial age, most corporate brands follow the business logic of "large-scale production + large-scale retail + large-scale channels + large-scale brands + large-scale logistics" to achieve optimal allocation of social resources. This model is based on the premise of scarce resources, scarce channels, and scarce content.

Consumers buy well-known corporate brands or products endorsed by influential media due to lack of choices. In the digital economy era, resources have gone from scarce to abundant, and unlimited content is transmitted through unlimited channels, giving consumers unlimited choices and making traditional marketing models ineffective. Not only that, the consumption structure is rapidly differentiating, consumers' behavior paths are more diverse and complex, and advertising and marketing are showing a new normal with multiple touchpoints, dispersed paths, and accelerated changes.

Faced with the new normal of marketing in an uncertain environment, in order to obtain certain business results, corporate brands need to not only transform their business models, but also change their way of thinking about business operations.

First, from a business perspective, from relying on traffic to focusing on consumers. Second, in terms of operational capabilities, we have evolved from product development at the production level to technological innovation in the context of digitalization. Third, in terms of business methods, it has changed from a node to the entire process, from simply attracting attention to focusing on the user's full-process experience from interaction, transaction, to delivery. Fourth, from the perspective of business objectives, strike a balance between long-term brand building and short-term business growth.

Faced with the new normal, advertising and marketing are increasingly expected to “connect businesses and drive growth.” Both corporate brands and media platforms need to look at marketing from a new perspective. In response to this, Alimama upgraded its brand in 2021, taking "operational power" as its core business keyword; ByteDance also released a "full growth plan" at the beginning of 2022, attempting to integrate brand building, mind planting, and sales conversion to help companies achieve long-term value.

3. Four-wheel drive of the evolution of the advertising and marketing industry

Advertising marketing is an inventory and integration of existing resources with the aim of adapting to the market development environment. Entering the digital age of unlimited production, unlimited transmission, and unlimited demand, content, products, data...all kinds of elements have become infinitely abundant, demands are infinitely satisfied, and the thinking mode of advertising and marketing is also moving towards dataization, integration, ecology, and intelligence under the "three infinities". These “four transformations” are the core drivers of advertising and marketing changes.

1. Digitalization

For advertising marketing, the amount of data is growing exponentially, the data granularity is becoming increasingly refined, and the data calculation, analysis, and application capabilities are constantly improving. Datafication has become the fundamental driving force behind the evolution of marketing. From the perspective of the entities that use data, datafication can be manifested in the following three aspects.

One is the digitization of media platforms. The commercialization of digital media is inseparable from the improvement of data capabilities. The role of data platform products in marketing is becoming more and more obvious. Whether it is the "Big Data Cloud Map" under ByteDance or the "Dharma Plate" of Alimama, they are all refined operation tools based on the perspective of consumer data.

The second is the digitization of corporate brands for their own use. To combat risks, corporate brands are accelerating their digitalization process. The foundation of digitalization is the collection and application of first-party data of enterprises. Brands leverage both directly owned and licensed consumer relationship data and integrate and refine consumer behavior and attitude data. Whether it is building a CDP (customer data platform) or launching a marketing cloud, it is becoming more and more common in corporate marketing.

The third is the digitization of consumers. In commercial services, policies and regulations such as the Personal Information Protection Law will give users the right to refuse excessive digitization. The recalibration under the influence of data privacy will affect every participant in the Internet ecosystem. It is also a major test for advertising and marketing practitioners, who need to constantly learn legal and compliant data strategies.

2. Fusion

With the in-depth development of data, the convergence of data from multiple parties will inevitably lead to integration. The integration is mainly reflected in four areas: industry, model, business and scenarios.

The first is industrial integration. As companies’ marketing goals and growth demands become more and more specific, the industry boundaries of advertising are disappearing and advertising is becoming bigger and bigger. Not only is the boundary between traditional advertising and digital advertising blurred, but driven by digital technology, advertising is constantly merging with big data, cloud computing, artificial intelligence, cognitive science, the Internet of Things and other aspects, thus bringing about a comprehensive integration of models, businesses, organizations and other fields.

The second is model integration. If the goal is to create user value and achieve business growth, then advertising, marketing, operations, and management as the means to achieve this goal have become integrated and difficult to distinguish. Not only does advertising marketing need to coordinate with sales conversion in the front and back links, but it also needs to be connected with consumer operations, thus running through the entire business operation process of the corporate brand. Whether it is advertising and marketing aimed at C-end users or B-end enterprises, it will be closely integrated with the company's sales, service, production, logistics and other business areas.

The third is business integration. Under such requirements, media platforms need to integrate resources and build a full-link business growth that matches corporate brands. For example, the innovative model of the TikTok platform uses information flow and search scenarios to pay real-time attention to live broadcast dynamics, achieving full coverage of the population and global traffic; marketing service agencies also need to improve their capabilities and provide full-process services from communication to sales. For example, Leo Digital, founded in 2014, has formed four major divisions: integrated marketing, media agency, strategic investment and incubation platform.

In addition to creative services, the integrated marketing segment also provides incubation services specifically for new consumer brands; the media agency segment will explore the combination of media and content, and also has businesses in the fields of short videos, live e-commerce, and information flow. At the same time, in order to strengthen more diversified businesses, Leo Digital also absorbs companies with great potential in the industry through strategic investment and incubation platforms.

Fourth, scene integration. The integration of the content field for "planting grass" for C-end users and the transaction field for "conversion". Nowadays, consumers are increasingly relying on social media for purchases, and the boundaries between social, short video and e-commerce platforms are gradually blurring. The demand for business scenarios such as customer acquisition, downloads, store opening, and store visits for B-side enterprises will be summarized and integrated, so that enterprises can obtain more online data support and decision-making references. Whether it is the C-end or the B-end, marketing needs to be integrated with the scenes composed of time and space.

3. Ecological

Based on dataization and integration, as the platform's influence expands, it forms a monopoly, and data and algorithms form new control power. At this time, anti-monopoly, personal information protection, and data security have become new problems facing the platform, and the entropy increase phenomenon is becoming more and more serious. An effective way to avoid entropy increase is to establish a fluid, open ecosystem that can continuously exchange energy and matter with the outside world.

Some Internet platforms with strong monetization capabilities continue to expand their ecological boundaries, strengthen in-depth interactions with audiences, build closed-loop business links, and tap into the value of existing users. On the one hand, the platform builds infrastructure such as data technology and opens up cooperation to attract various service providers and channel operators to share profits. On the other hand, it also carries out governance and maintenance to a certain extent. The prosperity and sustainability of the ecosystem depends on the maintenance and governance of the platform. Excessive exploitation and excessive plunder will come at the cost of destroying ecological prosperity.

The ecological construction of advertising and marketing has been reflected in the commercial operations of some platforms.

First, in terms of platform functions, WeChat Video Account achieves seamless connection with official accounts, enterprise WeChat, mini-programs, WeChat groups, etc., connecting public domain traffic with private domain traffic. Second, in terms of product system, the intelligent marketing platform of Alibaba Intelligent Information Business Group has built an intelligent commercial operation ecosystem based on digital technology. On the basis of Super Huichuan, commercial product systems such as Super Xunliang, Songta Store, Orange Heart Investment, and Sirius have been launched one after another, building a more complete brand full-link intelligent marketing channel in the Alibaba system.

4. Intelligence

With the development of dataization, integration and ecology, massive amounts of data are generated in the implementation of advertising and marketing, which brings about problems of efficient information analysis, processing and optimal decision-making. The rapid development of artificial intelligence technology has become the best means to solve effective control and matching in advertising and marketing. Nowadays, artificial intelligence technology has empowered every link in the advertising management industry chain, and promoted the continuous upgrading of advertising marketing intelligence from computational intelligence to perceptual intelligence and cognitive intelligence. The intelligent drive of advertising and marketing will be mainly reflected in the following four aspects.

• The first is intelligent insight. Advertising and marketing are based on comprehensive and detailed consumer insights, enabling professional marketing teams to make smarter and faster decisions.
• The second is intelligent creativity, which combines scenario-based needs to provide diversified content presentation and expression for advertising marketing, capture element-level creative inspiration, and possess fission and high-productivity creative capabilities.
• The third is intelligent delivery. Algorithm technology will realize self-service hosting in the advertising and marketing delivery process, freeing humans from computers.
• Fourth, business opportunity management and long-term operation, marketing automation technology will play an important role in this link.

The intelligence of corporate brands is represented by Procter & Gamble. According to the financial report released by Procter & Gamble, in fiscal year 2021, P&G's sales were US$76.118 billion (approximately RMB 491.844 billion), a year-on-year increase of 7%; net profit was US$14.306 billion (approximately RMB 92.44 billion), a year-on-year increase of 10%. In fiscal year 2021, P&G's net sales and growth rate both reached the highest level in nearly 10 years, which is closely related to its years of digital transformation.

There are three main directions in P&G's business model transformation driven by data and intelligence. One is products and services. Discover market pain points based on data, create new products and add services. The second is contacts and channels. From the digitization of touch points, such as the "Skin Age Test" mobile application that allows users to complete skin diagnosis online, to media delivery combinations, modeling work for advertising delivery plans, and calculating the best delivery combination from tens of millions of delivery combinations. The third is the new supply chain. Establishing a flexible supply chain at a controllable cost can meet the personalized needs of today's customers and consumers.

Typical technologies driven by intelligence include marketing cloud. As an important support for the digital construction of corporate brands, marketing cloud technology improves factors such as traffic, conversion, average order value and repurchase rate through online and offline data integration and automated customer operations. For example, the marketing cloud product matrix of Convertlab, a leading company in the martech (marketing technology) field, includes the customer data management platform Data Hub, the marketing automation platform DM Hub, the advertising optimization platform AD Hub, the basic capability platform AI Hub, etc., to fully meet the company's more extensive business scenarios.

4. Core support for the reconstruction of the advertising and marketing industry

The uncertainty of the external environment has added many variables to the evolution of the advertising and marketing industry, but the driving forces of dataization, integration, ecology and intelligence have made the evolution process traceable. What supports can serve as a fundamental starting point for the evolution of the advertising and marketing industry? From the essence of marketing, the goal of marketing is to establish, operate and consolidate the connection between producers and consumers. In the process of sorting out industrial changes and constructing a new marketing theory framework with my team, we summarized the four core supports of the advertising and marketing industry.

1. People: Reconstructing the platform with people at the center

Advertising and marketing need to return to people themselves. People-oriented, consumer-centered, and customer-oriented are constantly emphasized in every stage of development of advertising and marketing, which also highlights the core position of consumers. From the practical operation of advertising and marketing, insight into consumer needs has always been placed at the starting point and first priority of marketing.

Whether it is the center or God, under the premise that channels, media, and consumption maintain a relative distance, the identities of "people" as consumers can be clearly divided, the "target groups" can be identified and grasped, and corporate marketing can take the initiative in communication and sales respectively. However, driven by new technologies, the marketing environment is changing again and again, and the social roles of consumption/audience/life appear and switch with each other at any time in the same time and space, and the complexity of the relationship has increased unprecedentedly.

Value people and make them the link in advertising and marketing operations. These "people" can have multiple identities and titles, they can be KOL, KOC; they can also be experts, anchors, UP hosts; or directors, artists, designers, etc. They have communication, social and sales powers. This type of "person" who possesses the characteristics of a businessman, creator, and socializer enters the marketing field and takes the initiative, using their own social resources and creative abilities to complete communication and sales. In this process, information can be spread and fissioned, and "people" truly become the core of marketing: the division of labor of production/consumption is transformed into the integration of "co-creation of life". Therefore, how to find, combine and empower the right "people" becomes the first mission of corporate marketing.

2. Relationship: Rebuilding the relationship between enterprises and people with 0 and 1

Business operations have always involved two parties, just like the two parties in a transaction, who are connected to each other and establish a relationship. In pursuit of repeated and lasting relationships, business operations not only involve clan relationships based on blood ties, but also expand to cultural identity relationships based on regional geography, and penetrate into fan relationships based on hobbies and interests through the Internet. The closer the relationship between an enterprise and its consumers, the more repeatable it is; otherwise, changes will occur in a short period of time.

In the digital network era, the physical network is becoming increasingly vast, and connections between people and things are everywhere. The integration between media and channels, between channels and social media, and between relationships has occurred and deepened. Just as in human society, from husband-wife relationships to friendships to cooperative relationships, all require compatibility in aura, values, knowledge, temperament, etc., the construction of "relationships" in digital networks also needs to rely on advertising and marketing to achieve this process. Advertising and marketing in such a three-dimensional cyberspace will describe, understand, accumulate and polish relationships based on recordable, traceable and restorable data to make them more compatible and achieve broader and deeper connections.

Many companies are trying this approach. For example, Coca-Cola is opening up the data chain from the production line to the sales end, leaving data traces for the production, logistics, channels, and sales of each bottle of product, using data to describe the entire production and distribution process. On the demand side, the process of digitalization of consumer demand has already begun. Especially in the domestic market, consumers leave digital footprints on various media platforms and transaction platforms, and corporate brands define and manage their relationship with consumers based on this data.

3. Content: Connector and Catalyst for Marketing

The connection between people begins with the material chain, and then evolves into the cultural chain and the spiritual chain. The "content chain" representing the spirit gradually replaced the "material chain" and became the protagonist. The evolution of network technology continues to break down physical connection barriers. Marketing ultimately needs to answer: how can connections between minds be achieved?

Content is the ultimate connector and catalyst. In the one-way era with scarce channels, content is at the top, using information and data to depict the reality and meet functional needs; digital technology has brought about an abundance of channels, a surge in emotional needs, an increase in the desire to perform, and the entertainment value of content. A world of storytelling and carnival is thus formed, where everyone is a writer and everyone is an actor. Unlimited supply and demand has given rise to exponential growth in content.

It is not enough to stand out and attract attention from a sea of ​​content; the right goal is to continuously communicate and capture minds. Only by creating characters and incubating stories from seemingly empty social emotions, perceiving feedback and coordinating responses among unpredictable consumer groups, capturing and judging topics, designing and promoting co-creation, collecting and calculating effects, and integrating artistic creation with meticulous business management, can we harvest marketing content with its own vitality and achieve telepathy with consumers. The key lies in immersion and participation, creating a source of stories that ordinary users are willing to participate in and can tell, and continue to operate.

For example, IKEA has launched its own IP "IKEA Goes to Your Home" for different target customer groups, which has spawned various forms such as long videos, short videos, pictures and texts, topics, and mini-programs; in addition, there is the content IP "Their Home" for fans to share their own home decoration, and the content IP "Rental House Renovation" specifically for young people who rent houses; in terms of brands inviting users to co-create content, such as the marketing event of "HEYTEA logo full body picture".

This activity, which was spontaneously produced by netizens and personally participated by the official, received 410 million readings and 390 million discussions, and also had the popular "Mi Xue Bing Cheng Theme Song". The theme song was released on the official account of Mi Xue Bing Cheng on the Bilibili platform. Through the ghost-like creation of Bilibili UP masters, multiple language versions, ancient Chinese version, and Peking Opera version were released, which made the theme song spread across the entire network and received tens of millions of clicks. In addition, more and more corporate brands are trying to use content in different forms and fields for marketing communications (see table).

4. Data intelligence: Achieving optimal matching of supply and demand through algorithmic recommendations

Advertising marketing in the post-industrial era needs to use the "big data + intelligent technology" operation method to meet the growth needs of enterprises and achieve efficient matching of resource supply and demand. In advertising and marketing, large amounts of interconnected data are repeatedly trained until a model is established, using machine intelligence to break through the ceiling of manual computing power. Enterprises can use models to better understand and predict market and even individual user needs, and achieve the best match with their own supply capabilities.

In fact, optimal matching has always been an important goal pursued by enterprises. In today's context of infinitely dispersed communication touchpoints and rising media costs, it is necessary to push the right content to the right people in the right place. That is, in a complex media environment, using data analysis to predict the click or purchase behavior of individual consumers and achieve the optimal match between materials, media, and consumers can help companies obtain the greatest benefits at the lowest cost.

Expanding the vision from advertising to business operations and achieving the best match is also an important means for companies to drive growth. Take Xiaomi as an example. It connects a huge group of Mi fans and understands their needs through scientific means. It matches the manufacturing and distribution capabilities within the corporate ecosystem, provides diversified products, and stimulates consumers to repeatedly place orders on its mall platform. Geely Auto is also adopting a similar approach, connecting tens of thousands of spare parts suppliers and factories on one end and millions of consumers on the other end. On the enterprise platform, production data and consumer demand data are constantly collided, matched, and optimized, ultimately achieving the optimal match between production capacity and consumer demand.

In the economic research framework, the path to growth is to allocate scarce resources to where they can produce the greatest profits, thereby improving economic efficiency through optimal matching. In the digital business world, the path to achieving this requires using data to define each element in the advertising business process, such as a large number of increasingly sophisticated user tags and content tags, and then pushing them to users using "digital" algorithms, forming a new logic and new order for advertising operations to promote the achievement of the "optimal match."

5. Future trends in advertising and marketing: bridging the gap between production and consumption

In a people-centered platform ecosystem, advertising and marketing will eliminate information asymmetry between producers and consumers and establish manageable and operational connections based on data. Content will become a catalyst and connector for building relationships, running through the entire process of communication and marketing. Data and intelligence will drive the synergy between advertising and operations, ultimately achieving effective resource matching. Industrial factors are intertwined and interacting in a complex game. Industrial transformation will continue. How will advertising and marketing develop in the future?

Infinite content, infinite transmission, and infinite demand, the three infinities complement each other and achieve each other to construct the future consumption scenario. Living space, family composition, consumption habits... the overlapping layers of time and space are filled with ever-changing demands. For consumers, when the entire scene changes with "my" current needs, customized consumption behavior will naturally occur.

Based on content and data, life, material, spirit, tools, services, information, all human behaviors and thoughts are recorded, analyzed, and responded to at all times. Deep inner needs and fleeting desires are captured quickly and satisfied immediately. This forms a number of marketing loops. Each closed loop is based on the data accumulated from the above-mentioned consumption scenarios. It is people-centered, with unlimited demands and connections at various levels. In the data feedback, information symmetry is achieved to form people's final decision.

In addition, the endless stream of content products are seamlessly connected through boundless communication platforms, continuously stimulating and satisfying the audience's material or spiritual needs, and achieving a natural and continuous state, and the loop becomes a closed loop. In this way, advertising and marketing may reach its peak by bridging the gap between production and consumption.

(The author Ma Tao is a lecturer at the School of Advertising at Communication University of China, and Huang Shengmin is a professor at the School of Advertising at Communication University of China and the director of the China Advertising Museum)

Author: Ma Tao, Huang Shengmin; Editor: Sun Ying

Source: Media