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COMMENTARY

Welcome To the New Communications Economy

• by Anush Prabhu , January 10, 2024

Advertising used to be a more integral part of culture. Taglines like “Coke and a smile” and “Where’s the beef?” made it into our everyday language.  Ads created cultural behaviors -- Diet Coke convinced us we needed a break at 11 a.m., and Calvin Kline convinced us underwear could be outerwear.  And this was done primarily via television commercials. 

Well this isn’t 1984 anymore and we are no longer in the old advertising economy.  This is now the new communications economy.

It’s an economy in which we have almost doubled our time spent with media -- plus 187%, according to Statista.  However, it is not television but other media forms like gaming, streaming, and social that are gaining momentum. Still, many of these environments are not ad-supported. Of the time people spend with media, ad-supported media stands at just 45.7% and is estimated to go down to 41% by 2027, according to PQ Media. Even in ad-supported environments, 99% of Gen Z consumers will hit "skip" on an ad if it's an option and nearly two-thirds (63%) use ad blockers to avoid online ads, according to Bulbshare.

Despite this, 95% of media spend still goes into ads, while only 5% is devoted to content and experiences that deliver better returns (essencemediacom estimates).

“Barbie” is a perfect reference for how a brand today reignites itself. The company did not do it ad-first, but went media-first, generating pride in the younger generation to associate with its brand. Crocs drove a 300% increase in share price in a year by leaning into social media influencers.

In this new communications economy, people are not hard to reach -- they are just harder to reach with ads. Brands must rethink their approach, and agencies must question what business they are in, to stay relevant.  If you are still focusing the majority of spend on the creation and distribution of ads, you are playing with the old advertising playbook. At best, you risk lower returns, and at worst, irrelevance.

If you are leading a brand’s approach for 2024, think of these three people-first suggestions:

Meet people where they are: The industry is not meeting people where they are, but where they can see ads. Your media approach should be more than a carrier of ads.

Harness data as an insight driver: Use data to understand people rather than to just target them. Make a more holistic approach to your data strategy and infrastructures. The market has enough data solutions that are not built with a holistic purpose in mind.

Make relevance your ultimate currency: Relevance drives greater impact, near and longer term. We have all witnessed the impact of cultural relevance, but personal relevance in communications can deliver up to 50% greater impact (essencemediacom benchmarks).