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Top industry trends for 2005

If you are blogging regularly, have your Blackberry on order, know what 3G is (not a 3rd G-spot you have no hope of finding anyway), have Craig Native in your wardrobe, know what the Feminine Factor is (nothing to do with Fear Factor!), then you're so up-to-date on coming trends that you might as well stop reading now. However, if you don't even know what I'm talking about, best you resign your job right now and take up vegetable farming! Without a doubt, new technology options will have the greatest influence on media, marketing and communications options in the future, globally.

At a recent international media conference in the United States, the annual UBS Media Week, experts predicted that the Internet will shortly overtake outdoor as a mass medium; that 2005 would be a very good year for advertising; and that the Asia Pacific region will see the largest upsurge in total advertising outlay over the next three years (see Bizcommunity.com's round-up of the main international trends). A long list of digital and technology innovations "threatening" traditional media spend has also been tabled at global conferences in the past year, encouraging marketers to fast track their understanding of the proliferation of new media options.

Locally, the big deal this year will be transformation in the media, marketing and advertising industry and aligned sectors in the creative industries. The road is expected to be arduous and controversial, with parliament already turning on the heat.

To highlight some of the general and industry trends expected to materialize in 2005, both locally and globally, Bizcommunity.com polled various industry players for their view. For fun we also asked for personal new year resolutions!

One trend that is certainly emerging in the new economy driven workplace, is the need for more quality time - personal new year resolutions from the various guru's polled, indicated spiritual, esoteric, and "more me time" wishes; such as "go barefoot more"; prioritise health; watch less television; do more reading... And media owners best stay on the right side of Starcom head, Gordon Patterson, as his personal new year's resolutions are to "get back into combat shooting" and spend more time with his wolf!

The impact of technology

On a more serious note, media and entertainment executives around the world are focused on the impact of technology on their industry and believe more technology-savvy managers are critical to their companies' future success, according to a new study by Ernst & Young. Executives participating in the study say that the digitization of content, combined with the increasing adoption of broadband distribution technologies, is creating major shifts, challenges and opportunities for their industry.

Among the study's findings:

  • The introduction of new industry-altering technologies is occurring
    at an increasingly rapid pace without any slowdown in the rate of consumer adoption.
  • Executives complain of unprecedented levels of competition, creating
    severe industry pressure.
  • 75%of executives participating in the study cited digital video recorders (DVRs) - more than any other new technology - as an innovation likely to disrupt the industry's status quo. DVR use, allowing viewers to time-shift programming and thus bypass advertising, is expected to grow rapidly in Europe, reaching 6.5 million households by 2007 and some 24.7 million US homes are expected to have DVRs by 2007. These are due to be launched in South Africa in October 2005.
  • Electronic game software has the fastest growth in earnings before interest, taxes, depreciation and amortization (EBITDA) profitability of any media and entertainment industry sector.
  • While television broadcasting remains one of the most profitable segments of the media and entertainment industry, executives generally see it as the most challenged to thrive and grow in the future.
  • Radio enjoys low marginal costs and growth as advertising shifts from TV.
  • Traditional print advertising is forecast to grow steadily, but still faces potentially disruptive threats from increased Internet usage.
  • The music industry, which has been hard hit by piracy enabled by content digitization, now has the lowest profitability margins of any segment in the industry.
  • Cable operators in the US, more than other industry segments, are likely to thrive in the years ahead.
  • The single biggest point of controversy among executives is about joining or separating content and distribution.
  • "While the current level of new technology adoption may differ by country and region, the overall trend remains the same worldwide," said Steve Barber, European head of Media and Entertainment for Ernst & Young. "Content digitization and the introduction of broadband technologies are forcing media and entertainment companies to rethink every aspect of their business, from intellectual property protection to new models for distribution and revenue creation."

    "This study is highly significant for the South African Media & Entertainment industry," adds David Purnell, leader of Media and Entertainment for Ernst & Young in South Africa. "Whilst DVRs in South Africa may be slightly behind and may not impact quite so profoundly as in the US and Europe for the moment, we are anticipating the significant impact which digital migration will have on television and radio in this country. Equally significant are the global trends for the music industry, which are further exacerbated in South Africa by piracy, which extends beyond the Internet."

    Monty Filter, creative director of branding agency, Enterprise IG, agrees that technology trends are likely to dominate. His five predictions are:
    1. iPod Mania - anything with USB, Blue-tooth etc link, will be the attachment to attach.
    2. Virtual reality as a new affordable commodity - this new reality will enhance media as escapism.
    3. Return to minimalism - technology is decreasing the concept of acceptable size, resulting in info becoming more acceptable.
    4. Teen design - teens are the masses as far as technology consumption is going. Teen design is becoming the new must-have for any product line.
    5. Individuality as a counter to super-powers - war and the invasion of non-like minded individuals (America's new war) will drive cultures to promote individuality as a counter to super powers.

    But apart from the technology onslaught globally, there are some uniquely South African challenges for marketers locally. Doug de Villiers, chief marketing officer, Enterprise IG, outlines some of the most significant branding trends that South African marketers can expect:
    1. African brand revival - the African brand will start becoming an internationally accepted, respected and desired brand.
    2. Brands for Africa - South African brands (and brand expertise) will become even more prominent through the rest of Africa.
    3. Holistic branding - brand differentiation in Africa will move for the incorrect perception that Brand = Logo, to a far better understanding of all brand elements (product, packaging, visual language, 3D environment, staff behaviour etc).
    4. Africa visual style - the use of African elements in brand visualisations will become more prominent (see # 1.) And as the world searches for different visual styles.
    5. Professional brand development - leading African brands will be developed by strategic branding agencies and not as a "favour" from advertising agencies.

    Media spend

    Gordon Patterson, Managing Director, Starcom, gives his five predictions for 2005:
    1. Television will be the medium of change in 2005 - more changes and challenges than this medium has seen since the launch of commercial television in South Africa in 1978.
    2. Another prosperous year for radio as the retail boom continues.
    3. The launch of some new titles, several of which will enjoy success if they deliver something new and don't copy an existing formula.
    4. More outdoor sites, particularly in the more densely populated areas.
    5. There should be greater media owner transformation.

    Pieter Groenewald, managing director of Comutanet, says the barrier to entry of below-the-line media types has been eased. This is borne out by the deregulating of the market place and through the new freedom of access that the new South Africa affords its citizens.

    "As a result of the explosion of above-the-line media options and the resultant clutter, marketers have switched much of their focus away from broad brand marketing to a more tightly focused Activation communication - literally, activating products and services rather than straight 'branding'. Marketers have also woken up to the importance of interacting and communicating with the so-named 'emerging market' which is also loosely defined as LSM 4, 5 and 6, and B-T-L (below-the-line) communication is seen as a key strategy in influencing this market."

    Groenewald says the resultant growth in the arena of Below-the-Line communication will continue to have positive spin offs for the industry. However, there are inherent pit-falls that come with this growth that need to be navigated by marketers to ensure that they achieve enduring success with their market communications and activation. "Innovations within the electronic media space should attract more attention from entrepreneurs and has become a more viable option with the stronger rand lowering the initial outlay."

    Lucille van Niekerk, General Manager: Beeld, in turn, says that when considering the upward trend in the total print spend since 1991, it is unlikely that this trend will regress, given the positive economic indicators (GDP, Personal Disposable Income, CPI, etc). "In this regard, there will be an increase in the total print spend and newspapers will benefit from this, albeit a confined proportion of the economic movements in the media industry."

    On the subject of the Afrikaans published language and its relative share of ad spend, the last decade has shown a positive growth tendency, Van Niekerk says. "The last five years have marked a recovery period and there is also no reason to anticipate a regression, given the rise in circulation and readership as noted by AMPS and ABC research findings. Anticipate an increase in total ad spend in print media, in which newspapers will fiercely compete for their share of this honey pot."

    When it comes to community publications, Gill Randall, Joint Managing Director, Newspaper Advertising Bureau (NAB), says there will definitely be a continued upward and buoyant trend for advertising spend in the community newspapers arena. "The increased spending power of the emerging market will continue - the biggest growth will be in the furniture and appliances and clothing and shoes sectors.

    Randall says all media owners who keep delivering efficient returns on investment will continue seeing healthy increases. However, the industry shouldn't be "too greedy and try and milk the supply and demand" scenario. Astute marketers will continually seek alternatives (of which there are many), she says.

    The growth of online marketing

    Sally Falkow, international brand strategist, who has just attended the Marketing Sherpa Business to Business Summit in San Francisco, US, says marketing, advertising and PR will have to focus resources on reaching consumers searching for their products and services online.

    Falkow's top global trends are:
    1. Pay per click: Pay per click will become a $3 billion industry. According to attendees at the Marketing Sherpa Business to Business Summit held in San Francisco last week, over 75% will increase their spend on pay per click in the New Year.
    2. Natural search optimisation: companies will invest in upgrading and optimizing their websites, using persuasive architecture and optimized content, so they can capture the 76% of searchers who click only on the natural search results, as opposed to paid results. Optimized content generation will make an appearance as a line item on web redesign budgets.
    3. News engines and optimized press releases: the emergence of Yahoo News and Google News as the number one media choice for news will change the way people market and advertise their products. Just sending out a press release to the media no longer works. It has to be optimized and included in the news engines to reach your targeted audience directly. And for the first time the results from a press releases can be tracked - web analytics makes it possible to track clickthroughs and conversions from a press release.
    4. Corporate blogging: business blogging will become a mainstream marketing and PR activity. Blogs raise search visibility and build brand value. Monitoring blogs for mentions of your brand and pitching bloggers will be a new PR activity.
    5. RSS and content syndication: syndication of content through the use of RSS feeds is set to become one of the hottest trends of 2005. Not only can your public subscribe to your RSS feeds directly, your content can reach a wider audience through other websites using the content or you can assist relevant journalists by offering them a feed of industry information.

    It's more than a game as digital rides the techno wave

    Greg Cook, digital design specialist at Enterprise IG, lists some of the trends his organisation have highlighted in this digital age:
    1. The influence of gaming - currently one of the biggest areas of growth and development across the globe. The industry will take direction from gaming, focusing on interactivity to influence digital interface. 2005 will see gaming used as a powerful tool in digital content, from the commercial market through to individual applications.
    2. Digital video - (satellite/DVD/video hardware/interactive movies). Business will realise the power of digital video in 2005 and harness its marketing and brand building power.
    3. Back to hands - the digital industry will utilise more hand drawn graphic integration, combining with digital compositions to create effective digital renditions.
    4. Digital sound sales - with the current popularity of MP3's, sound effects in digital applications, we can create/purchase sounds that are real and unique for digital application.
    5. Speed - Downloads are becoming faster, graphics lighter. Beyond dejunking, we will now start thinking in streamline.
    6. Convergence - the convergence of software platforms means more applications of bleeding over the boundaries of each other. There are no longer applications that deal solely with data, graphics or digital elements. Will 2005 see the development of a super application that does it all?
    7. Differentiation by interactivity - interactivity is the key factor for 2005. It is no longer about how it looks but how it works and how the consumer can get involved.

    Catherine Parker, strategist at Quirk, agrees, pinpointing Voice over IP telephony; wireless internet access; Blackberry (sexy wireless phone/email/internet/organiser); and Gmail (Google's new web-based email), as tools no savvy marketer can do without. If you don't know how to use it, how can you sell your products on it/through it/with it?

    Communications is key for any future strategy

    Angela Makholwa, MD, Britespark Communications, says there is consolidation of the industry, especially event management companies. More creativity will start to come through with the staging and organizing of events.

    Marie Yossava, MD, Grapevine Communications, lists her top five trends:
    1. 2005 will see more businesses utilising PR to successfully launch brands.
    2. 2005 will see further case studies of international brands and entrepreneurs who will attribute their success to the power of PR.
    3. Companies will realise the importance of investing time and manpower in their communications consultancy, not just funds.
    4. The Internet will become a more recognised and powerful PR medium for businesses.
    5. The continuing focus of core competencies within the industry will continue to gain the respect of businesses and other industries.

    The cult of celebrity

    Celeb publicist, Marcus Brewster of Marcus Brewster Publicity, believes the rise of publicity (read: editorial coverage) as a means of getting a marketer's message out there has led to the rise of the celebrity. "The public loves celebrities. Celebrities sell magazines and newspapers. Link a celeb with your product and you're on your way to reams of editorial exposure. We expect Heat magazine to be posting ABCs in excess of 50 000 next year."

    He sees good things ahead for ambient media and PR. "Consumers are filtering out a lot of advertising messages delivered through conventional channels. To reach them, agencies are going to have to ambush them in delightful ways so we will see a lot more clever ambient media being used.

    "And when consumers start becoming immune to advertising messages, clever marketers will already be trying to reach the public through alternate strategies. In exactly the same way that tobacco manufacturers were obliged to implement lateral campaigns after a ban on tobacco advertising, so savvy product managers are trying to communicate with their target publics in ever more inventive and credible ways."

    FMCG trends

    From a consumer perspective, Chris Wildish, general manager, Enterprise IG Cape Town, believes that although consumer spending is up and people are buoyant, nobody knows how long the party will last so people are keeping some in reserve.

    Other trends to keep in mind, he says, are:
    1. The return to basics and health - people are conscious of what they put in their bodies and health is one thing they will pay for.
    2. Focusing of spend - lines are being consolidated! For those products that compete with cheap imports the only way to compete is shrink and focus.
    3. Packaging becomes an imperative differentiator in a very cluttered market.
    4. More competition on price - quality is one thing, but consumers will not pay more.

    The National Brands Limited Marketing Department compiled a list of product trends for Bizcommunity.com, focusing on the snack market. Essential are that market and consumer research clearly inform the company's product and brand strategies and development:
    1. It is critical for marketers of top brands not to become complacent. Changing market conditions plus ever-evolving consumer needs often result in a different set of rules for that particular brand environment. This becomes increasingly important as brands enter new global territories.
    2. Affordability is becoming more important to more consumers. Consumers in general expect more for less.
    3. The value of time, and therefore need for convenience, has increased as lifestyles continue to become more stressed and fast-paced. This has resulted in more snacking occasions and less formal meals, as well as less quality family time together.
    4. Health and well being remains a growing trend - although this is more prevalent amongst higher income earners. Ingredient technology, and the adaptation thereof, will become a significant advantage for manufacturers into the future. Following on this is the 'back to basics' trend with increased use of natural and organic ingredients representing mother earth and a yearning to recapture the goodness of life.
    5. Globally there has been a blurring of the distinction between sweet and savoury flavours - as these start to fuse.
    6. The segmentation between traditional categories, both globally and locally, has also blurred, eg, cereal bars.

    (And by the way, Craig Native is one of South Africa's hot new designers of Afro-chic, the essential wear at functions these days. For more on the Feminine Factor, read our Branding Trends article under Branding this week!)

    About Louise Marsland

    Louise Burgers (previously Marsland) is Founder/Content Director: SOURCE Content Marketing Agency. Louise is a Writer, Publisher, Editor, Content Strategist, Content/Media Trainer. She has written about consumer trends, brands, branding, media, marketing and the advertising communications industry in SA and across Africa, for over 20 years, notably, as previous Africa Editor: Bizcommunity.com; Editor: Bizcommunity Media/Marketing SA; Editor-in-Chief: AdVantage magazine; Editor: Marketing Mix magazine; Editor: Progressive Retailing magazine; Editor: BusinessBrief magazine; Editor: FMCG Files newsletter. Web: www.sourceagency.co.za.

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