Duncan Stewart: The ad industry just needs to make better ads

Deloitte's TMT director of research says with eyeballs harder to capture, it's time to make ads count.
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MiC is looking back at the issues and trends of 2017 with some of the brightest minds in the business, discussing what shaped the industry over the last 365 days, what baggage the business will carry into 2018 and what they hope will change in the months ahead. Read our previous interviews in the series here.

Duncan Stewart has the huge job of leading the research for Deloitte’s annual Technology, Media and Telecommunications predictions (which are crafted from expert interviews, direct survey data from more than 50,000 respondents and reports collected over the course of the year). And every year, he comes away with a few key, overarching themes.

This year — the 18th Deloitte has offered predictions — he wants the ad industry to just “make better ads.” Between ad-blocking, changing mobile behaviour and the rise of subscription services, he said, it’s harder to get your ads in front of eyeballs. When you do, you have to make it count.

MiC put a few of the report’s key statistics and predictions in front of him to ask what changes, if any, media buyers and owners should expect.

This interview has been condensed for clarity and length.

In Canada, roughly 6% of Canadians block more than four types of traditional or digital advertising (compared to 10% in the U.S.). Millennials over-index on this stat, with 11% blocking that many ads formats.

MiC: Should advertisers be concerned about the future with millennials over-indexing on ad-blocking?

Stewart: It may be a bit of a scare statistic. Yes, millennials are twice as likely to be “ad-lergic.” But it’s still only a small percentage of them. Yes, 11% are blocking ads, but 88% are not. It’s really important to remember that the view that young people never see an ad is not accurate.

But for those who are ad-lergic, they tend to have higher income, good jobs and be educated.

So what do advertisers do, given that the ones who are [blocking] are very desirable demographics? It’s much, much harder in many cases to block ads inside a social feed, Instagram, Twitter. It’s easy to see why social advertising is growing. If you want to reach people, do it in a place where ad-blocking is harder. And then there are forms of advertising that are impossible to ad-block. Sponsorship on an event, or a billboard.

Cell phone owners will interact with their phones on average 65 times per day by 2023. However, 39% of Canadian adult smartphone users worry that they use their phones too much and will try to limit their usage in 2018.

Are reach or engagement going to drop on mobile as people get more mindful of their exposure?

When I started writing this prediction, I was going to make that declaration. There are many contexts in which, yes, the smartphone distraction is bad. Distracted driving, checking your phone in the middle of the night, distracted walking, distracted dating. The perception out there is that young people – millennials, in addition to their damn avocado toast – are using their phones too much and that’s true. But young people are significantly more likely to admit that they’re using their phone too much, and they’re trying to curb their usage. But for the general adult population, not all smartphone use is bad. Many are using it as they shop, which is good, they’re often looking up the price. Or they’re using it as they’re watching TV. It’s not all bad.

By 2020, there will be more than 680 million digital subscriptions, with consumers increasingly willing to pay for content.

Does this mean that ad-supported platforms are going to lose their hold?

It’s kind of complicated. We have things like Netflix that are ad-free, we have music services that are ad-free, but we also have subscriptions that people do pay for, like The New York Times, where there are still ads. There are increasingly mixed models. In the U.S., Hulu has two tiers, one where you pay a little less for ads. And you have to remember that although Spotify has a nice, healthy number of people willing to pay money, the number of free users is three to four times larger. It ties in with the “ad-lergic” population; the harder-to-reach tend to be higher income and well-educated, so you have to take the same strategy.

TV viewing by 18-to-24-year-olds will decline by about 10% per year, and the rate of decline isn’t speeding up.

If the rate of decline for young TV viewers is declining, even if it’s steadier than it is sharp, does this mean there’s potential to reach zero?

It’s absolutely one question that I’m asking. Young people are viewing TV less than two hours a day, which is down from two years ago. But reach for that age group is still weirdly high in Canada. About 90% of 18-to-24-year-olds still watch some TV, although the average consumption is down. I look at stuff like sports, reality TV, things that are largely consumed live and frequently have a social component. When I look at the resilience of that shared communal experience, the TV is still the fire that the tribe gathers around. Very few say “I don’t watch any TV and I never will.”

If the ad industry could make one New Years Resolution, what would you want it to be?

Make better ads. There are all kinds of ads at the Super Bowl in North America, in the U.K. the Christmas ads that John Lewis makes, they are shared, they go viral. I compare and contrast that with the low-quality stuff you see at 3 a.m. on TV and the digital stuff that’s disruptive and poorly designed, of course people are going to block that. But people don’t block ads that they like seeing.