Predictions and Trends for 2017
It’s that time of year again. So, get ready for a big post. For the third year in a row all ten of last year’s new year predictions came to fruition – Accenture with the purchase of Karmarma in November (although EY were the first mover into the agency space in Italy with the buyout of Neri Wolfe), and Amazon just saving me at the last with their new retail concept in December.
I have to say this year, I am less confident about my forecasts and trends than I have been in years. I put it down to the mood of the the industries I consult in and the varying levels of optimism and pessimism – we are surrounded by uncertainty – politically, economically and socially.
As an observer, it’s a fascinating time. And as an entrepreneur, it’s a time for precision. And calculated risk.
GfK (see the report) saw the overall confidence index score rise to -7 (behind the forecast of -6) up from the post-Brexit lows of -12. But putting it in context, we started the year at +4.
Personal financial situation measures decreased by one point to 0. The forecast for the next twelve months has increased to +3. Six points lower than December 2015. The general economic situation is an ugly -26. 21 point lower than a year ago. The forecast for the next twelve months is -23.
But the interesting one for most brand owners is the major purchase index – the propensity to buy or make major purchase. It’s a trend-bucking +12. Five points higher than 12 months ago – perhaps due to Christmas spirit, maybe the fact that finance is still cheap, or, as is my belief, simply because the economy hasn’t fallen off a cliff as the Remainers projected, and the falling pound is yet to be felt by most pockets.
That said, we are still to file Article 50. That’s when we really see if the Remainers (of which I was one – but I fully accept the nation’s vote) were right. The delay has softened the blow for certain, but without some softening of the EU’s position towards the UK, the Brexit impact is probably yet to be felt in full.
The only certainly is that 2017 is full of uncertainty. Sterling is faltering. Brexit negotiations are to come. As GfK themselves say “confidence will be tested by the storm and stress of the year”. It sure will.
So, to this year predictions and trends then.
1. The bigger risk takers will win.
With uncertainty comes risk. And opportunity. I think the big risk takers in the next 12 months will win out. Finance will remain cheap throughout 2017 and I expect to see some fairly outlandish acquisitions, some exciting brand extensions, repurposing and repositioning from those under the greatest pressure. We’ll see at least one major merge or acquisition in the media / communications space as those under pressure businesses try to gain market share and beef up their margins, and I’m not talking about Sky.
2. Simplicity is dead. Long live Simplicity.
An entire philosophy in one word – simplicity is at the heart of the best ideas, the best products, the best services and the most successful brands. And while we live in increasingly complicated times, without exception the most successful business and brands relentlessly pursue simplicity in everything they do. Solving problems. Differentiating. And everyone knows it. Simplicity as an ambition is no longer unique. Anything but. In reality, it’s still rare. But, as more brands master what it really means to offer their customers simplicity, the less of an advantage it will create.
So how do you get more simple than simple?
With intuitive tools. Super-Personalisation (me), Super-Intelligence (AI, automation and predictive models) and Super-Connectivity (IoT) will bring in a new era for customers – Super-Simplicity, powered by Big Data. It will fast become the next wave of differentiator, surpassed only by brands that delight and reward. Brands that promise simplicity and don’t deliver it will see increasing levels of churn as service expectations in B2C and B2B mount.
3. Say goodbye to ‘Sad’.
For years we’ve been pulling on the heart strings of consumers with heritage, family, provenance, authenticity, emotion and storytelling being at the heart of most great campaigns in the UK. Well, that certainly won’t change overnight, and neither should it – but as things get economically tougher, brands and advertisers will look to create more moments of light, laughter and happiness to connect with consumers. John Lewis’s brilliant ‘Buster the Boxer’ spot this Christmas is a good example of this shift away from (as Adam&EveDDB put it) ‘sadvertising’.
4. TV goes local. And annoying.
We have been spoilt for years in the UK with really sophisticated TV advertising. But brilliant platforms such as Sky AdSmart are making it easier to run micro-targeted local campaigns. And TV ads, well, they are cheap to produce as the cost of film has collapsed (along with some of the quality it has to be said – there is far too much dreadful content being produced right now… just because someone can use a camera and edit a film, doesn’t mean they can do it well – buyers beware!). So, get ready for an influx of local, which is great both for the industry and for advertisers. But it won’t be pretty.
5. High Street failures.
BhS was last year’s pick, and, ultimately, as expected it fell. But I don’t believe it had to. A very dear friend of mine led a rival bid to acquire the ailing retailer, which in the end would have probably kept the business alive, looked after the futures of their very dedicated and hard-working staff and would have perhaps been a better deal for Arcadia (or for Green personally) in the mid-term. It’s a great shame. But that’s hindsight.
This year we’ll see more big high street names struggling. Staples for one that is set for mass closures. Homebase needs a breath of fresh air. Miss Selfridge will surely this year (or next) reincarnate as a concession and online only business. And it could very easily be game over for Game.
6. Big box retail goes small.
This year we’ll see an increase in the big box retailers hitting the high-street as they hunt out new types of customer. Topps Tiles did it beautifully, but expect more of the same from the car makers (Tesla style), furnishing stores (it’s an obvious move for the carpet retailers) and perhaps some trial stores for the big names in DIY.
7. Apple surely isn’t… “uncool”.
I’m not sure how popular this will be… but yes, Apple. Now I love Apple. But the shine is temporarily coming off.
Not necessarily at a product level. But their recent ATL advertising has become, well, advertising. Not big beautiful story-telling spectacular advertising. Gone are the lofty heights of their ‘1984’ Super Bowl spot. Not brilliantly clever. Not simple. Gone too are the white background beauties for the iPhone launch, musical feasts for the iPod and the wonderful shot on iPhone campaigns. Not even lovely. Just, well, anyone-could-have-done-it type addy.
Right now, Apple’s communications are, yes, I’ll say it… uncool.
I could go further still. If it wasn’t for Apple’s seamless eco-system (which is genius in its design, usability, concept, lock-in and total commerciallity) and the unbelievable amount of cool points they have racked up over the years, I think they’d be seeing some serious slowing up in sales. If Google Pixel had been a better phone (I think it’s good, but not quite there yet) and if Samsung had set the world on fire (not in the literal sense that they did) then it could be a tricky year or two at Apple HQ.
I have NO doubt Apple will return to form. It’s a brilliant business. The most creative ever. I don’t think for asecond this is a post-Jobs issue. It’s part of the lifecycle of a maturing brand. I just really look forward to Apple getting back to their roots. Hopefully the iPhone 8 (or will it be iPhoneX as the iPhone is ten years old this year) will be a catalyst for the Apple we all fell in love with to do what it did better than anyone.
While we are on the Apple subject – this year or early 2018 I expect to see their plans for an electric driverless car and some kind of development into home entertainment or home control systems. An outlandish thought perhaps, but I could see them co-funding Tesla projects at some point in the not-so-distant future.
8. Article 50 is triggered.
The will of the British People will be enacted, I’m sad to say. But it is what it is. We march on. It may not be in March. But certainly within this parliament. And I would be amazed if it’s not within this calendar year.
9. RPI at 4%+.
This may be an unpopular one, but I see inflationary pressure and a weakening pound (particularly around the filing of Article 50) to put huge pressure on prices in the UK. To be honest, I don’t think numbers like 5% or even 6% are impossible. 2% or 3% would be an achievement. Companies have already absorbed massive pricing pressure in the run-up to Christmas to support top-line trading figures, but it can’t continue.
10. Menswear will be the big story in fashion.
Ever wonder why David Beckham tied up with H&M, or David Gandy with M&S and not a higher value brand? Well it’s because it’s a brilliant idea. Menswear is outselling Womens in the US for the first time ever. It’s set to happen in the UK too, with a projected 23% growth over the next three years. And the big benefactors will be the value / accessible end retailers and those with the strongest cultural icons – if they can become better shopping destination experiences, be brave with their communications and crack the omni-channel retail code.
11. Mobile first.
While I am not a Pokémon Go fan, I did love the use of geo-location technology, brilliantly blurring the borders between reality and the digital world, with more then a little aplomb. And we will see more of it particularly in retail and online selling.
We’ve also reached a digital tipping point. Unlocking our need to carry cash, tickets, receipts, bank cards – and soon, proof of identity. I predict digital passports will be in use domestically within 5 years.
This all puts the mobile at the heart of our everyday life… not just our digital life. Google are adopting a mobile first search approach already, and with the rise in voice search, mobile will soon become the priority for brands and digital designers with traditional ‘websites’ being consigned to yesterday.
12. Highs and Lows for the Internal Agency
The internal agency fills me with dread when clients do it themselves (unless they are genuinely creative or innovative businesses at their core, Google, Facebook, Apple etc). And the IA model is set to make it’s way back on to the boardroom agenda, for cost-cutting purposes. The fact remains though that to get the RIGHT talent (which is the only real secret to building a great agency), client’s will have to a) pay more (which they won’t) and b) be an attractive sell (which most brands own internal culture isn’t by comparison to an agency).
The hybrid model is certainly going to do well in 2017 and 2018, with Oliver leading the way. It’s a business and model I have huge respect for. More so today than ever – it’s an idea that has really found its moment. Oliver acquired one of our agencies in 2015 so I met the founder Simon Martin a couple of times – he’s a fascinating and brilliantly intelligent man with an extraordinary vision and appetite for growth. Oliver is a sensational business, and it deserves its success.
I know of two other Top 20 agencies that are planning to evolve into or launch their own Oliver-type internal / hybrid agency model, which will bring some interesting competition into this space.
I expect to see some of the mid-size agencies looking at adopting the model as a way to drive exponential growth too. It would be smart business in a world where M&A for mid-size agencies with proportionately low-levels of retained and contracted business will find it increasingly hard to command strong multiples. Embedded businesses yield a better return on exit.
13. The rise and rise of The Communications Agency
This year will see a shedding of the old agency descriptions to better reflect the role agencies play in customer engagement. There will be less and less using the terms ‘Integrated’, ‘Advertising’ and even ‘Digital’. This will be particularly important for those positioning themselves for acquisition by the management consultants and non-typical agency suitors.
14. Amazon goes shopping.
This business continues to amaze. Dash buttons. Deliveries by drone. Airship warehousing and docking bays. They’re in the midst of tearing up the retail rule book. And they’ve had one of the outstanding ad campaigns of the festive season. But it has massive challenges in profitability and operating costs. At the front end it’s a retail and trading space – a business worth $70bn+. But in reality, they are a logistics business – and that’s where they are focusing their attention and innovation. Perhaps not this year, but maybe over the next five, I see them becoming the world’s largest commercial courier business with their own logistics network worldwide – acquiring an existing global player such FedEx, DHL, UPS or perhaps a number of top tier regional firms… Blue Dart, Schenker AG, Post NL or even Royal Mail.
15. Trump lands with a thump.
I predicted Brexit. I predicted Trump winning. Lot’s of people did. It certainly wasn’t rocket science… it was just about reading the mood of two nations, if not the entire Western world. And now, this ‘thing’ with Trump and Putin, it’s going to go horribly sour. If not for the US and Russia, for the rest of us. The real downside – there will be global economic casualties (via sanctions, increasing tariffs and protectionism) and an acceleration of the nationalist agenda. He, and his style of politics, may though be the shot in the arm that we all need – that is, a working example of how not to do it. Let us hope.
As I said, we are in uncertain waters – but it’s very exciting and there are opportunities everywhere for smart brands that look for them – particularly those that solve real world customer problems, flowing seamlessly from digital spaces into the real world and back again. The brands that speak the language of the customer, work hard to connect, engage, delight and get closer to those their customers will win.
Happy new year.