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Is advertising over? What chief marketers are saying about the future of marketing

The means to advertise products to people have never been more prevalent. More than half the world's population has a smartphone, and Facebook alone has more than a billion daily mobile active users. It reported an 18 percent increase in daily users between February 2016 and February 2017 and more social media eyeballs means more ads: eMarketer predicts that brands will spend a staggering $34 billion on Facebook this year alone.

But as businesses spend ever more money on advertising – nearly $500 billion in 2016 globally according to MAGNA – there are clear signs of nervousness among big business and a recognition that ads can be super annoying. YouTube, for example, will pull its 30-second non-skippable ad format next year, because it wants to provide "a better ads experience for users online," according a statement emailed to CNBC.

In April, Procter and Gamble, one of the world's largest advertisers, blasted the ad industry for overwhelming consumers with advertising. "There's too much crap," said P&G's chief brand officer Marc Pritchard, in a speech to the American Association of Advertising Agencies, in a transcript seen by CNBC.

Procter & Gamble's Marc Pritchard speaking at the Olympic Pride event in Washington, DC, in September 2016
Paul Morigi | Getty Images
Procter & Gamble's Marc Pritchard speaking at the Olympic Pride event in Washington, DC, in September 2016

"We bombard consumers with thousands of ads a day, subject them to endless load times, interrupt them with pop-ups and overpopulate their screens and feeds," he said. Pritchard called for advertisers and agencies to work together to make better content, and said that P&G will be "focusing on fewer and better ideas that last longer."

Is advertising over?

Earlier this month, Forrester research published a stinging report: "The end of advertising as we know it."

"The end of advertising is coming because interruptions are coming to an end," wrote co-author James McQuivey in a blog post.

"It's the casual indifference to advertiser interests… that will enable consumers to finally inhabit a world free of advertising. That casual indifference is only possible because people will spend less and less of their time doing interruptible things on interruption-friendly devices," McQuivey wrote.

Digital assistants, he suggested, will replace Google search, and bots will be able to "scrape" and present people's Facebook feeds back to them, removing the stuff they don't care about, including advertising.

Forrester's research suggests that 38 percent of U.S. adults who use the internet have installed an ad blocker, and 50 percent claim to actively avoid ads on websites.

And while the marketing industry has recently been justifiably occupied with preventing their ads from appearing next to videos promoting hate and other extreme content on YouTube, ad blocking remains a massive issue, said Keith Weed, chief marketing officer at Unilever.

Keith Weed, Unilever's chief marketing officer, speaking at Advertising Week Europe in London on 20 March 2017
Shutterstock | Advertising Week Europe
Keith Weed, Unilever's chief marketing officer, speaking at Advertising Week Europe in London on 20 March 2017

"Ad blocking is a hugely hot topic… There has always been ad blocking. Ad blocking was the 30-second TV ad coming on air and you got up to make a cup of tea. That was real physical ad avoidance and what did we try and do to stop that happening is to create more engaging advertising.

"There is a huge fragmentation and clutter out there in advertising absolutely, and so people have more choice and I totally agree [that] this idea of the attention economy, of course people have choice, they can switch around more, and hence if we as advertisers don't show great advertising, people switch around more," he told CNBC during the Advertising Week Europe conference in London in March.

People are continuing to download ad blocking software: there were 615 million devices blocking ads globally in December 2016, an increase of 142 million on the previous year, according to a February 2017 PageFair report.

"We have a ton of Millennials and they are not going on TV, so it's about how do you find them in ways that's not so interruptive and annoying?" Meredith Jurek, Self Esteem Brands

For Sanjay Nazerali, global chief strategy officer at media agency Carat, ad blocking is a welcome wake-up call. "I have to say I am really excited by ad blocking, which is incredibly controversial in our industry… If it is forcing brands to speak with greater meaning, with greater relevance and greater value ultimately to consumers, bring it on," he told CNBC by phone.

"We have languished for much too long, and the ability to throw messages out there that we assume that people are just going to watch, without any sense of the value that we are offering people. And guess what, they are saying they don't want it anymore," he added.

Influencer marketing

Ad blocking means marketers are looking to be more creative about how they reach consumers, and one way they're doing this is by using "influencers," or people who have a lot of followers on social media, to communicate. Nearly half (48 percent) of advertisers said they planned to increase their spending on influencers, according to a poll by agency Linqia of 170 U.S. marketers in December 2016.

However, ad spend on Instagram is increasing. It said in March that it had 1 million advertisers, an increase of 400 percent year over year, while 100 million members joined in the six months to December 2016.

But not everyone is convinced that an ad-funded model is the way to go on social media. Billionaire businessman Ayman Hariri founded social network Vero with the aim of reaching a more grown-up audience, but without advertising.

Social network Vero
Vero
Social network Vero

"We felt that by excluding ads out of our business model …allows us to look at our users as our customers, rather than advertisers," he told CNBC by phone.

And instead of pure advertising, Nazerali at Carat suggested that branded content – ads that are more like editorial – will come to the fore, as long as marketers can get them right. "That again brings all of its own challenges. You can make something because you have a brand objective in mind and not the audience's delight in mind," he said.

Being an entertaining brand

Meredith Jurek, chief marketing officer at Self Esteem Brands, which owns the Anytime Fitness and Waxing the City chains, agreed that brands are looking for ways to entertain people in their communication.

"We have a ton of Millennials and they are not going on TV, so it's about how do you find them in ways that's not so interruptive and annoying, but entertaining, and to insert your brand into that conversation, or do you go a step further and provoke a conversation?" she told CNBC by phone.

Waxing the City worked with website Scary Mommy on branded content
Waxing the City
Waxing the City worked with website Scary Mommy on branded content

While Anytime Fitness is an established franchise with around 3,300 outlets globally, beauty chain Waxing the City is a growing brand with about 70 sites in the U.S. Jurek wanted to find new ways of advertising its services, including intimate bikini waxes. So it partnered with parenting website Scary Mommy to sponsor a video featuring comedy character "Madge the Vadge," who interviews women about hair removal. While Jurek had some say in how the Waxing the City brand was incorporated into the video, the approach was to present a funny and informative look at waxing.

"When you partner with a third party to provoke that conversation on your behalf, it takes some risk off our part, but it also makes it more authentic, and I just fell in love with the character and her authenticity," Jurek said. The video had more than one million views, and Waxing the City's website saw a 50 percent uplift in traffic over two weeks in February.

Advertisers will have to move towards a model of openness, according to Nazerali at Carat. With brands keen to make sure their ads don't appear near fake news, we'll start to see them open up in ways that go beyond advertising, he said.

"That's why tech is such a wonderful thing, the ability to click on a webcam at any time, and actually, be able to walk around a [brand's] factory through your webcam which I think is a very powerful thing to do.

"I don't see why more of them are not deploying that kind of tech to say 'look we are so open that actually any journalist can just go straight into stores, straight into our stockroom, straight into our factories and see for themselves.'"

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