Kellogg on Branding in a Hyper-Connected World

CHAPTER 10Building Strong Brands through Advertising Strategy in the Online Age

Brian Sternthal

Brand building often entails a significant investment in advertising. In the United States, media advertising is expected to grow from $195 billion in 2016 to $245.6 billion in 2020,¹ and worldwide it is expected to increase from $550 billion to $724 billion.² Advertising spending online is particularly noteworthy—it has increased from about $21.2 billion to over $88 billion in the past decade,³ and in 2017 it surpassed TV as the leading advertising medium.⁴ The expectation is that search will continue to be the dominant online medium, with a predicted 43 percent share of advertising revenue in 2020, followed by banner advertising with about half that revenue, and with social media coming in third.⁵

In addition, the forecast is for programmatic advertising to increase in the United States from $25.48 billion in 2016 to $45.72 billion in 2019.⁶ This type of advertising involves real-time bidding for digital advertising space served to consumers whom advertisers have targeted based on their online behavior. By contrast, TV ad spending is expected to remain the same or drop slightly in the next several years, reflecting a loss of viewership among those under 35 years of age, a demographic coveted by many advertisers.⁷

These trends raise a number of issues regarding the role of advertising strategies and institutions in building brands. One pertains to the function of advertising agencies. ...