I’m thrilled to inaugurate the Nielsen News Center with some thoughts on themes I’ve been discussing at various events lately. I believe these themes will define the next 30 years, both for us and for our clients: population shifts; the rise of the middle class; media and retail fragmentation; how advances in measurement will trim waste and drive a golden age of marketing; privacy and security in the age of big data—and why I’d like to be 32 again!
First, population shifts. In 2011, world population passed 7 billion. Current estimates suggest it will pass 8 billion by 2025 and 9 billion by 2050. The vast majority of that growth will take place in Asia and Africa: India will grow to 1.6 billion people, making it the world’s largest country by population. Africa’s population will more than double to 2.4 billion. China will peak at about 1.4 billion, and it will probably begin to decline in about 10 years. The developed world will shrink almost everywhere except the U.S., which will grow from 320 million to over 400 million. Importantly, that growth will be multicultural: Hispanics will grow to 29% of the population, African-Americans to 15% and Asian-Americans to 8%. The non-Hispanic white population will drop from 62% today to 43%.
All this has big implications for companies and brands. It is, after all, a lot of mouths to feed and people to entertain. But the biggest market for the goods and services we measure—the middle class—will not track population growth directly.
The big opportunity for the short-to-medium term remains China. That’s because it has grown so quickly at a time of high GDP growth. The Chinese government has also encouraged urbanization, a crucial income driver. As a result, China’s middle class, just 5% of urban households in 2000, will reach 75% by 2025, when there will be approximately 625 million middle-class consumers in China.
By contrast, India’s middle class is just 50 million—5% of the population. Because its GDP is now growing faster than China and its middle class will reach 475 million by 2030, it may very well overtake China as the world’s long-term growth opportunity. Much, of course, depends on government policies and geopolitical developments.
And much depends on technology. Today, technology is driving media fragmentation, as viewing habits continue to migrate from the TV to the Internet, PCs, laptops, smartphones, tablets and other devices. This is version 2.0 of the rise of cable and satellite TV 30 years ago.
Of course the most significant “fragmenting” device is the mobile phone. Video consumption on the phone is small, but growing quickly. Globally, there are nearly two billion smartphones—so important to peoples’ lives that there is now a condition called “nomophobia”… fear of being out of mobile phone contact! Web access on phones passed PCs in 2014. People opened more emails on their mobile devices than on their PCs. What can’t you do with a mobile phone? Want to send a text? Read a book? Write? Watch a video? Surf the web? Take photos, make videos, monitor your home (security, thermostats) or your body (fitness bands, smartwatches)? Oh… and make a phone call?
Mobile is also a crucial driver of fragmentation in commerce. E-commerce—perhaps the most important new sales channel since the supermarket—is still small versus total sales: about 6% globally in 2014. But it will likely grow to 10% by 2020. It’s already 10% in China, where lower-tier city residents spend more than 25% of their discretionary income via e-commerce. The implications of companies’ access to hard-to-reach populations will be immense.
All this activity generates big data, which facilitates better measurement. Better measurement drives greater clarity about consumer choice and will ultimately drive a convergence of both on- and offline commerce and measurement and analytics. More and more marketing, advertising and sales activity will be added to the technology stack courtesy of Moore’s Law. To take one example: advertising is now routinely bought and sold by algorithm-driven computers. The results will be greater speed, quality, and productivity and consequent improvements in ROI.
When something gets more efficient, more money is spent on it. People often assume the opposite: if people know exactly whom to reach, won’t they pay only to advertise to those people? In fact, uncertainty about whether you are reaching the right audience discourages spending. The same thing will happen with in-store promotions, which have a modest average ROI today. So we are embarking, I believe, on a golden age of marketing and advertising. Golden ages are accompanied by wrenching change (as the alchemists discovered, it’s difficult to change anything into gold). But the trimming of waste driven by improvements in precision and optimization will drive up spending, just as a drop of two-thirds in the price of the Model T resulted in an explosion of car-buying and the arrival of the era of mass marketing in the U.S. I believe the same thing will happen with the arrival of true one-to-one marketing.
Trimming waste: a little idea with big implications. It improves entire markets one company at a time. And it has a compounding effect.
Of course, the more digital the world gets, the more granular, connected, real-time and personal data will become. Consumers are becoming more sensitive about data privacy and security.
If their data is secure, and they can control whether to share, the equation between sharing data and receiving benefits that underpins all these efficiencies will hold. But they will respond quickly depending on whether companies behave poorly or well: Social media is a sword that cuts both ways.
There have been hiccups; there will no doubt be more. But data recognizes no borders, so its role funding consumers’ access to content and goods will grow. In this environment, data integrators will become experts in “master identity management,” connecting disparate data streams at the (anonymized) individual level to inform more precise marketing than ever before. This has happened to all of you in the form of a pair of a shoes or a dress you looked at online, which followed you around on the web for days. Whether that impresses you or gives you pause, recognize that it’s only the beginning.
A final point. Technology advances speed things up. For many, it’s exhausting. For many (including me), it’s energizing. It makes me wish I were 32 again: advanced enough to have established some degree of mastery; advanced enough to have made mistakes and acquired some humility. But primarily because my career would still have 30-plus years to run—and the next 30 years are going to be amazing. We have seen what Moore’s Law has brought us in the last 30 years. That law is exponential. So if things are fast today—well, you can imagine what is coming. The last 30 years will seem modest and slow. It’s going to be an exhilarating ride.