Analytic Partners’ Senior Director Kristin Moody spotlights both the uncertainties and the certainties of digital advertising in turbulent times.
In viewing the state of digital advertising, it’s clear we live in “interesting times” for marketers. Contrary to popular myth, that phrase is not a Chinese curse, but it is nicely laden with irony. And while it’s tempting to throw one's hands up in despair because things are so “interesting,” it’s important to see through the confusion in order to gain the benefits of digital.
It’s tough fishing in these stormy waters. Some uncertainties marketers face in the digital realm include:
Digital Channel Inequities – Digital channels and ecommerce retailers have different advertising and data strategies. There is no go-to data aggregator that can provide market context by category. This has resulted in data silos that make it difficult for advertisers to benchmark against competitive data. We at Analytic Partners believe information will flow more freely in a maturing digital market, but when or how the market will mature is impossible to predict.
Ad Fraud – Click fraud, conversion fraud, and data fraud, often generated by automated botnets, resulted in an estimated 20% of digital ad spend being consumed by fraudulent traffic in 2016. By 2025, the global waste attributable to ad fraud could reach $50 billion.
Data Theft – Each week seems to bring another story of customer data hacked from a retailer, social media site, or government agency. The growing list of data breaches is projected to cost more then $2 trillion globally by 2020. Consumer distrust could threaten the rich new vein of digital commerce.
Regulatory Inequities – The digital markets cannot stabilize until we attain some consistency across regulatory jurisdictions. Europe is leading the way with the General Data Protection Regulations (GDPR) but the US may be moving in the opposite direction. In addition, the FCC revocation of Net Neutrality is being challenged in court by more than 20 states. California, for example, is set to pass a state law explicitly preserving Net Neutrality. It’s certain that tons of legal ink will be spilled in battle before these issues are settled.
No matter how fractured today’s digital markets may be, advertisers will go where their customers are. It’s the First Law of Marketing Thermodynamics. The numbers bear this out:
Source: Zenith, March 2017, in Billions
Last year, global digital spend surpassed TV for the first time. Digital is expected to climb steadily in the near future while TV remains relatively flat. Though TV and offline ROIs are more stable, digital ROIs are generally higher. The catch, in the volatile digital world, is that ROIs can vary significantly within digital channels. Read our ROI Genome Report to get more details on this topic.
The Strategy and the Tactics
In a time of uncertainty and rapid change, employing a robust measurement program is the most reliable baseline that advertisers can achieve. We recommend using a holistic unified methodology (combining the strategic Market Mix Modeling with the tactical Attribution) in a cadence appropriate to your marketing executions and consumer purchase behavior. Leveraging our ROI Genome, we’ve found the following guidelines that can help still the waters of digital chaos:
Some brands that used to model once every two years are now modeling quarterly or monthly.
The leading performers are those brands that probe with new tactics within the context of previously-measured successes.
Digital works best when combined with TV to deliver consistent messaging across media. TV still serves as a cornerstone for reach, but complementary digital marketing can amplify the messaging and drive the strongest ROIs.
We can fight ad fraud. We know that programmatic spending may be high risk. 29% of programmatic spending in 2016 was on invalid traffic, while only 12% of direct publisher spend was invalid.
Additionally, marketers have the option of leveraging view-through services that provide metrics (and some validation) of their customer’s journeys, instead of just relying on impressions.
To further combat ad fraud theft, industry initiatives such as the Trustworthy Accountability Group (TAG) have developed evolving standards for certifications against fraud. Proctor & Gamble, for example, requires all its digital media partners be TAG certified by June of this year.
We look forward to a more stabilized digital market where advertising is fairly traded and tracked, but it won’t happen right away. Until then, we can find effective strategies and robust ROIs in the whirlpool of digital uncertainties.