After major shifts in 2017, advertisers are changing the game
There is no doubt that 2017 represented a notable inflection point for the digital advertising industry. With concerns about brand safety and lack of transparency in some channels, the landscape was overdue for a shakeup. Moving into 2018, we are seeing a major shift in the industry model. The big word being thrown around right now is “quality”: quality brand experiences for the end user, served on quality inventory, using quality data.
Quality End-User Experience
For all the power of digital ad tech, traditional digital ads deliver an admittedly poor end-user experience, driving 64% of Millennials to use ad blockers on at least one device. After a decade of emphasizing all the new targeting, trafficking, and analytics technologies in the ad space, the industry is now shifting focus to a far more low-tech tactic for improving performance:
A better user experience.
In 2017, brands doubled their investment in Instagram. And not just through the Facebook ad platform. Ad spend has shifted dramatically towards native placements with Instagram Publishers, which average 10x the engagement of Facebook placements and nearly 50x the engagement of traditional display ads.
Direct Native Placements Have the Distinction of Being:
• Highly-relevant Your audience isn’t being “targeted” – they’ve chosen to see this content in their feed because they want to.
• Highly-engaging On average, 4.3% of impressions generate a like. Compare that to the .2% engagement seen on Facebook, or the .02% CTR of display campaigns
• Non-disruptive Unlike paid Instagram ads, native Instagram posts don’t disrupt the user experience – they are the user experience.
• Wide-reaching With more than 500 million daily users, Instagram offers a larger potential audience than almost any other native publisher, and far better organic reach than its big brother, Facebook.
For years, the advertising industry has prioritized quantity over quality when it comes to buying ads. The popular logic being that–even assuming you get a certain portion of fraud and low-quality publishers–by chasing rock-bottom CPM rates, advertisers ultimately drive the most cost-effective campaigns.
But this way of thinking was challenged by a number of events last year. Volume-based campaigns began to attract a stigma as the fallout over lack of brand safety, lack of transparency, and fraud took center stage.
The year began with Procter & Gamble CEO Marc Pritchard famously issuing a very public ultimatum to the digital ad industry to clean up its act, or forget about P&G’s near $3 billion in spend. With the year coming to a close, Pritchard acknowledged the massive cultural shift in the industry, and says he considers the situation to be improving (though he still hasn’t committed to placing ads on YouTube, just yet).
Industry spend has been trending away from cheap RTB placements and towards more expensive, direct placements. P&G increased its direct spend by more than 25%, Unilever increased the number of its brands engaging in direct buys by 112%, and Chase slashed the number of publishers it promotes on from 400,000 to just 5,000.
Despite dramatically higher CPMs, the brands report no negative impact on ROI–a fact that has got to change the types of channels brand advertisers are going to prioritize moving forward.
Reliable and up-to-date data facilitates accurate audience targeting and contributes measurable value to a campaign. The challenge advertisers face is how to identify which data layers are going to be the most cost-effective in the long run.
“For a typical Fortune 1000 company, just a 10% increase in data accessibility will result in more than $65 million additional net income” – Richard Joyce, Senior Analyst at Forrester
Larry Myler, CEO of By Monday, Inc. defines “quality data” in very practical terms: It’s whatever data improves ROI and “allows you to identify areas of opportunity and pinpoint those opportunities that can add the most value.”
While major 3rd party providers find their way into nearly every Google and Facebook ad campaign, brand marketers often struggle to employ data targeting that goes beyond demographic categories and implied hobbies/interests.
• Targeting mobile devices that have visited your stores — or your competitors
• Targeting based on relevant online purchase history
• Targeting a specific list of households by translating a physical address into an IP address
The increase to CPM is almost always offset by a decrease in the cost per click and–most importantly–the cost per conversion on the post-click.