2019…the year addressable marketing took over
1. Ad dollars continued to shift from mass media to addressable. Linear TV is, for the first time, declining while digital continues to show double digit growth. In absolute ad spending, digital is $129 billion vs. linear TV at $70 billion. Mobile is now the majority of digital at $87 billion, bigger than TV. Programmatic is forecasted to be $69 Billion in 2020…basically as big as TV. These shifts are driven by marketer desire to reduce waste by delivering messages selectively to the right consumers. TV is trying to be on trends with their own forms of targeting such as audience matching models and premium digital ad offerings to maintain some growth.
2. Amazon turned the big 2 into a big 3. While Google and Facebook ad sales continued to grow impressively, Amazon grew ad revenues about 50% and gained share according to eMarketer. And, as I predicted, other retailers are jumping into AdTech…e.g. Walmart, Target, and Kroger, leveraging their amazing shopper data for targeting.
3. Use of Multi-touch Attribution grew. MTA penetration is now at 45% of US marketers based on the 2019 MMA marketer study, up significantly from 2016. Marketers are using MTA to shift dollars to those ad tactics, segment targeting, and creative assets that produce demonstrable results.
4. Marketers continued to judge ad effectiveness and efficiency by short term metrics. MMM, MTA, A/B tests on conversion rates…are almost always focused on short term results. Via my MMA role, I have spoken with over 40 marketers; nearly all are concerned that we might be mortgaging our brands’ futures but don’t know for sure because the right tools aren’t available. This is being addressed by the MMA…
But 2019 is also the year that a powerful opposing force emerged, threatening the future of addressable marketing…
- Crumbling data identifier infrastructure on the horizon. Identifiers used for data matching, the heart of programmatic and MTA analytics, will be threatened as privacy concerns led to browsers automatically erasing cookies. Google announced that Chrome will eventually give consumers the ability to opt out of 3rd party tags, and IDs are likely to be pulled out of Doubleclick ad server log files sometime in 2020.
Marketers need to focus on 3 main priorities for 2020
If marketers lose the ability to “recognize” a user, it threatens programmatic and independent MTA methods that must connect ad serving, profiling, and outcomes at a user level. Potentially, this will drive even more ad dollars to the big three (because they are based on first party log-in). However, marketers want choices and the ecosystem will fight back…
1.Do what is needed to support addressable marketing
a. Expect and encourage universal identifiers. LiveRamp, The Trade Desk, the IAB and a few others are working towards first party systems for universal identifiers. Publishers who are not in the big three and DSPs will want this to protect their ad businesses.
b. Explore private exchanges and direct deals. Most of programmatic is already private and direct anyway. These deals can give marketers access to publishers’ first party classifiers, improve reach against desired targets, and guarantee safety.
c. Data strategies for MTA must change. Assuming tags, cookies, and user identifiers in ad server logs go away, typical mechanisms for linking ad serving and conversion data will no longer be available at sufficient scale for MTA. Marketers should start talking with their MTA providers to understand their response strategies.
d. Targetable segments need more scrutiny. The creation of third-party segments has always been opaque, and now it will get worse. Marketers will want to verify that segments are what they purport to be. Via a research service I offer in a partnership called Jolt! we score different providers of the same segment; we have seen a range in “validity index” from 250 (good) down to 75 (below gen pop…really bad.)
2. Brand vs. performance understanding
Brands exist in the minds of consumers so surveys are needed to understand brand-building. The mapping of media tactics to brand vs. performance benefits is not “0/1”; it is more like x and y coordinates. The MMA is working towards better understanding of this with its “brand as performance” initiative that combines digital analytics and brand surveys in a single source way, using first party, permissioned and persistent identifiers. (contact me to learn more…joel@rubinsonpartners.com)
3. Use Marketing research databases to fill in the gaps
Digital data only takes the analyst so far. Marketers cannot independently see the effectiveness of ad serving within walled gardens. Frequent shopper data has some gaps. Well funded marketing research providers are increasingly building unique, opt-in, permissioned databases at large scale to address these and other gaps.
The bottom line for 2020:
Ad spending trends are clear; marketers won’t go back to 1990s marketing. Addressable marketing should now be viewed as the base and not the bolt-on of media planning, Although, bottom up planning tools have not yet emerged At the same time that marketers drive for more efficiency, they also need to learn how to use addressable marketing to build brands (can be done…a future blog for sure!). As new rules driven by heightened concern for privacy rock the digital data ecosystem, marketers, with their media agencies and tech partners, will need to work towards replacement identifier approaches.