The second chapter of our blog series on digital advertising trends covers the biggest challenges in martech - and how marketers can strategically tackle them. See the first chapter of our series on the future of digital marketing and stay tuned for the next chapter, coming soon.
Digital advertising trends can be difficult to identify in a challenging and ever-changing advertising landscape. With buyer journeys becoming more consumer-centric, market forces are pushing brands to deliver higher-quality, more-relevant, and more-cohesive advertising experiences.
Assessing the Challenges
Forrester Research suggests that "most search marketers track an array of metrics. But so much diversity in measurement may actually keep marketers from gaining critical intelligence about program performance."1 How can marketing leaders stay on top of all this change? The answer to this question will mean billions of dollars for the world’s most forward-thinking brands.
One of the biggest challenges that marketing leaders face is identifying and navigating opportunities to optimize their marketing offerings. For example, advertising ecosystems are changing rapidly: mobile Google searches surpassed queries from desktop in the summer of 2015, according to TechCrunch, and eMarketer predicts that in 2016, digital display ad spending will jump 39.7% over the previous year. So how can marketing leaders prepare for these and other changes?
As a company that powers predictive advertising management software and manages $1.2 billion in paid advertising spend for enterprise brands, QuanticMind has a unique strategic vantage point into the ways that innovative brands are optimizing their budgets. Here are the digital advertising trends that QuanticMind and its customers have identified as the biggest marketing challenges today.
The 9 Biggest Challenges
1. Consumers continue to go digital. But what and where are the best ways to reach them? Consumers continue to shift to digital — a 2015 report from Mintel observes that nearly 70% of all adults in the US shop online monthly and 33% shop online weekly - up from 24% in the previous year. Yet how they shop, search and browse has become more fragmented than ever - users use multiple publisher platforms across multiple devices, leading to an ever-growing list of potential touch points: from text ads to call-based advertisements to social, and many more. Now, more than ever, marketers struggle to keep up with their prospective customers - not only to figure out exactly where and when they are searching, but also figure out how to ensure a positive interaction with their brand. Despite the volume, variety, and velocity of data available to businesses, most software is ill-equipped to turn these multiple signals into a cohesive and welcoming buyer story.
2. Data ownership. In addition to information overload, another of the most challenging digital advertising trends marketers face is managing their data across many disparate systems and software suites. Many marketing organizations that have outsourced parts of their business to agencies, contractors, vendors and other third parties lose out on critical insights into their audience, buyers and customers. The resulting information gaps create strategic disadvantages and long-term marketing inefficiencies. And when companies outsource their processes to external partners, they are ill-equipped to prevent problems before they can arise: digital skills gaps now plague companies in both the US and UK talent markets. Even established, Fortune 500 companies like IBM are experimenting with new tech-based solutions to improve in-house data analytics capabilities. Data ownership presents a clear strategic advantage. But few companies have the insight they need to maintain a comprehensive data management program in-house.
Accenture: 75% of digital skill gaps result from non-technical factors around data ownership.
3. Integration gridlock. Marketers rely on a multitude of systems to manage their daily operations, with some organizations using 50-100 tools each day. Integrations make it possible to build complementary workflows between platforms—saving valuable time, creating new strategic insight, and optimizing efficiencies along the way. But there is often a lack of integration expertise within marketing teams, creating dependencies on IT teams with long project backlogs.
4. Finding superior algorithms. After the launch of Google AdWords in 2000, digital media advertising trends show that automated ad buying has grown massively in size and popularity. A report from eMarketer suggests that programmatic ad spend exceeded $10 billion in 2014 and is set to double by the end of 2016. What’s more, all digital advertising categories are now trending toward algorithmic marketing, including TV, video, display and even out-of-home solutions. The advertisers who come out ahead will be the ones using the most effective algorithms to fine-tune their acquisition, engagement and retention strategies.
5. Misalignment between your revenue goals...and their pricing against your spend. Marketing teams don’t win by overspending. CEOs and investors expect maximum revenue at minimum costs. So why should CMOs hire anyone paid on a percent of marketing spend? The short answer is that they shouldn’t. Percent-of-spend compensation models reward individuals who drive up advertising costs, without any incentives for eliminating wasteful spending or improving efficiency. No wonder the average CMO tenure is just 18 months.
6. Option overload. From a variety of different targeting strategies to long-tail keyword bidding, paid search advertisers have a bewildering number of ways to optimize campaigns for their audiences. Which should they use, and which should they ignore? What are the best strategies to optimize their campaigns to accomplish their own unique, internal key performance indicators (KPIs)? And how will emerging platforms affect these strategies in the coming years?
7. Publisher overload. Believe it or not, despite their enormous clout today, Google and Bing may not be the only dominant platforms in the future. AOL and Yahoo continue to plug along, while companies with any interest in e-commerce need to be aware of the particulars of working with Amazon. Those with specific business interests in Asia need to be aware of how to work with Baidu and Alibaba. And every company with potential upside from social platforms needs to be cognizant of Facebook, Twitter, LinkedIn, Pinterest and even Instagram and Snapchat. Ask a hundred different people what search, social or e-commerce will look like five years from now, and you’ll get, at minimum, a hundred different answers.
8. Constant changes by publishers. Arguably the most frustrating of all digital advertising trends is the lack of control that marketers have on their platforms. Even with a wealth of tools, data, and technical capabilities, marketers lack transparency into advertising ecosystems. For instance, Google regularly makes changes to its advertising platform to improve its search experience, as well as to set itself up for more revenue. Marketers need to be ready to respond nimbly to such changes to avoid being penalized by new search rules, while maximizing any new opportunities to bring in new revenue. Search may be a marketer’s highest performing tool, but it can quickly become the least efficient with sudden, unexpected publisher changes.
ThinkWithGoogle: Micro-moments mean the buyer journey is changing.
9. Shaping a cohesive and positive user experience across the buying journey. Consumer behavior is shifting: from voice searches to location “near me” searches, user experiences are no longer limited to desktop, tablet, mobile or offline only. Now, audiences rely on a series of interactions and touchpoints to form opinions about brands (ThinkwithGoogle refers to this concept as “micro-moments”). In addition, the use of ad-blocking software is threatening publisher revenue, according to The New York Times. If user experiences fail to keep up with new trends or simply get filtered out, customers are more likely to ignore marketing messages altogether. Advertisers must tackle the question of how to personalize experiences and reach audiences on a 1:1 level, at scale.
The Role of Marketing Technology in Digital Advertising Trends
The strategic use of first- and third- party data sources, coupled with the right marketing technology (martech) optimization platforms, can help solve the efficiency, optimization, and targeting challenges we’ve identified, by using smarter algorithms and more-specific, more-granular data to pinpoint new and returning customers regardless of who they are, or where or when they search. For instance, leading telcos like Verizon, Sprint, Telefonica, and other carriers are partnering with firms like SAP, IBM, HP and AirSage to “manage, package and sell various levels of data to marketers and other clients,” according to AdAge. One UK grocer is using this type of information to better predict key customer variables, such as where store visitors go after their shopping trips.
The idea to target audiences on a granular level with extreme precision isn’t new: technology has always been a key part of the optimization equation. From campaign automation to bid management, marketing leaders have always relied on intricate workflows and systems to drive growth at scale. What is new is the emergence of third-party martech solutions that uncover untapped opportunities for efficiency and growth.
Consider the case of Dafiti, the largest e-commerce player in Latin America. Offering a complete portfolio of products including clothes, shoes, accessories, beauty products and sporting goods, the e-commerce leader spends approximately US $1 million per month to reach consumers in Brazil, Colombia, Chile and Argentina. With these campaigns spanning 30 million keywords and more than 100,000 product groups, every detail matters—over the course of a year, even the slightest inefficiency in the company’s bidding processes can result in seven figures of pure waste.
When Dafiti made a subtle change to its advertising campaigns, replacing script-based bidding processes with a fully-automated solution, the outcome was a 28% reduction in inefficient ad spend. The change in workflow replaced the company’s existing bid management strategy with the ability to react quickly to market changes and maximize return on advertising spend (ROAS). Using predictive algorithms, Dafti’s marketing leadership has ensured that its marketing systems are running as efficiently as possible.
As digital media advertising trends continue to evolve, quality will trump quantity: the marketers who come out ahead will have workflows, technologies, and teams in place to take on increasing data challenges, adapt to publisher changes and reach ever-changing audiences with precision. As cost per acquisition (CPA) increases industry-wide due to increased competition, the companies using a cutting-edge predictive advertising management platform will follow a different path in driving both more-efficient ad spend and higher return on investment (ROI).
Predictive advertising management platforms are the future of digital advertising. The next part of this series will explain why and how. In the meantime, please be sure to check out Chapter 1 and stay tuned for more updates.
1. Brief: Evaluate Your Search Marketing Programs, August 2016 Forrester Report.
About the Author
Andrew Park is a content marketing manager at QuanticMind. A UC Berkeley graduate and lifelong Bay Area resident, Andrew has done tours of duty in editorial, PR and marketing, and now works with the QuanticMind team to communicate the importance of data science and machine learning in digital advertising.More Content by Andrew Park