Blog | 11th Aug 2019

11th Aug 2019

How advertisers can survive(and win) in coming years - part 1

The programmatic industry has grown at a phenomenal rate with spending set to reach heights of over $80 billion in programmatic advertising worldwide. And this ecosystem is all set to grow exponentially in coming years.

This transformation in the advertising environment is pushing advertisers to find the right mix of reach, relevance, service and highest ad quality that can generate better ROI. Google and Facebook are, undoubtedly, going to make the biggest impact in this changing environment. However, they have their own agenda to accomplish. For Google, an advertiser is just another slot for making money. No more. No less. With this in mind, let's dive deep into how advertisers can survive(and win) in the coming years-

Diversify ad expenditure beyond duopoly - Advertisers are gambling around 90 percent of their ad spending into Google and Facebook, leaving only 10 percent of the spend for content publishers. Meanwhile, Google and Facebook tweak their rules to maximize their profit which is, almost every time, against the advertisers.

The writing on the wall has never been more clear for advertisers - do not put all your eggs in one basket; in the case of digital advertising, two baskets. Moreover, diversifying one's portfolio is crucial to reducing risk, and relying on anyone platform or channel can have negative consequences.

Change in approach - A high priority and advantage for the mass approach is to reach a large audience with many exposures at low CPMs. On the other hand, one of the main selling points of the programmatic advertising is the possibility to reach only the most interested consumers with the most relevant messages at the right time.

As Jeff Green, CEO at The Trade Desk, says: "There will be fewer ads, they will be more relevant, they will cost more, and they will be worth it." So instead of reaching a large audience at a low cost, the ultimate goal is more about the return on investment over time, which was also the goal of direct marketing and CRM. Fewer ads with the right targeting are all set to work better in the near future.

Shift of focus from eCPM/CTR to ROI - Getting the lowest CPM wouldn't be worth it if advertisers fail to achieve their objectives. Similarly higher CTR means nothing if there isn't much conversion. For instance, CTR can be much higher on mobile than on desktop. But the downsides are higher bounce rate and accidental clicks. The determining factor can always be CPA or CPC (cost per conversion) which means sometimes they have to spend more to get in front of right users who might like what they have to offer.

Meanwhile, Programmatic Advertising gives level ground for big and small advertisers. So just because they are big, doesn't mean they win. However, this approach needs proper handling of data. Data is at the heart of programmatic advertising. If advertisers cannot play well with data, they're already out and all set to lose millions of dollars in programmatic.

So to overcome this problem, they choose a better option (at least this is what they think) - Hiring an agency. And hiring an agency is like putting your money in the void sink as nothing special happens in these agencies. So, what's the other way?

In-housing of programmatic - Most beneficial and expensive but definitely worth it. In housing entire programmatic along with "A" type data scientist can actually increase ROI by almost 40%. In housing success usually depends on three things-

  1. Inventory strategy- The volumes of inventory available on ad exchanges seem to be unlimited. In fact in France, for example, 100 billion ad impressions are for sale programmatically on supply-side platforms every month. However, unlimited supply is a major fallacy as quality supply is limited. It is essential for a successful branding campaign to ensure running ads exclusively on quality supply maintaining brand safety and average viewability.

  2. Data strategy- It is not uncommon that Programmatic Advertising is often directly linked with data-driven online advertising. This is based on the fact that an ad inserted in a system usually has to function independently of the specific content environment in which it is run, without providing additional information. Consequently, an essential feature of conventional online media planning disappears and needs to be substituted by using appropriate data.

  3. Technology- A better technology is the only critical way to win this race. Hands down.

Conclusion:
Digital advertising is a vast and dynamic industry that keeps on bringing new technologies, formats, and platforms every other day. While the above-mentioned strategies can be considered as the best ones, there are many more aspects(that we will cover in the next post) to look at to maximize ROI.