Digital advertising is booming in terms of growth, but is struggling to personalise ads effectively. This is stagnating performance and undermining the industry, says Cablato’s Adrian Pearmund.
If you take a look at the recent Advertising Expenditure Forecast from Zenith Global it looks as if everything in the digital ad garden is rosy. The respected report reveals that digital ad spend will grow by 13% to top US$205 billion in 2017. Zenith Global also tells us that this will be the first year in which more money will be spent on digital ads than on traditional television advertising, which is predicted to total US$192 billion.
So what seems to be the problem?
Well, despite the increasing investment that brands are making in digital marketing as well as data management technologies, advertising effectiveness has stagnated, according to Google-Doubleclick. The average click-through rates have remained consistently poor at around 0.15% over the past five years or more.
So paradoxically we appear to have an industry that is in rude health in terms of the amount of money being spent on ads, yet suffering when it comes to the effectiveness of that advertising.
Of course, everyone in the industry knows this. They also recognise that the answer lies in creating a more personal and relevant ad experience for consumers. Unfortunately, this is where it stops. To date, despite the technology now available and the increasing amounts of customer data, brands and agencies still struggle to collate, model and use the resources at their disposal to achieve true personalisation.
The recent State of Digital Advertising report from Adobe Digital Insights shows there is widespread recognition of the challenge, with almost half of UK marketers (49%) believing their current ad campaigns don’t match consumers needs or interests. This is in contrast to only a third of British consumers who felt advertisers were getting it right.
So where does the answer lie?
It starts with harnessing ALL the information at a brand’s disposal – behavioural, third party, first party and CRM data – to not only build detailed audience profiles in terms of age, gender, location, interests and preferences, but also identify key behaviours and appropriate channels. The game needs to be changed from the current audience segmenting approach and moved to the one-to-one or ‘hyper personalised’ level.
But it’s not enough simply to send out generic ads to individual consumers – in fact this approach rather defeats the object. The creative content of an ad plays a pivotal role in its effectiveness, contributing up to as much as 70% of campaign performance, according to Google. This means that to engage on a far deeper level, each consumer must receive a personalised creative execution to match their profile. What’s more, this hyper personalisation needs to be delivered at scale.
Imagine a single campaign serving 14 billion creative combinations, specifically tailored to their chosen recipient, each one quick and easy to create and delivered on the right channel at the right time.
If that sounds crazy that’s not at all surprising, because to date it has been very complex and expensive to combine multiple sources of data to drive digital ad personalisation and performance. However, breakthrough technology now exists to achieve this and use the intelligence to tailor advertising creative to individual consumers, then deliver it in real time at scale to the appropriate channel.
What’s more, the process is far from complex. In fact, a handful of brands have already been reaping the benefits and finding that it not only significantly improves response and conversion rates, but also transforms the way marketers develop ad creative and engage with consumers. And it won’t be long before a lot more uncover the secret to mass precision digital marketing and a new era for the industry.
It’s time to change the game; to turn benign digital advertising into intelligent cross channel hyper-personalised communication so that brands can use it as a highly effective sales machine. After all, isn’t this what advertising’s all about?
Originally posted NetImperative 16 August 2017