The Real Value of Branding and Technology
Why the current state of Ad Tech is leading us into a wall? A deep dive into the risks and opportunities of data-driven marketing
In the past ten years, we have seen the emergence of data technology as a driving force as to where the advertising industry is heading. By providing marketers with highly efficient measurement and targeting tools, it has changed the field as a whole, and redefined what it means for a brand to live in a networked always-on digital environment. However, those data-driven technologies that are now commonly used in marketing also raise questions about ad effectiveness, reliability, and especially consumer privacy. Thus, we will start by examining their impact on how we build, market, and showcase brands before to explore the risks and hazardous consequences of “Ad Tech”. The second part will focus on new approaches for agencies to adopt in order to make better use of data technology.
Today, Big Data is more than ever present in the minds of marketers and companies alike. From social media to wearables to augmented reality, we are entering a world where our relationships, heart rates, stress levels and intended actions are all becoming potential sources of data, accessible by companies and third-parties. People consume content using smartphones, tablets, and laptops, sometimes simultaneously, creating an urge for marketers to become proficient in handling data technology to create campaigns that connect with customers across devices and platforms in real-time.
At the same time, we see the emergence of intelligent machines and software programs that can learn from massive amounts of data sets, turn it into meaningful information, and perform tasks we would normally associate with human intelligence. Just as the Industrial Revolution relied on access to coal, data is the fuel that enables machines to learn, while algorithms is the engine that allows them to think. In the years to come, the development of artificial intelligence will consist of computers conquering more specialized tasks while moving toward a generalized multi-purpose AI that can mimic human thinking.
So, what does it mean for marketers? First, the increased ubiquity of machine learning and data allow to create products and services that learn from the behavior of their users and personalize their brand experiences. Second, AI technology is enabling us to identify and automate mundane tasks from the lives of brands and their users. Third, machine learning-powered APIs will become increasingly effective at detecting patterns from customer data, draw insights, and predict future outcomes. Finally, intelligent conversational interfaces are on their way to become mainstream one-to-one communication channels for people to have real-time conversations with brands and faster service — just think of Alexa.
While these are ongoing developments, data has already changed the nature of marketing as it led the creative side of the discipline — tapping into people’s wishes and aspirations through stories — to merge with the technical side of data and analytics, turning digital marketing from mostly art to mostly science. The introduction of programmatic advertising has allowed marketers to automate the buying, placement, and optimization of media inventory via real-time bidding, ultimately leading to more effective targeting and even personalization of messaging to the right person, at the right time in the right context. Jivox IQ is a good example of a technology platform that can send a relevant message tailored to the individual “triggered by profile, contextual and event data“.
In spite of positive aspects like personalization that were brought by programmatic marketing, the online ad experience has sometimes fallen short of consumers’ expectations, as indicated in part by the widespread adoption of ad blocking software. For example, interruptive banner ads that disrupt the browsing experience or delay access to content can frustrate consumers. According to the Global Adblock Report, there was a 30% global YoY growth in adblock usage from 2015 to 2016, with over 600 million devices running adblock software, 62% of which were mobile devices. The main reason people use ad-blockers is that ads make sites slower and harder to navigate, and also to protect their privacy. While these numbers are alarming for advertisers, the use of ad blockers also indicates that the implicit bargain between publishers and viewers has gone wrong. Until the industry really starts protecting online privacy, ad-blockers will continue to be relevant.
Finally, the advertising industry is facing an upcoming threat from major consulting firms, which offer digital marketing services to brands in addition to their long-time business strategy expertise. New entities like Accenture Interactive, PwC Digital Services, and Deloitte Digital are rising fast in the marketing landscape by bringing strategic and data analytics solutions to the complex problems companies are facing in this era of unstoppable digital transformation. Recently, those same consultancies have started acquiring creative agencies to expand their offering to content marketing (Karmarama by Accenture, Heat by Deloitte Digital), putting them on the same ground as traditional agency networks. With combined revenue of $13.2 billion in 2016, the marketing services units of Accenture, PwC, IBM and Deloitte sit just below WPP, Omnicom, Publicis Groupe, Interpublic and Dentsu.
The rise of consultancies is a reflection of how much marketing is changing. With the advent of ad blocking and the decline of traditional channels, brands must look beyond display advertising and banner ads to reach people. Meanwhile, companies like Uber and Airbnb have built brands by disrupting traditional business models with smooth user interfaces and growth hacking strategies. But there is a much bigger issue associated with the widespread adoption of ad tech tools.
The lawless landscape in which this technology has emerged has created an environment that has subverted its own potential. The overall absence of accountability and limited transparency of this self sustaining automated ad complex has had a very negative impact on customers perception of ads by messing up with their user experiences and decreasing customer loyalty — exactly the opposite of what marketers seek to achieve. As pointed out by an agency CEO, Adam Kleinberg, marketers have embraced ad tech “despite the fraud, the viewability issues, and the disengaged consumer backlash, because the tools do have use and their presence feels like an inevitable rising tide”. However, the way ad tech tools have been applied and sometimes overused has put the advertising industry in deep crisis.
More importantly, ad tech has become the hidden economy that fuels everything we see online, lets anyone target anyone else with programmatic ads by collecting and combining as much behavior data as possible. This is mainly the product of two companies that have become indispensable services for marketers: Google for search, Facebook for social. Advertisers buy our attention on these platforms because they believe they can reduce their wasted ad spending. Meanwhile, in less than ten years, these two tech giants have reached a point where they seem to dominate the global digital advertising landscape as a duopoly. In the third quarter of 2016, digital advertising grew by $2.9 billion, with Google and Facebook accounting for 99% of that growth. Together, they captured 85% of the U.S. Internet advertising revenue according to the Internet Advertising Bureau. This has also led to the disruption, monopolization, and weakening of legacy media markets along the way.
In 2008, Google acquired DoubleClick, a company that basically invented the banner ad business and turned impressions into a key metric in digital advertising. Now, its parent company, Alphabet, controls 11 of the top 20 ad tech domains on the web, and has succeeded in capturing what Doc Searles calls the “intention economy” through its search and AI appliances. This same year, Facebook exceeded MySpace, and became the leading social networking site, progressively capturing the “attention economy” with the acquisition of Instagram, Whatsapp and the development of new ad features. In 2016, the duopoly made a huge step in personalization capabilities by unifying their data profiles across boundaries previously separated, allowing to collect and combine data from both within their platforms and from the web. Now, the two tech titans are amassing huge amounts of user data upon which they will be building the AI platforms that will shape the future.
Google’s search offering has proved itself the best vehicle for direct response marketing but the effectiveness of the practice itself has been put into question when brands and publishers felt cheated. They realized that Google AdWords — the platform’s SEO and online ad tool — was taking more credit, and charging more, for value that its ads did not deliver. It leverages the search engine capabilities to create click-bait and presence but the ads it distributes does not create purchase intent — it just takes credit for it. In the meantime, Facebook admitted it had problems with its measurement metrics, resulting in ads that are “far less viewable than people were expecting”, according to Drew Huening, director of Omnicom’s digital ad buying trading desk Accuen. For example, Facebook defines an impression as seen by a real person for more than zero seconds, meaning lower than the 1-second IAB standard. The ongoing trust crisis was well embodied last January, when Matt Pritchard, Procter & Gamble’s Chief Brand Officer complained about the lack of transparency of the current media supply chain, and urged for a more widespread adoption of MRC ad viewability standards by Google and Facebook, as well as third-party verification to assure advertisers that their money is well spent.
While the ad industry is demanding for more accountability and transparency from those platforms, it seems that the bigger issue is what happens when an organization with malicious intents wants to manipulate the behavior of large audiences by spreading false informations using the same advertising-industrial complex? The vast majority of people do not understand that their browsing habits and personal data are blended together by this “opaque and unregulated” ad tech-powered system that allows for what David Carroll—a professor at Parsons School of Design—calls a “behavioral direct response targeting arbitrage” that can monetize attention, and manipulate the individual behavior of large numbers. According to Carroll, these weapons-grade marketing surveillance tools played “an undeniable role in catapulting American democracy toward the abyss” in the 2016 presidential election. Indeed, it helped bombard people’s social media feeds with hyper-partisan “fake news” propaganda and disinformation with the very same micro-targeting and traffic sourcing apparatus used by legitimate publishers and advertisers.
What “fake news” hoaxers did in this election was creating alternative media outlets for each of the targeted audiences. Because they were easily able to to earn revenue from ad tech tools, and equipped with analytics dashboards, they targeted audiences by misdirecting the political discourse of the campaign, continually optimizing incendiary headlines for fraudulent articles. Running on the same clickbait apparatus as programmatic and search engine marketing, media was fully weaponized against itself. Another component of this nationwide media manipulation was the use of psychographics, i.e. the study of personality, values, opinions, attitudes, interests, and lifestyles. It has been widely reported that the Trump campaign employed psychographics firm Cambridge Analytica to help with voter micro-targeting of messages based on psychological traits. Cambridge Analytica’s parent company, SCL Group, has taken its name from the whole field of study — Strategic Communication Laboratories — , that have offered services in Libya, Afghanistan and countless other countries.
Therefore, ad tech was a key component of the Trump campaign’s PSYOP operation while revealing the dark truth of surveillance capitalism. Following the election, many articles pointed out how political campaigns are taking advantage of automated attention arbitrage features of the data-driven marketing system that Google and Facebook have helped unleash.
So, how do we move away from this? How do we confront the urgent necessity to separate surveillance capitalism from more sustainable models, and reclaim privacy control over our data? The solution seems to be bilateral: first, we must demilitarize, regulate, and police digital advertising like any other industry, especially because they are monopolies of their own markets. Second, we must change the focus and methods that are now employed by advertisers and brands alike so that the whole industry can progressively pivot from interruptive programmatic buying to providing real value to customers by leveraging data in a respectful and smart way.
With the proliferation of touch points, consumers are no longer following a linear purchase path. Rather, they experience with a brand, and build up expectations as to where and when this brand will find them. Thus, effective branding in the digital age has increasingly became this ability to consistently deliver on those expectations to earn the trust and loyalty of customers. As Prophet analyst Brian Solis stated: “the legacy value of brands is overtaken by brands that earn relevance by investing in engagement and collaboration in moments of truth beyond creative”. Thus, well-developed customer experiences have the power to replace advertising and marketing when they provide a sum of interactions — in marketing, sales, customer support — that is seamless and enjoyable.
Building a better customer experience has to start with knowing your customers, understanding their innate needs and values. This survey should help brands go further by developing a service that are is truly useful to their users. Think of Uber, Spotify, or Airbnb, the success of their brands relies first and foremost on fluid, responsive, and upgradable user experiences powered by data and algorithms. Marketers in the digital age have to think of people and experiences first, and how they can create products and services that integrate into their daily lives. This functional — instead of promotional— approach results in more natural communication based on use and sharing rather than basic entertainment.
As people’s expectations are evolving, so too should the business model of ad agencies in order to become more agile. As the development of data-centric technologies has enabled companies to discover customer insights and innovate accordingly, consulting firms like Accenture and Deloitte have turned into a new rival. At the same time, this has led agencies to reconsider their offering in order to include this newly required expertise. Omnicom, for example, created Hearts & Science, a new type of media buying agency that uses technology to scale customer relationships. Publicis Groupe and WPP have also been developing their own consultancies. In the future, agencies that do not integrate business strategy and data technology as part of their offering will struggle to stay relevant. Creativity will continue to be essential to marketing success, but it is now just a part of the solution.
By focusing on providing useful services and enjoyable experiences instead of pure advertising, and by adopting the consulting model, agencies have a chance at giving clients the flexibility they need to succeed. However, this cannot be done unless they leave out the old advertising approach. Lengthy pitching processes often result in good ideas and smart strategies, but they can be outdated before they are implemented . All that content, generated and consumed in very traditional ways, results in a homogenous digital culture that self-perpetuates through lack of imagination and a reluctance to push boundaries. In order to move quickly, agencies need to adopt new approaches to build brands, capture and retain customers’ attention. With people voicing more concerns about their online privacy, and cases like Cambridge Analytica’s media manipulation, companies will also want to create relationships with customers that are based on trust and transparency.
As industry players and professionals are starting to realize that they need to embrace new approaches to remain competitive, established actors and agency professionals are launching innovative ventures that will shape the future of advertising. For example, in September 2016, R/GA launched the IoT Venture Studio to support English startups looking to develop internet-of-things products and to stay ahead of technology and customer insights. The agency has also successfully played on the same field as consultancies with its business transformation practice, which helps clients from Fortune 500 on innovation strategy. In 2013, Facebook started the Facebook Creative Shop, a department of over 250 creative strategists that collaborate with brands and agencies to create campaigns that best utilize the social platform capabilities, for large and small businesses. Finally, in 2015, David Jones, the former CEO of Havas Worldwide, funded You & Mr Jones, the first “brandtech” group that invested heavily in tech startups such as Pixlee, TheAmplify, and data agency Fifty-five, in order to create brandtech ecosystem for its clients to leverage. Jones, himself, considers that the industry has to go from “marketing to consumers to mattering to people”. With an array of partners, and a creative agency — Blood — as the group’s operating system, You & Mr Jones is on its way to becoming a highly effective platform that connects brands with technology.