Media Outlook 2019: Spell Marketing with a ‘D’

The January marketing calendar in New York has included for the past decade or so a certain can’t-miss event of the Direct Marketing Club of New York. In 60 fly-by minutes, 100-plus advertising and marketing professionals hear a review of the previous year in marketing spend, a media outlook for the current year and macro-economic trends driving both.

The January marketing calendar in New York has included for the past decade or so a certain can’t-miss event of the Direct Marketing Club of New York. In 60 fly-by minutes, 100-plus advertising and marketing professionals hear a review of the previous year in marketing spend, a media outlook for the current year and macro-economic trends driving both.

Bruce Biegel, senior managing director at Winterberry Group, keeps everyone engaged, taking notes and thinking about their own experiences in the mix of statistics regarding digital, mobile, direct mail, TV and programmatic advertising.

“We will be OK if we can manage the Shutdown, Trump, China, Mueller, Congress and Brexit,” he noted, all of which weigh on business confidence.

Suffice it to say, marketing organizations and business, in general must navigate an interesting journey. Biegel reports estimated U.S. Gross Domestic Product (GDP) growth of 2.3 percent in 2019 down from 3 percent in 2018, while total marketing spending growth in 2018 had dipped below its historic level of exceeding two times GDP growth.

In 2019, we are poised for 5.3 percent growth in advertising and marketing spending a slight gain from the 5.2 percent growth of 2018 over 2017.

Watch the Super Bowl, By All Means But Offline Dominance Is Diminishing

Look under the hood, and you see what the big drivers are. Offline spending including sponsorships, linear TV, print, radio, outdoor and direct mail will spot anemic growth, combined, of 0.1 percent in 2019. (Of these, direct mail and sponsorships will each post growth of more than 3 percent, Winterberry Group predicts.)

But online spending growth display, digital video, social, email, digital radio, digital out-of-home, and search will grow by 15.5 percent. Has offline media across all categories finally reached its zenith? Perhaps. (See Figure 1.)

Figure 1.

Credit: Winterberry Group, 2019

Digital media spend achieved 50 percent of offline media spend for the first time in 2018. In 2019, it may reach 60 percent! So who should care?

We do! We are the livers and breathers of data, and data is in the driver’s seat. Biegel sees data spending growing by nearly 6 percent this year totaling $21.27 billion. Of this, $9.66 billion will be offline data spending, primarily direct mail. TV data spending (addressable, OTT) will reach $1.8 billion, digital data $7.85 billion, and email data spend $1.96 billion (see Figure 2.)

Figure 2.

Credit: Winterberry Group, 2019

Tortured CMOs: Unless She’s a Data Believer

Marketing today and tomorrow is not marketing yesterday. If marketing leadership does not recognize and understand data’s contribution to ad measurement, attribution and business objective ROI, then it’s time for a new generation to lead and succeed. Marketing today is spelled with a D: Data-Driven.

Unfortunately we don’t have all the data we need to manage Shutdown, Trump, China, Mueller, Congress and Brexit. That’s where sheer luck and gut instincts may still have a valid role. Sigh.

In Praise of a ‘Workhorse’ — by Identifying One

The real workhorse of data-driven marketing — and perhaps soon all of advertising (or branded storytelling, some industry folks now eschew the term “advertising”) — is neither digital display, television or direct mail at all … it is data itself, as in data-driven.

workhorse
Painting: Working Horse, Hauling, 1994 | Credit: Kate Javens

What’s a workhorse?

I found this reference in a 2016 article on tech startups and private finance:

“Workhorses are smart, tough, sturdy, dependable, docile and patient. They are strong, even in the presence of a storm. Workhorses are durable and adaptable. Oh, and workhorses aren’t mythical.

Think of the workhorse as an evolved unicorn. The unicorn is of mythical value. The horn was useless and the magic isn’t real. Workhorses are evolved in that they are producers of fundamental value. They do real work and solve real problems.”

In aviation, for example, the “workhorse” of global and transcontinental passenger travel just had its U.S. retirement:  the only Boeing 747 still at work with a U.S. carrier is Air Force One. As much as I love 777s and Dreamliners, I’m actually going to miss the iconic jet. Check out this experiential marketing event in December from Delta, that’s quite a sendoff.

Jump to advertising — and we’re quick to see last night’s televised Super Bowl and this month’s Olympics as workhorses for mass marketing … even as they have their more targeted digital and social brand extensions.

Then there’s data-driven marketing.

According to eMarketer, digital overtook television in total media spending for the first time in 2017 — with digital capturing $4 of every $10 spent on all media … and what’s the “new” workhorse within digital?

Well, if measured by total spend, the answer is display advertising — which overtook search spending as the largest digital format last year. Both display and search are data-driven, with behavioral and contextual data providing the targeting parameters, but video display has come on the scene fast and is three-fourths as large as banner display.  Mobile is also a significant driver — mobile spend is twice as high as desktop/laptop, says eMarketer. Programmatic drives the bulk of digital display purchasing.

Media spend on digital display also will overtake total direct mail spending this year, says Winterberry Group — with $42.3 billion to be spent on mail advertising, and $47.2 billion to be spent on digital display. Debates are welcome on which of these categories produce greater response, greater ROI and more efficient cost-per-action.These metrics matter — so test, test and test.

My take-away from all this media-this-and-that is that the real workhorse of data-driven marketing — and perhaps soon all of advertising (or branded storytelling, some industry folks now eschew the term “advertising”) — is neither digital display, television or direct mail at all … it is data itself, as in data-driven.

Po-tay-to, po-tah-to. Media preferences may come and go, ebb and flow, but a reverence for data keeps the whole industry flying high, getting brands and customers from Point A to Point B, together, and creating value and experiences in the process. Like a Boeing 747.

Yes, data is today’s — and tomorrow’s — workhorse. And workhorses demand recognition and respect. The entire advertising ecosystem must embrace this concept, protect and preserve how and why data serves the customer, build and protect consumer trust, and prevent artificial barriers that impugn on the brand-customer value exchange.

Let workhorses work.

The Future of Retail Is in a Data Stream Near You

For all of the digital disruption, store closures and bankruptcies, the retail industry still has not had its transformative “moment.” While some might see a slow death through a thousand cuts, there’s really no need for such doom and gloom.

Retail
Magnificent Mile, Chicago, Nov. 13 | Credit: Chet Dalzell

For all of the digital disruption, store closures and bankruptcies, the retail industry still has not had its transformative “moment.” While some might see a slow death through a thousand cuts, there’s really no need for such doom and gloom. Unless you’re a retailer that can’t handle change.

For every piece of negative news out there, there’s a slew of innovation happening now. Even at the macro level, retailing is thriving!

First off, consumers are still shopping. Despite $1.2 trillion in student debt and $800 billion in credit card debt, the American consumer has resilience and fortitude. The National Retail Federation forecasts 3 percent-plus growth in retail spending this year.

But don’t dare measure retail health any more in year-over-year “comps” (comparable sales by store).

The metrics of success are undergoing a (sea) change — much because the customer journey is changing … rapidly. Smartphones, tablets, kiosks, websites, search… and stores — it’s all in the mix. And it’s not just Millennials who are all over the customer journey map.

To capitalize on today’s highly personalized paths to purchase, data is the currency that’s making a difference. In its most recent U.S. Retail Industry StatPack 2017 (download access), eMarketer reported:

“If I can start to take browsing history, social media history and tie that to your transaction history, I can start to do very specific segmentation … If you can master the data, you can really target customers with what they want and optimize your marketing,” said Michael Relich, COO, Crate & Barrel.

“There has been device proliferation in natural consumer shopping behavior,” said David Doctorow, head of global growth, eBay. “To serve customers well, we have to identify them no matter the device they’re interacting with us on.”

So much for CPMs and sales per square foot.

Look at these profound shifts in retail ad spending. Retail dominates U.S. digital ad spend among vertical categories, primarily because of e-commerce competition. Retail accounts for 21.9 percent of total U.S. digital ad spend, and will grow 15.8 percent this year to more than $18 billion. (Automotive and Financial Services — second- and third-ranked industries, respectively — each net around 12 percent of total U.S. digital ad spend, for comparison). Kantar reports that TV retail ad spend sits at $7 billion — digital’s nearest above-the-line neighbor.

Within digital advertising categories, tried-and-true display ads have nearly closed the gap with search — the former helped by mobile display and digital video display ads targeted to Millennials, eMarketer reports. Video is now 14.2 percent of total digital ad spend among retailers, and more than half of this spend is purchased directly with premium video sites. Meanwhile, programmatic ad spend is driven by retailer spending on social media: Facebook, Instagram and elsewhere, though brands reportedly are cautiously guarding where their ads appear — turning to “private, one-to-one setups to buy high-quality inventory.”

Search ads, as one might guess, prevail in retail’s mobile ad spend, as consumers conduct price comparisons and look for product reviews and recommendations while in-store.

And what of Amazon, the so-called retail killer? On the contrary, Amazon (and other marketplace platforms, such as Walmart) “storefronts” may prove a survival mechanism for many stores — though don’t expect that highly sought path-to-purchase data to find its way back to the retail brand. Data usually is not shared outside the “walled garden.” According to retail consultant Ryan Craver, speaking recently at Marketing Idea eXchange, half of Amazon’s U.S. product sales are now sold through third-party vendors (storefronts).

Yes, there’s more to today’s and tomorrow’s retail story than data-driven targeting and marketing … yes, physical stores need to be destinations, malls need to be destinations, retail may need to entertain, etc. But mass marketing is scaling to 1:1 personalization, anonymized or other, through data. Recognize that customer well, she will reward you. Sounds a lot like the 19th Century shopkeeper, virtually yours.

Smart Attribution Modeling

Depending on the size and scope of your advertising and marketing spend, you may have spent time and effort thinking about attribution modeling. Different organizations have very different approaches to attribution.

analyticsDepending on the size and scope of your advertising and marketing spend, you may have spent time and effort thinking about attribution modeling. Different organizations have very different approaches to attribution.

To this end, developing a valuable attribution model that serves your goals and your business can take many forms. Herein, I’ve put together some criteria that’ve been used effectively by a number of organizations we’ve worked with to inform decision-making and use of attribution methods and models.

First Things First: Determine Your End

The most important questions senior marketers need to ask going into an attribution initiative, at any level of investment, include:

  • “What is the purpose for attributing (estimating) media value?” You may be surprised how often that answer is ill-defined. Make sure you can answer, in simple business outcome terms, what the purpose of your attribution is. All else fails if this step is missed.
  • “How logical, defensible and credible is a potential attribution methodology?” While attribution, by its nature, is rarely deterministic, it is requisite that a methodology is credible and has robust basis, or a raison d’etre, if you will, if it is to add value. The understanding individuals often develop is an appreciation that the assumptions underpinning any attribution strategy are tenants of the strategy itself.

The right answers for any brand depend on keeping the end in mind and knowing the expected outcome. So the logical starting point is defining your purpose for attributing media value, as described in that context. For example, “to get the best ROI from our advertising investments.”

3 Strategic Attribution Model Levers

In the spirit of keeping it simple, we think in terms of three strategic attribution levers that an organization can benefit from. These strategic levers are used to inform both the attribution model selection and the weighting of channels. They are as follows:

  • Engagement: Measures a customer’s depth of interaction and potentially, the relationship with the brand.
  • Recency: The amount of time lapsed since the last touch. For example, all other things being equal, a touch yesterday is more valuable than a touch 45 days prior.
  • Intent: Identifies a need the user has or information the user is seeking. Intent is specifically valuable in search, and sometimes in social media. Lead generation programs demonstrate intent, as well. The point of considering “intent” is that it prequalifies traffic in a meaningful way. If the consumer exhibits intent-driven behavior — that should be weighted heavier in your attribution thought process.

While the decision to “attribute” always means judgment is incorporated, the credibility of the attribution is higher when media touches are evaluated within the three strategic levers and should always be based on the nature of the interaction — or lack thereof. If a user did not engage with an ad, then the amount of interaction is lower or even zero.

The following chart breaks out major channels and how you might evaluate each of the strategic levers discussed above.

Ferranti display ad chart

Ferranti display ad chart part two

The ‘Bonus’ Lever: Measurability

Measurability is the “fourth” strategic lever, and can be considered optional for very large brands utilizing traditional non-digital channels extensively. A channel that has evidence associated with its performance is one that can be weighted accordingly. When a channel is measurable, the weighting in the attribution model can be scaled to leverage the predictability of that channel; thereby, improving the efficacy of the attribution. It is a reality that some channels however, will have hard measures, while others require more assumptions and inferences.

Brands should give thoughtful consideration to not inadvertently “reward” a channel, simply because it is hard to measure — and, by the same token, not unnecessarily punish them, either.

Over- or under-weighting channels that have weak evidence of conversion value can actually reduce the performance of the overall media mix.

Viewability and Display-Weighting

While reach, frequency and targeting are hallmarks of display advertising, it has the widely known challenge of “viewability.” Viewability is when an ad is served (and paid for) but a consumer does not see it.

When the objective is to improve the ROI of the media mix, ads that are never seen (un-viewable) should be accounted for in the attributed value of the channel.

One way marketers simplify account viewability concerns is by deducting the percentage of ads that can never be seen on a percentage basis when weighting online display in the model. Bear in mind, “viewable” generally means that only part of the ad was viewable for 1 second. Specific viewability metrics should be discussed and negotiated with media outlets or networks you work with.

How Much Is Viewable or Unviewable?

A recent study done by Google identifies that many display ads are never viewed; therefore, the weighting of display ads should consider this reality (opens as a PDF).

Here are some of the issues with viewability that should influence the weighting of display.

  • 1 percent of all impressions measured are not seen, but the average publisher viewability is 50.2 percent.
  • The most viewable ad sizes are vertical units. Above the fold is not always viewable … Worth considering when weighting display.
  • Page position isn’t always the best indicator of viewability.
  • Viewability varies across industries. While it ranges across content verticals and industries, content that holds a user’s attention has the highest viewability.
  • The most important thing is to give viewability consideration and weight based on your own experience.

Frequently Used Attribution Models

Let’s summarize the most popular attribution models in order of frequency of use, and as based on field experience. There are many more models you may consider, and this list is not intended to be exhaustive.

  • Last Click: 100 percent of the sale is credited to the last click, given its immediacy in driving the sale.
  • Linear Attribution: Equal weighting is given to all touchpoints, regardless of when they occurred. Its strength and weakness is in its simplicity. Not every touch is equal and for good reasons that we’ll describe in some detail below.
  • Time-Decay Models: The media touchpoint closest to conversion gets most of the credit, and the touchpoint prior to that will get less credit. This is the best of the simple approaches. It does not, however, account for brand discovery.
  • Position Model: Position model utilizes intuition and assumption to spread the weights of touches over time, heavying up the first and last touches, and considering the middle touches to spread the difference evenly across them. To be clear, this model presupposes “zero” brand awareness — and, therefore, that every customer “discovered” the brand from a (display/banner) ad impression, for example. Blanketing an audience in advertisements can provide great reach and frequency. It also sets a lot of cookies, which can be used to set the first “position.”

Pointers for Getting Started

The closer you can get to individualized attribution vs. broadcast attribution, the stronger the returns. For example, attribution by segment can provide insights you miss when measuring the aggregate.

Channel measurability should be weighted accordingly. Non-measurable channels should be measured by depth of observable engagement.

The Time-Decay model is widely considered a good place for brands to use when getting started in media attribution. Brands can simply insert logical and evidence-based assumptions and customize the half-life of decay based on the Three Strategic Levers described above.

Follow-up discussion and analysis can refine your thinking and allow you to provide a rationale that helps achieve the most credible, logical and valuable attribution capability.

 

Retargeting With Demand-Side Platforms in Display Performance Media

A key driver for growth in display advertising is the rise of technology that seeks to bring efficiency to ad impression buying — i.e., demand-side platforms (DSPs). Approximately 10 percent of today’s online spending flows through DSPs, with forecasts calling for that figure to increase to as much as 50 percent over the next few years.

A key driver for growth in display advertising is the rise of technology that seeks to bring efficiency to ad impression buying — i.e., demand-side platforms (DSPs). Approximately 10 percent of today’s online spending flows through DSPs, with forecasts calling for that figure to increase to as much as 50 percent over the next few years.

Large brands will fuel much of this growth as they shift large ad network budgets to DSPs for better pricing, increased transparency/brand safety, centralized ownership, protection of visitor data, among other benefits. Even marketers who failed with display in the past can achieve success with the ad vehicle in the present via DSPs, thanks to the inherent advantages some DSPs bring to the table.

Many direct and performance-based marketers who were unable to measure traditional display buys to a reasonable return on investment in the past are starting to explore DSPs as a new source of incremental sales and leads. Since a retargeting buy is publisher agnostic (i.e., the advertiser is buying impressions served to specific cookies, not impressions served on specific websites or content channels), DSPs offer the most scale and efficiency, reaching 98 percent of internet users through one-bid management platform using global frequency controls.

Thanks to these advantages and the relevance they offer, retargeting campaigns often convert two times to 10 times more than traditional display ads, and can, at times, show an ROI equal to or better than generic search or content targeting campaigns.

Display advertising continues to evolve, and certain key strategies are starting to take shape that can help advertisers control risk while gaining valuable insights for future channel maximization. Depending on website traffic and ROI flexibility, performance-based advertisers typically have the most success kicking off testing with site-based retargeting.

This strategy enables advertisers to retarget consumers who visited their site, browsed and left without ever converting into a lead or sale. By placing a retargeting tag in the footer of these pages (e.g., the home or shopping cart pages), advertisers can build and bid on multiple retargeting segments using segment-specific messaging or offers across the web through an ad buy on either a DSP or ad network.

So why not just limit testing to retargeting? Although advertisers may be able to achieve ROI close to search or affiliate campaigns with retargeting, impression volume will eventually limit growth. Similar to the role of generic terms in driving brand term volume in a paid search campaign, it’s important to test and explore a broader set of display performance media strategies that may work at higher, more flexible RS/CPA levels in conjunction with retargeting to help drive site traffic that feeds a retargeting cookie pool.

DSPs can help advertisers implement these strategies. Run of network buys (testing different DSPs/networks with and without filters), contextual targeting and site targeting, when bought in a biddable marketplace, are all viable in driving cost-effective traffic to an advertiser’s site. If an advertiser has the right tools and processes in place, DSPs can even be profitable in and of themselves.

For advertisers that are willing to be more flexible and effectively leverage it, display performance media can quickly become the next big untapped channel. These emerging strategies will continue to evolve and pave the way for targeted display advertising for years to come.

Special thanks to contributing author Kirstin Peters of Performics.