The future of digital advertising

Shipping and sea routes - see the big data example belowI was kindly invited to an event today called “The Ad Apocalypse And The Rise Of Interactive Brand Experiences”, hosted by wayin. Wayin runs a content management system for brands to run interactive campaigns in their digital advertising.

Although the event proved how wayin was the answer to several of life’s challenges, there were a few interesting thought leadership pieces at the event which I’ve tried to capture below.

My apologies for brevity in the notes format and any spelling mistakes.

Wayin introduction, Richard Jones (Wayin CEO)

Richard started by describing how Mondelez has pulled £100M from their advertising recently due to the lack of impact that their digital advertising spending is having. They’ve never pulled ad spend before the holiday season.

We’re in “the age of Infobesity” – with too much information and content being thrown at us, mostly for free. The goal for advertisers is (COMMENT:  “obviously”) to reach new consumers in the digital era.

Amazon is able to decimate almost any consumer product category very quickly. One example was when Amazon decided to sell its own brand of batteries, it impacted thousands of shops and jobs. Every retailer is discussing “What if Amazon start competing with us?” at board level.

We are still in the paradigm of non-interactive display ads – trying to interrupt a user’s experience of reading a web page or watching a video.

46% of global ad spend is from 100 advertisers. For the first time, a local independent pizza restaurant is competing with a global pizza brand – in the same digital advertising slot, on the same bidding platform. (COMMENT:  Some background here – 10 years ago, it was difficult and expensive for a company to start advertising on the web).

We saw some case studies of a competition inside a digital advertising unit – with an ROI (Return on Investment) of 38:1 based on the competition and $5M in sales from a follow-up email on the competition.

Websites will also have to become more interactive than static content. Even billing websites will become interactive. Vodafone tried this in their billing mobile app – they created a competition and had 1.2M entries

The same will happen with Out of Home advertising – e.g. in street billboards becoming experiential.

US sports are doing this in a stadium – fans vote during their visit and the results are shown on large screens.

So what’s stopping marketing from adopting interactive experiences right now? It’s the inefficiency of current processes and not reusing campaign assets and resources across regions. Wayin found one customer had 8 advent calendars around the World.

Note: Facebook doesn’t currently support interactive advertising.

SAP Exchange Media, Johann C Freilinger (Head of Marketing and Co-Founder)

Johann’s presentation was about making digital relevant again.

This is why Amazon Alexa, Google Home and other assistants are so popular – it makes everything so relevant and useful – so relevant.

Relevance (through digital, context, IoT, data and technology) is now more important than reach (the old world of advertising). COMMENT:  I would argue that relevance and reach are not mutually exclusive – as Amazon, Google and Facebook know very well.

70% of digital advertising spend is lost in the industry supply chain… to middle men and the media fees, and fraud.

It’s a remarkable industry. That’s about $161BN of a $221BN industry. Fraud is over 10% of this figure. COMMENT:  These figures were confirmed by the Guardian.

Summary: The digital advertising market needs more digital transformation: with relevance, transparency, efficiency and control to everyone in the supply chain.

In the entire chain, only the publisher knows the actual media placement costs!

TATA Consulting Services, Ved Sen, Digital Evangelist, TCS

Were on the cusp of redefining value shift (consumers), work-life-play, identity, rewiring of society and education.

Alternative intelligence… this is the real revolution. When you learn to drive, you learn from errors, which you can’t then pass on to your kids when they learn to drive. An autonomous car doesn’t work like that.

The old company structure was the CMO (Chief Marketing Officer) brought new prospects to the checkout, then the Chief Sales Officer did the sale, and then the COO (Chief Operating Officer) kept care of the customer.

Now, marketing is responsible for more. Hence the rise of the Chief Customer Officer – which looks after the whole customer lifecycle.

I liked Ved’s thoughts on the future of education. Our current approach is to learn at the start of our lives and then work the rest. But in the future, we’re likely to continuously retrain and re-educate ourselves. E.g. many of us still think of Pluto as a planet and struggle to rethink it! Companies currently expect staff to learn new skills, in the future this will become more explicit.

Forrester, Samantha Merlivat

We’ve become immune to advertising.

People now buy products which neither have advertising or even products – on Indigogo.

We’ve already adapted the ability to pre-empt ads and skip them. Samantha showed an eye-tracking heat map of a homepage, and virtually no one looked at the ads on the page.

I liked Samantha’s observation that established brands, even new ones like Uber, have low to very low ratings on the Alexa skills store. Users want a better user experience from Alexa than their previous user experience on say, a mobile, and companies are failing to match it.

Scott McNealy, Founder and CEO of Sun Microsystems (and co-founder of Wayin)

Scott is a great speaker who had flown in for this presentation.

“With innovation, sometimes you’re the windscreen and sometimes you’re the bug.”

It’s OK to innovate, but remember we’re still using mainframes and PCs. And those mainframes are still making the vendors a lot of money.

The difference between business models:

  • Microsoft: buy and bundle
  • Oracle: buy and kill
  • Apple: borrow technology and change business models
  • Google: the amazing ability to sell to advertisers every word in every alphabet.

Automated cars are simply air, land and sea unpiloted drones. Automated cars will have aq huge impact on society at all levels. What will happen to American truck drivers? What will happen to car designers? No one cares about car design of an Uber, or the need for a driveway and garage.

VC companies are still investing in ad analytics companies, despite current CTR (Click Through Rates) of 0.35%

We still have an ad industry that can’t tell that when a customer buys a product, we can’t apportion the value of the retailer or manufacturer sponsoring the stadium naming rights or banner ads they had seen.

The biggest companies in the world spend very little on advertising (Facebook, Google, Uber).

Not only goes Google, Facebook and Amazon get most digital advertising revenue… they also get all the consumer data, which is quite unique. This is despite the huge fraud and lack of accountability of their platforms.

Telcos also know a lot of consumer data, but they are regulated to prevent using a lot of this. Why aren’t the big technology companies regulated yet?

When SOX (Sarbanes Oxley) and other financial regulation came into force, Oracle and SAP became a duopoly because they were the only certified platforms which could support the needs of large enterprises. The same will happen with GDPR – with such huge fines, there will only be a handful of vendors certified and trusted to hold user data. Naturally, they quoted wayin as one of these.

Every campaign should have a data collection strategy from an interactive campaign. Scott provided several examples from Airbnb, Nike and others.

Scott’s advice: if you are a publisher, do something that Facebook and Google can’t.

The industry challenge is that there’s no one in the advertising industry who has the interest to simplify and optimise the industry. From the Head of Marketing who manages multiple agencies and a large team (and wants to continue this way), to the agencies, the media agencies and even the publishers.

Summary

The digital advertising industry is ripe for disruption. Google and Facebook started the disruption by offering direct advertising models, but they’ve simply become endpoints (publishers).

The industry is simply too powerful at present. The change will come from revolutionary CMOs who want lean teams rather than massive departments.

Over 99.9% of ads will remain unclicked, unnoticed and unseen. There is some room for interactive and smart, well-thought-out ads to grab the attention of viewers.

All advertising and content will become relevant (to users) and interactive.

The web is terribly poor at promoting new or alternative products like a retail shop does (through window displays, multiple products on a shelf and so on). There’s still room for digital advertising, but it could be three times more efficient.

When it comes to retail, it’s all about Amazon.

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