With digital advertising spend set to overtake traditional for the first time this year, there is no longer any debate on where the future of advertising lies. But many large advertisers are yet to transform their approach, being still beholden to an old model of media buying. This means they lack access to advertising data, which has been particularly damaging during the current period of volatility. In contrast, by bringing this data into their planning, the digitally mature advertiser can gain a vital window into customer behaviour.
Digital transformation of media
Pre-covid, digital transformation was already a massive topic for brands, focusing on projects such as strengthening ecommerce offerings and encouraging offline shoppers to move online. This might mean investing in the user experience on website and app, to improve search functionality, real-time stock updates and page load speeds. Or it could mean investment in digital content and communications, creating structured production plans to syndicate content across YouTube, apps and email.
However, what has been less well understood, and funded, is how media and advertising within the marketing department needs to be digitally transformed. This is a question that has often been conflated with the in-housing of media buying. But it’s really more of an all-encompassing change to the way things are done.
This type of digital transformation of media involves investment in data infrastructure, skills, and processes. And presents itself in projects such as integrating a customer data platform (CDP) into your media buying tech, or even building a custom data stack from the ground up to power all analytics, insights, and marketing efforts.
For the most part, the pace of this transformation has been dictated by the rate of user migration to digital, offset against the resilience of the legacy operation in the face of this change. Fundamentally, if a company was doing well, there was really little impetus to push forward.
Consumer behaviour changed overnight
Then, virtually overnight, consumer behaviour completely changed. Content consumption shifted to digital, with YouTube seeing a 6.5x increase in usage in the UK. Consumer active engagement with brands became virtually 100% digital.
Covid has been tough for all businesses, but some have weathered the storm better than others. Those with a strong ecommerce offering have naturally done better. But Covid uncovered another issue. The legacy model of media buying was a dislocated approach. Advertisers working in this way struggled to make informed decisions. By not owning the tech or data they forfeited access to customer insights. And even when a direction was decided, they lacked the control to implement before behaviours changed again.
In contrast, advertisers with a data-driven media model were following customer behaviour day-by-day. Using data insights to react to evolving consumer needs and media consumption.
How did they achieve this? By taking control of media technology contracts, these advertisers could connect advertising data and their customer data. They used analytics and data science to uncover actionable insights and incorporate these into media plans to advertise more effectively.
Doing this on native digital channels is one thing, but the most progressive advertisers are embracing data-driven approaches on traditional channels, such as TV or out-of-home (OOH). By buying these channels programmatically they have greatly increased agility. Not tied to bookings made weeks or months ago, they were able to move budgets around quickly when Covid happened.
It was no surprise the first relevant creatives that appeared during lockdown, some in a matter of days, were from digital-only or direct-to-consumer brands. By their nature, these tend to be digitally advanced and data centric, and displayed that responsiveness in their creative messaging.
Post-lockdown, what sticks?
Now we’re starting to come out the other side of lockdown we’re seeing that some new consumer behaviours are sticking, and the expectation is these will represent a sustained acceleration to a digital economy. As a specialist digital media agency, many of our retail clients at Infectious saw a sharp increase in ecommerce, and it’s showing no sign of declining. For some the change has been quite beneficial, with a flood of fresh customers from new age brackets replacing revenues from missing high street sales.
All this is driving a massive re-prioritisation, with digital transformation now the most important project across many businesses. Those brands that were naturally ahead, such as DTC brands or those who were well on this path, have seen themselves in a much better position. Those who didn’t think this was a priority pre-covid are now scrambling to catch up. We’re not just seeing this in our existing clients, but also in the pitches to which we have been invited. There is an uptick in frequency, and their focus is on the operating model and making the most of digital transformation.
The savvy brands know that digital transformation is not a nice to have, it’s an imperative if they are to thrive in the future. The problem is the future is now. We are already living in a world where digital advertising is the lion’s share of the market, and nearly 70% of it is bought programmatically. A world where customers are shifting from traditional content consumption to digitally enabled versions, and Covid has only sped this up. Where TV, audio, and OOH are increasingly bought programmatically.
It’s also a world of increasing uncertainty. Soon, we will see privacy legislation making the deployment of 1st party data more central to everything advertisers do, but perversely they’ll be more restricted in how they can do it. We’ve already seen how trends, new platforms, and changing market forces can all come out of nowhere. To take advantage of these requires data-driven agility, so brands need to be built and operate in a way that can quickly adapt to serve customer need.
Most advertisers are not ready for this world. So, what can you do?
Six steps to digitally transform media
1. Map out your journey – Having a rough destination is one thing but knowing how to get there is another. Digital transformation involves significant change, it’s a process with lots of moving parts. Working back from your destination will show how these parts interact, what needs to happen, and when. There are going to be a lot of unknowns to this journey, so use partners who have already charted the pitfalls.
2. Structure your organisation around data – Digital transformation doesn’t just involve a technology investment or process change, it will impact how your business operates. It needs to be based around leveraging your own data to put the customer at the centre of decision making. This can have a big impact of how you operate. Access to rich customer data across your business will show up bottlenecks, slow decision making and poor measurement. It’s quite hard to get a clear picture when it comes to evolving your structure, so follow the lessons learnt by businesses that have already embraced digital transformation.
3. Prepare your people – You need to prepare your people for change by reviewing skills and initiating training. We see time and again huge investment in technology only for it to be underused, as the skills needed to apply it and integrate it into business processes are missing.
4. Tech audit – You wouldn’t construct a building without first working out its purpose. The same is true of your media tech stack. It’s surprising how many marketers might think they need a technology, like a CDP, but be unsure of what they are going to do with it. You need to work out what your tech needs to achieve before you start building it. So, audit the tech you have, align your tech plan to your marketing strategy, then work to fill in the gaps.
5. Top down media measurement – Once you have constructed a proper view of your customers, it’s very wasteful to base your value of them solely on the last thing they do before buying from you. Set your media investment measurement from top down. Start with how your customers behave, and what you want them to do. Only then consider how you can influence them. Unfortunately, many advertisers still start from the bottom up. They find the lowest common measurable denominator in media, then only invest in trying to improve that number across all channels. This approach is fundamentally flawed, don’t measure for measurement’s sake. Although measurement will always be imperfect, you can still measure what counts.
6. Select the right partners – Even as we advocate advertisers take more control of digital advertising, we recognise the complexity of the industry. It would be irresponsible to advise advertisers to do everything themselves. Within the in-housing of media debate, the camps often polarise into yes or no, where the reality is always somewhere on a spectrum between the two. Digital is a specialist area that needs help from specialist businesses. Once your house is in order, select the partners that share the same mentality and ethos as you. You know what is best for your business and customers, find partners that can help you achieve that.
What about the digital swamp?
The digital advertising industry is not the finished product. Many will be aware of recent exposés, including hidden margin, supply chain vagaries and fraudulent data and inventory.
These issues are rightly disturbing. However, much less so for digitally mature advertisers. Transparency brings with it insight and measurability. Insight to see the issues and measurability to optimise away from them, and towards what actually drives business benefit.
It would be naive to think that some fraud and hidden margin doesn’t get through. But with the ability to see the data, the understanding of what it reveals, and the process to make decisions off the back of it, these advertisers are largely protected from the main oversights of the industry.
What’s next?
The pandemic has been a major catalyst for change, but what will cement this way of working will be recession. In the past recessions have accelerated trends, with the 2009 recession hastened the shift from offline to digital media channels. We see the coming one focusing attention on the advertising data opportunity lying within digital transformation.
