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How digital advertisers are thriving in the face of new and changing media landscapes
The rise of digital media has destabilized the status quo in advertising: as professional services company Accenture so pithily summed up: “What companies have done to date is akin to re-arranging the deck chairs on the Titanic – applying the historical ad paradigm to a digital world.”
The search is on for a new digital ad paradigm that will prove equally effective and flexible – and advertisers are paying attention to the latest trends in media consumption as they look towards a profitable future.
Of course, first among these shifts is that of print-based media consumption to digital consumption. This shift is particularly unsettling to the publishing industry to the extent that many publishing companies are switching their business models. One such company is the Oslo-based Schibsted Media Group, which has strongly committed to the digital turn such that 62% of their revenue is derived from digital activities. This strategy is wise – according to Adobe’s Brand Content Survey, consumers in the USA spend an average of 8.8 hours per day consuming digital media.
As for how this affects advertising, the trend is clear: while currently ad buyers spend 41% of their budgets on TV and the same amount on digital advertising (as opposed to 10% on print), according to Accenture, the latter is expected to comprise over 50% of marketing budgets in the next two years.
Formerly, advertisers used to approach their audiences in terms of traditional metrics: age, sex, gender, and location; today, these segments tell us less and less about our audiences. Many media and entertainment (and advertising) companies are pivoting towards behavior-based segmentation in order to better understand (and target) consumers.
Deloitte coined the rather clunky term “MilleXZial” in order to convey the point that generational gaps in media consumption are closing. In short, age doesn’t matter nearly as much as it used to due to increased media literacy across generations. Traditional expectations attached to gender are also eroding to the extent that, while this indicator may still be useful in certain areas, it is declining in importance. Finally, while location is similarly critical in some areas, habits and tastes are increasingly globalized due to advances in digital communication and the Internet: kids in rural Nebraska want the new Nike sneakers just as much as those in NYC.
As these traditional forms of segmentation are becoming increasingly outmoded in the new globalized digital landscape, companies seeking to improve their reach and sales are increasingly looking at consumer behavior. As Deloitte crystallizes: “By adopting advanced metrics such as behavioral segmentation, an M&E provider can likely better service customers through an optimized product mix and more intuitive consumer relationships.”
In an age of ad-blocking software and pervasive numbness to traditional advertising forms, companies must go beyond basic segmentation tactics in order to tailor specialized content to their consumers. The key is to walk the fine line between helpful and creepy–one that is tough to toe in this age of floating data sets harboring personal information, digital privacy scandals, and listening smartphones.
While many business models in digital advertising track their audience’s buying history, emotions, habits, and preferences, it’s difficult to maintain an air of respect. For instance, 25% of customers surveyed by Adobe said they felt annoyed when confronted with content that is too personalized and 82% indicated that they would stop purchasing from a brand if its ads became too creepily personalized.
However, according to a poll from Epsilon, “80% of respondents say they’re more likely to do business with a company if they offer personalized experiences. A total of 90% say they find personalization appealing”. In short, companies must be personalized, but respectful; they must be tailored, but authentic. This is the magic line in digital advertising today.
An anonymous executive director of digital advertising shared their thoughts on the future of advertising engagement with Accenture: “I feel the future of advertising is all about content and figuring a way to weave the advertiser’s message into a compelling piece of content in a way that gets the brand message across and at the same time serves some consumer need.”
This magic line of respectful and personalized advertising is being explored by means of artificial intelligence systems across the industry. Salesforce, for instance, predicts the adoption of AI among sales teams to increase by 155% through 2021. In the context of digital advertising, AI is able to make predictions about what audiences would like to experience based on computing large data sets and determining patterns.
Of course, there is understandable anxiety about the incorporation of artificially intelligent systems in everyday life (the Matrix, anyone?) – but industry leaders are taking measures to ensure that their systems are safe, consistent, and respectful to audiences. Issues of privacy are already at stake: after an initial free-for-all use of customer data, regulators are increasingly navigating these uncharted waters.
Ultimately, improvements in consumer targeting necessary for adapting to the digital age will rely on AI. This is where we circle back to the crux of the issue: consumer trust. Adobe’s survey indicates that two-thirds of their respondents said they “trust the brands they engage with will respect their privacy and have the best intentions with the data they gather.” Here is where companies can capitalize. At the end of the day, the American saying goes, “the customer is always right.” They just need to trust you enough to express themselves.