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People-Based Advertising Market Data / Supplier Selection / Event Presentations / User Experience Benchmarking / Best Practice / Template Files / Trends & Innovation Ô People-Based Advertising Evaluating the impact and future of addressable media In partnership with Signal North American Edition In partnership with Signal Published April 2016 Econsultancy London Econsultancy New York Econsultancy Singapore 4th Floor, Wells Point 350 7th Avenue, Suite 307 20 Collyer Quay 79 Wells Street New York, NY 10001 #23-01 London W1T 3QN United States Singapore All rights reserved. No part of this publication may be United Kingdom 049319 reproduced or transmitted in any form or by any means, Telephone: electronic or mechanical, including photocopy, recording Telephone: +1 212 971 0630 Telephone: or any information storage and retrieval system, without +44 207 269 1450 +65 6653 1911 prior permission in writing from the publisher. http://econsultancy.com Copyright © Econsultancy.com Ltd 2016 [email protected] Contents Executive Summary .............................................................. 4 Foreword by Signal ............................................................... 6 About Signal ............................................................................................ 7 About Econsultancy ................................................................................. 7 Methodology .......................................................................... 8 In context: data-driven display advertising .......................... 9 Addressable media or people-based targeting ...................................... 10 Data coming in first, second and third ................................................. 10 First party data ........................................................................................... 11 Second party data ....................................................................................... 12 Third party data ......................................................................................... 12 Walled gardens ...................................................................................... 13 Buying trends for people-based media ................................ 15 People-based performance .................................................. 18 Where do brands go from here? ......................................... 23 Mobile is vital for brands – but customers hate brands on mobile ..... 24 Fraud remains a real concern ............................................................... 25 Ad blocking ............................................................................................ 25 Measuring ROI ...................................................................................... 25 Data governance .................................................................................... 26 Data ownership ...................................................................................... 27 Consumer response ............................................................................... 27 Appendix – Respondent profiles ........................................ 28 Advertisers ............................................................................................. 28 Media Buyers ......................................................................................... 31 Page 3 People-based Advertising - Evaluating the impact and future of addressable media In partnership with Signal All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording or any information storage and retrieval system, without prior permission in writing from the publisher. Copyright © Econsultancy.com Ltd 2016 Executive Summary Traditional digital display advertising doesn’t work. Does that sound like inflammatory clickbait? Perhaps, but interaction rates are negligible and larger brand impact is muted by fraud and poor consumer experience. The increase in ad blocking shouts from the rooftops that consumers are deeply unhappy with the status quo. With these unpleasant realities weighing on marketers’ minds, this report explores the hypothesis that smarter, data-driven, people-based display advertising is an important alternative to the legacy model that is failing the online ecosystem. People-Based Advertising is based on an online survey of 350 senior North American marketers and media buyers with moderate to high online ad budgets. The survey was fielded in the first weeks of 2016, covering a broad range of industry verticals. Without question, online advertising as we know it is at a crossroads. Forty-eight percent of North American advertisers agree with the statement that “The current model for display advertising is broken.” And while 39% are undecided, only 12% actively agree that the model as we know it is sound. Simply, it doesn’t work because it’s cheap to inundate consumers with ads and it still relies on a traditional targeting model that leads to irrelevant ads that lack context or content that matter to the consumer. At the same time, most advertisers and media buyers see promise in using data to improve the ad experience for consumers and yield for businesses. They foresee a scenario where fewer, more valuable advertisements do a better job of reaching true, in-market consumers; more than half agree that “…display will be replaced by relevant, data-driven advertising.” Products from Facebook and Google popularized the idea that advertisers could target anonymous but relevant individuals, helping with customer acquisition at the top of the sales funnel. Solutions like these rapidly raised awareness of the possibilities for data-driven display, with 68% of advertiser respondents reporting that they are familiar with it and over two-in- three currently practicing at least one form of people-based advertising. True people-based marketing happens further down the funnel using a specific connection to individual consumers. By tying their first-party data together with enduring digital identities, brands can have a much deeper understanding of their customers and prospects. This allows them to have more successful interactions wherever their audiences congregate. Study responses suggest that this approach works to reduce waste, increase conversion and improve efficiency. 47% 50% Among brands who have deployed people-based 40% advertising, 83% report that it has outperformed 36% standard campaigns on similar media. 30% 20% 13% 10% 4% 0% 0% People-based People-based People-based People-based People-based advertising has advertising has advertising has advertising has advertising has been much less been somewhat been no more or been somewhat been much more effective less effective less effective more effective effective Familiarity has followed performance. Sixty-five percent of the advertisers who have deployed people-based campaigns report that it has outperformed standard campaigns on similar media. Perhaps even more indicative, the vast majority of media buyers polled (92%) said Page 4 People-based Advertising - Evaluating the impact and future of addressable media In partnership with Signal All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording or any information storage and retrieval system, without prior permission in writing from the publisher. Copyright © Econsultancy.com Ltd 2016 that they and their clients were increasing their people-based media buys, and are willing to pay more for it, with an average premium of 29% Why people-based advertising Companies’ need to cultivate and protect their first party data is well-established, with 70% stating that their effectiveness when using it to target people in their database is either excellent or good. The temptation is to use one of the high-profile data providers in this space, namely Facebook’s Custom Audiences (69% of respondents have used); Google’s AdWords Customer Match (63%) or Twitter’s Tailored Audiences (40%). The vast and varied databases these companies can provide are seductive but present challenges. Seventy-eight percent are concerned with data governance when working within these “walled gardens” and 74% are troubled by the customer data they’re handing over in the process. Understanding the relative utility and quality of data resources is an important cornerstone of building successful people-based advertising. Is people-based advertising a panacea? People-based advertising clearly has benefits but it also carries its own set of challenges. With a target audience that is limited by brands’ own data, reach is a central issue. Fortunately, it’s a problem that can be addressed using a measured approach to second and third-party data. Advertisers are warming to the idea of selectively sharing their data, and so are publishers. By combining data sets, publishers outside the walled gardens are creating viable alternatives. Most importantly, 51% of executives agree that people don’t want ads on their mobile devices. Yet this channel is frequently championed as the ‘killer app’ for brand engagement. Marketers will have to consider how to use devices wisely to interact. The near future of display Concerns aside, advertisers are clearly putting their money where their mouths are and investment in people-based advertising is rapidly making up a significant portion of ad spend. One quarter of respondents noted that people-based advertising
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