This is part three of Sociomantic Labs' “Digital Marketing Deep Dive” series. Part one and two covered digital marketing trends in both Germany and the United Kingdom, and now we head across the pond to the biggest advertising market in the world: the United States. Sociomantic’s North America President, JB Brokaw, goes in depth about the specific nuances of programmatic advertising and digital marketing within the US market and the role that agencies play in this landscape.
With a diverse population of over 300 million people and a home base to some of the world’s largest advertisers, the United States is by far the largest advertising market in the world. Whereas other markets are still learning about the benefits of programmatic advertising, savvy US marketers are already fully aware of its potential across all devices and have started to reallocate their budgets accordingly. But dealing with such a complex market brings a unique set of opportunities and challenges. Here are five characteristics that define the programmatic advertising industry in the US.
1. A massive market
The US market is enormous. There is more advertising spend in this country than anywhere else in the world. According to eMarketer, the US will spend $189 billion this year, and $59 billion of that will come from digital spend. Comparatively, the second largest market is China, which is estimated to bring in around $73 billion total. The high volume in the US can partly be attributed to the fact that marketers are tasked with reaching a diverse and digitally savvy population. Market research firm comScore estimates that over 191 million Americans own a smartphone and over 100 million own a tablet, with more and more people buying mobile devices at a rapid pace. While mobile once was just a small piece of the digital advertising mix, it has quickly become a priority. These technology adoption rates have led to a largely multi-platform market, and marketers must now evolve to reach consumers across many different devices and channels.
2. Adapt to survive
From small e-commerce start-ups to large, multi-channel brands, advertisers require highly customised services and solutions to meet their specific needs. In addition, the rapid pace of innovation adoption keeps advertisers on their toes as they strive to remain competitive in a crowded marketplace. With consumer preferences and behaviours developing at the same pace as consumer technologies, marketers are continually looking to leverage the latest innovations to better address their audience.
3. A dedication to the highest brand standards
The US is home to some of the world’s biggest advertisers. US companies hold strict brand standards as a top priority and the development, preservation and promotion of brand values cannot be overlooked. However, driving incremental revenue and growth without sacrificing a brand’s corporate identity and values can be a challenge. With a constant evaluation of short-term ROI versus long-term brand investment, many brands seek technology partners that are able to reach users across the full purchasing funnel.
4. Fierce competition
Known as the “birthplace” of real-time bidding, the US is home to hundreds of technology companies dedicated to the digital advertising arena. This has resulted in millions in venture capital and investment, which has driven constant innovation and progress, and has also led to an increasingly crowded landscape. The infamous LUMAscape illustrates the dozens of SSPs, exchanges, social networks, DSPs, agencies, and trading desks that are competing for the same advertising dollar.
With so many players, it can be difficult for brands to navigate the jargon-rich advertising industry with confidence. So, where do they turn for help?
5. Agencies are the gatekeepers
Agencies dominate the US advertising landscape and offer consultancy for a highly complex industry. While some brands have a more hands-on approach to their digital strategy, others enlist the help of an agency to handle advertising creation and distribution.
It is common practice for to test technology companies as they look for the right partner to work with their brands. These head-to-head tests, often complex in nature and held over long periods of time, are meant to ensure that agencies are delivering the best possible results for their clients by using technology that delivers the best results. While the end goal is the same among client-direct and agency relationships, as a technology provider we’ve learned that the working relationships between them can be quite different. In order to work equally well managing both brand and agency relationships, vendor communications and service strategies must be tailored for each.
While the nature of this landscape may not change immediately, there is an ongoing debate in the US advertising community about the role of agencies. Should advertisers rely on them to manage their entire digital ad spends, or should brands have in-house teams overseeing strategy? While we certainly don’t see a future without agencies, it is likely that their relationships with brands will evolve as the digital ecosystem matures.
The next frontier
This is an exciting time for the US market. More and more brand marketers are embracing programmatic advertising across devices and are upping the amount of their digital ad spend. By taking a data-driven approach with their marketing strategies, brands are able to create new, meaningful experiences for customers and prospects and drive customer loyalty in the long run.
While the US market continues to mature, it’s clear that the technology companies that are able to combine meaningful insights and performance with superior customer service will be the partners of choice for advertisers in the long run.