Brands should be spending around 60% of their advertising budget on long-term brand building, and 40% on short-term performance marketing, according to Binet and Fields’ 2017 research, Media in Focus.
Traditionally, long-term brand building has been the calling for TV, radio, out of home (OOH), and print. Digital, on the other hand, has very much been seen as a performance channel. With 61% of all advertising spend going to online in 2018, according to GroupM’s ‘This Year, Next Year’ forecast, there is a fear this will result in measuring the majority of advertising spend against short-term performance goals.
There is also concern that a focus on programmatic efficiencies will be at the detriment of marketing effectiveness and a lack of understanding of brand equity. It’s clear that advertisers need to start thinking of and measuring digital as a brand building, as well as performance, channel. Failure to address the brand building element of digital will result in a fall in brand equity - the driver of future growth - which will impact long-term sales and revenues.
The role of in-app
We are seeing an increasing move to enhance the brand-building potential of online. In-app has emerged as a leader with 93% of media buyers reporting that the use the channel for branding, according to the Move Toward In-App Advertising report by Forrester. The bigger question is - can digital deliver on both brand-building and performance marketing goals?
Arguably the newest advertising channel, apps provide marketers with an opportunity to modernise the way they plan, execute, measure, and report. As a result, we have seen that in-app media buyers use a healthy mix of branding and performance marketing KPIs equally. For in-app display, Forrester found that while cost-per-click was pronounced the most effective, this was followed by brand lift at number two, the click-through-rate. For in-app video, branding metrics dominated. Watch time was reported as the most effective measurement, followed by brand lift and then the more traditional cost per install. In this environment, video is becoming a proxy for TV in terms of brand building.
Predictions for the future
In the coming year, we will see more proof points that support the use of digital as an effective channel for brand-building which will spark the movement for even higher levels of investment into digital advertising. Concurrently, advertisers will push harder for the ad tech industry to provide the assurances they need to have confidence that digital really can deliver in an open and transparent manner. If advertisers’ fears are not alleviated the industry will be at an impasse, which will cause harm across the ecosystem.
Ad tech companies must prioritise transparency, full disclosure of the cost of technology, and focus on creating fraud-free, high-quality environments in which brands’ can trust.
Transitioning from second price to first price auctions has created more transparency for brands which is, in turn, allowing them to bid for ad impressions in a more cost-effective manner. This is helping to re-build brands’ trust in programmatic but there is still work to be done to create a uniform approach across the ecosystem which is what is needed in order to scale programmatic.
We’re also starting to see log data being disclosed and used to provide greater insight into what’s happening in the supply chain which is something that the buy-side has been calling for.
The influence of supply path optimisation
The move towards supply path optimisation is allowing buyers to achieve scale in programmatic with fewer but deeper relationships with trusted partners. Deeper relationships equal more control, transparency, and better insights; all of which build greater trust. Supply path optimisation is also inadvertently causing consolidation across the industry leading to a greater percentage of working media being spent on advertising.
Finally, a renewed focus on creating premium environments is set to continue as advances are made in fraud-detection, and brand safety technology, specifically greater investment the development of proprietary systems that operate in a way that is bespoke to each brand removing the issues created by one-size-fits-all solutions which fail to address specific needs. Hand in hand with this is the rise of in-house quality teams as brands recognise the need to take more control over their brand safety.
There’s a real step change happening in digital at the moment geared towards proving that digital can support the needs of brand building and direct response in harmony, and work in tandem with the other media channels to address the needs of advertisers going forward. Over the next 12 months, we will see even more improvements in the quality of digital advertising, which will spur more brand spend to digital.