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Internet Advertising’s Robust Growth Hides an Inconvenient Truth

Digital advertising is booming in terms of growth, but is struggling to personalise ads effectively. This is stagnating performance and undermining the industry, says Cablato Founder and CEO, Adrian Pearmund (pictured below).

If you take a look at the recent Advertising Expenditure Forecast from Zenith Global, it looks as if everything in the digital ad garden is rosy. The respected report reveals that digital ad spend will grow by 13% to top USD$205bn (£159.3bn) in 2017. Zenith Global also tells us that this will be the first year in which more money will be spent on digital ads than on traditional television advertising, which is predicted to total USD$192bn (£149.2bn).

So, what seems to be the problem?

Well, despite the increasing investment that brands are making in digital marketing, as well as data management technologies, advertising effectiveness has stagnated, according to Google-Doubleclick. Average clickthrough rates have remained consistently poor (at around 0.15%) over the past five years or more.

So, paradoxically, we appear to have an industry that is in rude health in terms of the amount of money being spent on ads, yet suffering when it comes to the effectiveness of that advertising.

Adrian Pearmund, Founder & CEO, Cablato

The recent State of Digital Advertising report from Adobe Digital Insights shows there is widespread recognition of the challenge, with almost half of UK marketers (49%) believing their current ad campaigns don’t match consumers needs or interests. This is in contrast to only a third of British consumers who felt advertisers were getting it right.

So, where does the answer lie?

It starts with harnessing ALL the information at a brand’s disposal (behavioural, third-party, first-party, and CRM data) to not only build detailed audience profiles in terms of age, gender, location, interests, and preferences, but also identify key behaviours and appropriate channels. The game needs to be changed from the current audience-segmenting approach and moved to the one-to-one or ‘hyper-personalised’ level.

But it’s not enough simply to send out generic ads to individual consumers – in fact, this approach rather defeats the object. The creative content of an ad plays a pivotal role in its effectiveness, contributing up to as much as 70% of campaign performance, according to Google. This means that to engage on a far deeper level, each consumer must receive a personalised creative execution to match their profile. What’s more, this hyper personalisation needs to be delivered at scale.

Imagine a single campaign serving 14 billion creative combinations, specifically tailored to their chosen recipient, each one quick and easy to create and delivered on the right channel at the right time.

If that sounds crazy, that’s not at all surprising, because to date it has been very complex and expensive to combine multiple sources of data to drive digital ad personalisation and performance. However, breakthrough technology now exists to achieve this and use the intelligence to tailor advertising creative to individual consumers – then deliver it in real time, at scale, to the appropriate channel.

What’s more, the process is far from complex. In fact, a handful of brands have already been reaping the benefits and finding that it not only significantly improves response and conversion rates, but also transforms the way marketers develop ad creative and engage with consumers. And, it won’t be long before a lot more uncover the secret to mass precision digital marketing and a new era for the industry.

It’s time to change the game; to turn benign digital advertising into intelligent, cross-channel, hyper-personalised communication so that brands can use it as a highly effective sales machine. After all, isn’t this what advertising’s all about?

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