Olenski: In the foreword you wrote that CMOs are “deeply dissatisfied with traditional digital advertising.” That’s a very strong message. Why do you believe this is the case?
Sands: Our research found that about half (48%) of advertisers agree that the traditional model for display advertising is broken. There are multiple reasons for the dissatisfaction, but here are several key ones:
- Legacy ad tech relies on Web cookies for targeting media, but consumers are spending an increasing amount of time interacting with media on mobile apps, Apple devices, Safari, and other environments where cookies don’t work.
- Consumers love their devices (and have an average three to seven connected devices) and use them to interact with brands anytime, anywhere they want. But the multiple platforms, tools and technologies that enable these interactions don’t interact with each other, so marketers have become disintermediated from their customers and left to guess who they are reaching.
- Advertisers are struggling to connect cross-device data quickly enough to recognize consumers as they hop from smartphone to tablet to laptop, etc. They can’t do attribution or measure reach, frequency or campaign outcomes accurately. A consumer may see a single ad 12 times across her devices, when the advertiser intended to show it three or four times, for example.
- The result is disconnected and even annoying brand experiences, increased ad blocking, and meager advertising performance—like paltry industry click-through rates of .06% on average.
On the other hand, direct response efforts like email—which leverage first-party data about customers for more precise targeting–are thriving in the digital world and producing click-through rates that are more than 50 times higher than digital ads. This is the idea that underlies people-based marketing: leveraging first-party data to connect brands with actual individuals rather than cookies or devices.
Olenski: It looks like, based on the results, that advertisers are slower to adopt People Based Advertising than Media Buyers. Why do you think advertisers are not as eager to utilize people-based advertising?
Sands: I wouldn’t say brand advertisers are any less eager than media buyers when it comes to people-based marketing. They are often further removed from the buying process than media buyers, who are constantly optimizing their efforts and therefore have more exposure to new approaches that will improve return on spend.
Olenski: Nearly one-third of respondents indicated they either know of people-based advertising or don’t know it at all. How does proverbial word get out about people-based advertising?
Sands: As a term, “people-based” marketing is only two years old, so in our view, it’s actually catching on quite fast. Publicity about the type of results advertisers are getting with Facebook Custom Audience is helping to drive the conversation. The shift is motivated by an urgent need for improved relevance to consumers, and better campaign measurement and accountability to the C-suite. Early adopters are experiencing the benefits of a people-based approach, and performance drives change. As advertisers continue to see superior performance, adoption will continue to increase.
Olenski: In the report it reads “People-based advertising uses knowledge about the customer, so it is naturally being used to further existing relationships.” But what about modeling? Brands want to use what they know about existing customers to target new ones. So how can people-based advertising help on that front?
Sands: When brands leverage their own first-party data to create relevant cross-channel interactions with their current customers, they can build rich, deep customer profiles from which to model “lookalike” audiences for reach extension.
Olenski: What’s the one clear message for brands when it comes to the findings and people-based advertising?
Sands: People-based advertising is the future. Today’s consumers are sophisticated – they know brands are collecting their online data and they know that forward-thinking brands such as Amazon are using that data to make shopping more convenient and personalized. Consumers are now demanding relevant, coherent brand experiences everywhere they go online, and they are quick to turn away from brands that don’t provide them.
The survey shows that vast majority of advertisers and media buyers have at least experimented (or more) with people-based advertising too, and they are shifting more of their budgets in that direction advertising because they have found that it delivers superior performance. Using first-party data to take the guesswork out of targeting is the best way to reduce ad waste, improve customer experiences, and move the needle on advertising ROI in today’s hyper-connected, cross-device world.
To read the full report download People-Based Advertising: Evaluating the impact and future of addressable media.
This article originally appeared on Forbes.