Does online advertising work

Does Online Advertising Actually Work?

tim-gough "Data-Driven Thinking" is written by members of the media community and contains fresh ideas on the digital revolution in media.

Today’s column is written by Tim Gough, vice president of media solutions at dunnhumby.

There are many factors in deciding whether Internet advertising works. With more marketing dollars funneling into digital advertising, we are absolutely right to question the extent to which it does. We have all of the data we need to quantify that, yet we still leave ourselves open to headlines such as “A Dangerous Question: Does Internet Advertising Work at All?”

What’s going wrong? Are we failing to measure digital advertising correctly, or are we not executing it correctly?

Unfortunately, the answer is both. But there is light at the end of the tunnel.

Poor Execution

ClarityRay pegs ad-blocking rates as high as 18% for Chrome and Firefox, with some tech sites north of 50%. While it’s true that this proliferation of ad blocking should inspire advertisers to do better, the growth and scale of the technology is a damning indictment of an industry regarded as invasive and, far too often, an irrelevant annoyance.

Instead, taking these users out has the effect of increasing relative response metrics for the rest of ads served, making it appear that ads are getting more engaging when in fact the opposite may be true. So we may continue to see more invasive and annoying ads for that very reason, especially if click rates remain the primary metric of success.

So how do we make effective digital ads which, rather than being intrusive, are welcomed and accepted by users?

The No. 1 factor is creative. Ads must win our attention while still allowing for a seamless experience. But for advertising to be truly effective, it needs to make our online experiences better, as crazy as that sounds. To do that requires the right combination of personalization and relevance, fueled by data-driven targeting.​

There is a growing buzz around demand moments as an opportunity for targeted mobile advertising, or essentially targeting consumers when they are most responsive to messaging. Using real-time data to respond to a consumer’s location, needs, intentions and even their mood presents a huge opportunity for marketers, not just in mobile but in all digital advertising.

Targeting ads when a gamer completes a level or when someone is standing on a car lot are simple examples that can be extended far beyond such specific use cases. While demand moments are very much reactive, the longer-term goal is to achieve true personalization and relevance, taking into account my longer-term habits and behaviors, both on and offline.

Online data has long been used in this way, but integrating our offline lives has been a much tougher task. We are now at the point where consumer packaged goods (CPG) companies can achieve previously unavailable targeting precision by serving ads using actual in-store purchasing data to define targeting criteria. This completely changes the dynamics of digital media buying, shifting the focus onto audience quality, which ultimately leads to better performance, rather than simply reach and frequency at a much less granular level.

This additional data also creates more responsibility for the advertiser and must be used with care. Used without context or emotion, our attempts to personalize may actually come across as creepy, and without a customer-first mindset, personalization may not be relevant.

Relevancy is king. When offline data is used with the consumer front-of-mind, the experience and performance is better for all.

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