Marketers Aren’t Making The Most Of Their Ad Dollars: Here’s Why
By: Tod Loofbourrow | Forbes Tech Council Member
Digital advertising is booming, accounting for more than half of all U.S. advertising. Within a few years, it will be more than two-thirds of all advertising. And digital video is leading the way. According to Statista, U.S. digital video advertisers will spend $67 billion in 2022, rising to $78 billion in 2023 — more than 30% of total digital advertising spend in the United States. Add in mobile and connected TV and the total rises to $233 billion per year. It’s why the best CMOs are now digital CMOs.
Why should marketers care about these numbers?
These are staggering numbers. The more money marketers spend on digital, the more pressure there is to prove consistent return on investment (ROI) when it comes to advertising campaigns.
At its root, advertising is a fairly simple proposition: meet a customer where they are, engage them with relevant brand stories, tailor advertising to the customer wherever possible and move them on a journey toward brand love, engagement and purchase. Rinse and repeat.
However, are marketers really doing this in a way that makes the most of their digital investment? Or are they leaving valuable dollars on the table in a market saturated with digital advertisements fighting for consumers’ attention?
Many marketers are wasting their budget with their approach to digital advertising. Why? Because most ad strategies prioritize a high number of impressions over the customer’s experience and the business outcomes.
There is an alternative: By focusing on engaging potential customers within advertising, and by optimizing ad journeys based on consumer sentiment, brands can drastically mitigate the waste and create positive brand impact.
What does the current consumer ad journey look like?
Most advertising is bought by building persona models for potential customers and then using third-party data to target consumers thought to fit those personas. Brands then aim to maximize impressions for those thought to fit the persona model, capped only by their limited understanding of how many times a person has seen an ad. At best, the customer journey is defined as seeing the same ad many many times, or perhaps seeing a rotation of ads that the brand thinks might appeal to the target persona.
The emphasis is on exposure, hoping that the birdshot approach to advertising occasionally connects with a consumer. The vast majority of the spending doesn’t connect and is effectively wasted.
What happens when consumers receive an ad that doesn’t connect? Brand favorability and trust see a sharp decrease.
How can you build a better customer relationship through advertising?
The purpose of advertising is to build a relationship with a potential customer. A customer who knows a brand, likes a brand and buys from a brand is the customer who comes back for more. And each one of three steps — knowing, liking and buying — impacts the brand/customer relationship. This relationship works best if it’s truly a two-way street at each step of the customer’s journey, so understanding what customers really want and knowing what fits into their life is the key to long-term success.
Imagine if you could send a salesperson or brand ambassador to talk to every potential customer. You can’t. It’s too expensive. But digital advertising differs from all other forms of advertising. A digital ad is effectively an app and can be as rich and interactive as an app on your iPhone or Android phone. With digital advertising, you can turn ads into interactive brand ambassadors, encouraging potential customers to engage, play and interact, and to express their needs, wants and desires right within the advertisement.
Not only does this unique digital capability provide consumers with a more customized and engaging online ad experience, but it also provides brands with critical insight into their potential customer base. This zero-party data allows brands to better target ads, shape their messages and waste fewer advertising dollars on the wrong consumers.
Marketers continue to get smarter and more comfortable with digital and with its powerful two-way ability to better understand consumers. The best brands understand potential customers in real time, every day and with every campaign, and they use that understanding to move consumers on journeys toward brand love and purchase. In short, they make their advertising customer-centric.
How can you execute a customer-centric ad journey?
Placing the customer voice at the center of an ad strategy includes four key steps: define, reach, capture and respond.
1. Define: First, define the advertising strategies that will bring a brand closer to its business objectives and construct ad journeys that move customers down the funnel.
2. Reach: Second, reach your target audiences where they consume content across platforms, devices and formats. That has to include display, video, mobile and connected TV (CTV).
3. Capture: Third, capture the “voice of the customer” and understand their needs. This can be as simple as asking consumers for their opinion within an ad unit itself. For example, consider questions such as, “How likely are you to shop at [brand]?” or “Which of these features are most important to you when shopping for [product]?”
4. Respond: Finally, considering the customer’s voice, respond with ads that make sense based on the customer feedback, while also driving toward the targeted business outcomes.
What do the results really look like for customer-centric advertising?
Brands that optimize consumer journeys have a stronger overall consumer-brand relationship and see significantly stronger advertising results. Interpublic Group (IPG) ran a set of tests on customer-centric advertising through their research arm IPG Media Lab and found that brands using this approach:
- Boosted brand trust by 2.3 times
- Doubled website visits
- Reduced wasted ad spend by 59%
By incorporating the voice of customers into advertising, brands can significantly and predictably improve advertising results. And by using interactivity to better understand what will lead particular prospects on the path to purchase, brands can tailor their advertising strategies toward achieving measurable business objectives. When it’s time to evaluate their CMOs, measurable business results are what CEOs are looking for from their $233 billion in advertising.
This article originally appeared on Forbes.