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Whither digital advertising?

Two experts suggest, at this critical junction for targeting via third-party data, that marketers return to their roots.

Barry Levine on July 23, 2018 at 8:30 am

Considering the General Data Protection Regulation (GDPR), the new California Consumer Privacy Act, massive fraud, lack of transparency and the hostility of various browsers to third-party cookies, it feels like digital advertising has come to a fork in the road.

So, which path(s) should it take?

“The pendulum has swung too far” toward programmatic advertising directed at users’ profiles using third-party data, Forrester analyst Susan Bidel told me recently, complicating my path-in-the-road metaphor.

“If you listen to [Proctor and Gamble] and Unilever,” she said, “they are all saying that digital marketing as practiced in the last five or six years has not borne out.”

It’s now “coming back to the middle,” she said, where marketers put a greater emphasis on two approaches that harken back to the old days, when marketers looked for customers similar to their own, and when they advertised on places where those kind of people were likely to gather.

In modern terms: “lookalike” targeting that finds customers whose attributes match the attributes of existing customer lists, and targeting based on surrounding context, such as travel ads on car sites or beauty ads in lifestyle apps.

One of the many reasons why this is a decision point for digital ads, she said, is that “global marketers will use GDPR as a [massive] A/B test” to see if the fall-off in targeting by user data — expected because of the users who will not grant consent for access to their data — will actually result in a falloff of results.

‘Spray and pray’

She noted that JPMorgan Chase, which had been running data-targeted ads on more than 400,000 sites, reduced it to 5,000 sites and saw no change in performance.

“The current ‘spray and pray’ of buying against audiences just isn’t working,” Bidel said, adding that brands should start with “their core assets, their [current] customers.”

“Your strongest chance of success is to target your ads to people you have a strong belief would be interested,” she added, because they are lookalikes with attributes like your customers or because “they are visiting environments that complement your message.”

“The world is getting bifurcated” toward two kinds of targeting, she said: users who are engaged with your brand in some way, as customers or visitors, and contextual marketing, where ad buys are based on the surrounding content, as it was in the old days of “Mad Men.”

“Third-party data is becoming dead,” Tasso Argyros told me. He’s CEO of customer data platform (CDP) ActionIQ, which focuses on first-party data, and he pointed to the difficulty in measuring the effectiveness of third-party data-driven targeting, in large part because of the lack of transparency about the data itself.

The quality of the targeting can differ dramatically depending on the third-party data vendor or the batch employed, he said, such that “the only way to know [how well it works] is to shut it down” and see if your response rates go down, similar to the GDPR experiment.

A key reason he likes lookalike advertising is “that a minimal amount of data changes hands.”

A kind of seduction

If a brand employs lookalike targeting in a “closed garden” like Facebook, the first-party list of customer profiles and attributes is handed to the social platform and the matching users are targeted. The data matching stays within the platform’s black box. Even if the match is made through an identity resolution service like LiveRamp, there’s little or no exchange of data beyond the submission of the customer list.

That’s not the case with the use of third-party data, in which browsing records, offline purchases, demographics and scores of other data points are often available for sale, rental or trade to anyone.

In his vision of marketing’s destiny, Argyros noted, the key idea is “to get consumers engaged with you.”

Once they click or submit an email address, then they begin down the path toward becoming first-party data, as a visitor or customer. From there, you can try to clone them by matching their attributes to others.

It’s a kind of seduction. Marketers used to focus primarily on transactions, Argyros said, but now they realize transactions may be down the road. The most valuable data for a brand is the first-party list of customers, and its use to find similar people.

The key task for marketers, then, becomes how to enlarge the opportunity of engagement, so that passing users get closer and closer to becoming first-party. In that perspective, making available a useful mobile app is one technique, just as casual visitors to Starbucks become more engaged once they start ordering their latte through their app.

About The Author

Barry Levine

Barry Levine covers marketing technology for Third Door Media. Previously, he covered this space as a Senior Writer for VentureBeat, and he has written about these and other tech subjects for such publications as CMSWire and NewsFactor. He founded and led the web site/unit at PBS station Thirteen/WNET; worked as an online Senior Producer/writer for Viacom; created a successful interactive game, PLAY IT BY EAR: The First CD Game; founded and led an independent film showcase, CENTER SCREEN, based at Harvard and M.I.T.; and served over five years as a consultant to the M.I.T. Media Lab. You can find him at LinkedIn, and on Twitter at xBarryLevine.