Venture capitalist Mary Meeker just released her annual review of internet trends, and Signal has distilled her slides into a few big ideas for marketers. You can read about our first big idea here: Customer Conversations Beyond the Keyboard. Our second big idea is: The Intersection of Addressable Advertising and Customer Identity Ownership.
What’s happening? If 2016 was the year of customer-addressable (a.k.a. people-based) advertising via the likes of Facebook and Google, 2017 is the year brands take back ownership of their customer data and relationships.
With ad vendors like Facebook and Google, marketers have to upload their customer email lists and utilize the vendor’s identity graph for digital ad targeting. Analytics are limited to whatever the vendor allows. Forward-thinking brands, however, are now building their own (databases of addressable consumer profiles used for marketing activation and analysis) around their first-party customer data. With its own identity resolution solution in place, a brand can recognize its individual customers and serve them ads almost anywhere online, through many different publishers and channels, and track the impact of those ads when a customer returns to the brand’s website, app or physical store.
Why is it big? Addressable media is everything advertisers want: precise, measurable and profitable. In fact, in a 2016 study, 60% of advertisers and 80% of media buyers reported higher ROAS on ad buys based on their first-party customer data vs. ‘standard’ digital media buys.
With real-time identity resolution, advertisers can respond almost instantly to individual customers’ intent signals by delivering personalized ads and offers that increase customer engagement and revenue. Real-time response and individual-level personalization are quickly replacing calendar-driven campaigns and broad segment-level marketing, as marketers adapt to evolving consumer expectations and shopping habits.
For marketers seeking to reduce customer churn and increase revenue per customer, targeting known customers with personalized marketing is highly productive.
While direct mail and email are the original forms of addressable marketing, programmatic display and video ads are the current hot channels for targeting known customers. To put this into perspective, Meeker notes that from 2015 to 2016, advertiser spending on Google rose from $30 billion to $36 billion and on Facebook from $8 billion to $13 billion, primarily because of their addressable ad offerings. These two platforms absorbed the vast majority of the growth in digital ad spending last year, although Amazon is now competing for those ad dollars with its new customer-list-matching service, Advertiser Audiences.
For marketers who want to not only deliver but also measure customer-level response to addressable ads, there’s a big opportunity for customer-level targeting and measurement in the $23 billion still spent in other online ad channels, as well as in the burgeoning addressable TV ad market which was valued at $1 billion in 2016 and projected to reach $2.2 billion in 2018.
What should marketers do?
- Look broadly for addressable marketing opportunities beyond Facebook and Google, including other digital networks, addressable TV and the next generation of addressable-marketing opportunities, such as in-car internet, voice-activated devices such as Amazon Echo, and other Internet of Things devices.
- To take advantage of all these opportunities, marketers should invest in customer identity data as a strategic asset that they own and control. Ownership allows a brand to use the same customer identity data throughout its internal operations as well as with any outside marketing vendors/publishers it chooses. In addition, having a single identifier for each of its customers streamlines both execution and analysis of integrated marketing programs.
Addressable advertising to known customers has become an essential tool in the retention and loyalty marketing toolbox. And for marketers who want to deliver a seamless experience to the same individual across many digital marketing channels and devices, ownership of their customer identity data is becoming a must. Together, they’re an unbeatable combination.
Originally published June 21, 2017