10.01.2020
Programmatic

Post-Covid, brands must reassess the power of programmatic marketing

The promise of programmatic advertising has always been anchored in driving efficiency. For a long time, this has led to the perception among marketers that it is useful for direct response objectives only.

What the current pandemic is showing us, however, is that digital channels are key in driving engagement with consumers, and marketers need to reconsider how programmatic can facilitate brand-building.

We need to remind ourselves that programmatic is simply a route to purchasing media – one that, according to the IAB, “uses technology to automate and optimise, in real-time, the ad buying process” but also “serves targeted and relevant experiences to consumers across channels”.

The attraction is that, by using consumer behavioural data, it can deliver greater precision, which enables marketers to bring better control and accountability into the advertising budget.

So let’s reassess what we have learned from the recent challenges presented by coronavirus, and the new light these cast on the job programmatic should really be doing.

Maintaining salience

We are experiencing a volatile market and one of the key tests is how a brand and its messaging can maintain relevance.

The recession coronavirus has plunged us into is of a different type from what we’re used to. As Mark Ritson noted on a webinar in April, it is an ‘exogenous recession’, in other words, caused by external factors, not market forces. In this case, those factors are a change in social behaviour and a loss of access to products owing to social distancing policies.

“When faced with sudden and profound changes, you need to be able to adapt your media buying and advertising messages on the fly” - Mark Ritson

We’ve seen this cause an immediate disruption to brands’ businesses – hospitality and high-street retail virtually vanished in an instant when the lockdown was put in place. But there has also been huge latency of demand – as demonstrated by the queues at McDonald’s and KFC when their locations reopened.

In this context, the relevance of messages is key. When faced with sudden and profound changes, you need to be able to adapt your media buying and advertising messages on the fly. Those brands that haven’t done it during the pandemic have soon looked exposed.

Switching media and messages is something you can do in programmatic in a matter of moments. It helps increase brand salience, as messages that find the right tone and context are more likely to land. At Verizon Media, we’ve found consumers are more responsive to those which display humanity and generosity – or even humour if it is brand-appropriate.

According to Gill Stewart, CEO of IAB NZ, programmatic advertising has become increasingly important during COVID-19 because of the flexibility it offers advertisers to adjust spend rapidly in response to the changing environment.

"The ability to measure and understand performance and return on investment is often commensurately faster as well. There are multiple ways to buy and manage digital advertising, but this responsiveness to adjusting spend in near real-time during a period of increased volatility and uncertainty and understanding the effectiveness of that spend almost as quickly is contributing to increased emphasis on programmatic technology during the current pandemic, over and above its growing maturity and use to manage digital advertising demand and supply."

Understand your new digital audience

To get this right, you must acknowledge the basis of branding is to be clear about and to know your target audience. A solid data foundation is the starting point to a programmatic strategy – not only your brand’s first-party data but that which you can combine with it in a GDPR-compliant way to gain competitive advantage.

It’s best if this too can be first-party data from partners. For example, Verizon Media can use insights on actual consumer behaviour from our email, search and publishing properties to complement brands’ own data. This creates better-quality personalised experiences for consumers, compared with third-party cookie data.

Verizon Media also focuses on educating brands on the role they play in the industry to promote programmatic advantages, benefits and overall solutions to mitigate various privacy and malicious activity. This is ever more important with today’s heightened scrutiny placed on supply-path transparency, data usage and increased regulation.

There’s a perception that being data-driven, programmatic doesn’t leave room for creativity. For a brand to be successful, it must communicate its key qualities and benefits, and let the brand personality shine through by creating memorable experiences for the consumer. Historically TV has been the channel that has excelled in harnessing creativity in this way, via the power of combining sound and moving images with a wide reach.

Lockdown itself, especially in New Zealand, has highlighted how important a digital presence is. Even more so as it relates to brands being able to adapt to rapidly changing consumer behaviour.

In April IAB New Zealand conducted a ‘COVID-19 Impact on Strategy and Digital Investment Survey’, which highlighted that 63% of respondents described their business in its current state as ‘Pivoting: Changing the business or media strategy based on the market and consumer insight’, and this was reflected some extent by how often respondents were reviewing their business strategy, which at the time was predominantly weekly.

The same survey, however, was conducted again in June, and the result switched to a balance between weekly, and as major announcements were made. Across both surveys, approximately 80% of respondents revealed they were thinking about changing their business strategy post-COVID-19. Of those that were thinking about changing their business strategy post-COVID-19, the majority (at almost 83% in June) were anticipating leaning further into a combination of e-commerce and data-led strategies, which emphasises the importance of a digital presence.

Creative, personalised experiences

High-quality online experiences are important right now, as social distancing continues to create an alien feel to the physical spaces brands normally occupy. “After a gradual reopening of the retail economy, it’s clear that physical retail will suffer from the lingering effects of social distancing on consumer psyches,” according to Paul Briggs, an eMarketer senior analyst at Insider Intelligence.

Online can be used to make a more compelling and useful consumer experience in a semi-lockdown state; to replicate a rich shopping experience online when the physical alternative remains less easily accessible. For example, Verizon Media’s mobile ad formats, ‘Moments’ and ‘Brand Stories’ can include shoppable tags that allow users to tap on clothing items or products seen in the creative to find out where they can be bought and at what price. Brands that have used shoppable features have seen a 23% increase in their return on ad spend.

Executions such as this demonstrate how brands can deliver a prompt a call to action within a consumer experience of seamless quality – it’s the epitome of Marshall McLuhan’s famous phrase, “the medium is the message”. To this end, native advertising – something Verizon Media can offer across premium news services including HuffPost, Yahoo, Microsoft News and Apple News – is one format that offers particularly high engagement and viewability for both branding and performance objectives. Native Ads spend longer in view than traditional display banners, and our research shows they increase brand trust by 20% and purchase intent by 16%.

Cost-efficiency and control

Not realising the potential of this is perhaps why some brands have chosen to stop advertising completely during the coronavirus crisis – they think they can’t be relevant so they go dark. But this is the wrong approach.

Eminent experts such as Ritson and ‘The Long and the Short of It’ author Peter Field – with a wealth of research behind them – argue you need to continue brand investment if you possibly can. Going dark might limit risk and preserve cash, but it misses out on the opportunity of earning an excess share of voice in a market where competitors are quieter than usual.

IAB New Zealand produces a quarterly digital revenue survey which is considered the most accurate in the market. In 2018 digital revenue in New Zealand reached $1 billion for the first time, and up to the end of Q4 2019 digital revenue experienced nine successive quarters of double-digit growth.

In Q1 2020, digital revenue grew again, at the rate of 6.3% year-on-year and despite the first decline in digital revenue in Q2 2020 since reporting began, H1 2020 reported only a slight decline of (2.0%) on the same period last year.

Digital’s share of the total advertising market revenue continues to grow, with an impressive increase from 41.6% in 2018 to 45.4% in 2019, according to the ASA New Zealand Media Turnover Reports (2018 and 2019). There is a strong possibility that we will continue to see share growth again in 2020 given early indications that digital revenue continues to perform well, and even more so in the current environment.

As restrictions gradually lift, the economic climate will be uncertain for some time, meaning marketers will need to be able to dial-up and down their investment in advertising in response to fluctuations in demand, while still maintaining targeting on their relevant consumer segments. Clearly, programmatic advertising offers huge potential here.

What is certain is that, whether the goal is to recover short-term sales or maintain a brand presence, many marketers will be looking for solutions that can make their advertising budgets work harder in delivering business outcomes. For this, digital advertising served programmatically is again an obvious choice.

Shifting media consumption

So what is programmatic’s immediate role moving forward? Inevitably, it is in answering the greater need for agility in the uncertain economic times ahead.

It’s important that marketers reconsider the changing balance of power when it comes to channel choice. There has been a change in media consumption habits overnight: investment in outdoor and cinema has been decimated with Group M forecasting drops of 35% and 50% respectively in 2020. Meanwhile, there has been a resurgence in demand for trusted news sites online as consumers seek out credible journalism and an acceleration in online gaming.

Programmatic enables brands to stay on top of both long-term shifts and short-term fluctuations in media habits. And as the wider media landscape continues to digitise and develop, it’s easy to see that personalised online experiences, bought programmatically, will extend into the majority of media channels.

“It’s important that marketers reconsider the changing balance of power when it comes to channel choice”

The huge opportunity here is a powerful incentive for marketers to start thinking differently about their media planning and buying – to think about their audience reach across all channels, rather than within different silos with fenced-off budgets.

Trust and innovation

For this potential to be realised, marketers need to see two things from the programmatic marketplace – innovation and trust, two pillars that are central to Verizon Media’s business. Innovation is clearly in evidence from what we’ve discussed above, but how will we bring better standards of online advertising to fruition, and thus reassurance to marketers?

We’re fully committed to the IAB NZ Gold Standard for online advertising and are actively working with the program’s partners to improve it as adoption increases. We also believe it’s crucial to ensure more of a brand’s media budget goes on working media – in other words, the ads themselves – rather than on the technology that sits between the consumer and the brand. Our unique position as a publisher as well as a technology vendor enables us to achieve this with a flat, transparent fee when brands use our DSP – there are no hidden charges or mark-ups on our ad tech service.

Education for brands and the role our industry plays in promoting programmatic’s advantages, benefits and overall solutions to mitigate various privacy and malicious activity is ever more important with today’s heightened scrutiny placed on supply-path transparency, data usage and increased regulation.

Marketers must adapt

But marketers, too, need to adapt if they’re to make the most of programmatic, so our challenge to you is as follows. Think multichannel and avoid silos. Consider how you can redesign your teams and media planning approach, in recognition of the fact more and more channels can and should be bought together, with an omnichannel strategy that increases ad effectiveness and ability to measure accurately.

Stewart says the significant disruption has forced the market and marketers to pivot, however, there is still room for further development as companies are moving from immediate changes to developing longer-term strategies which harness digital channels even more effectively.

"We have seen dramatic changes in the way in which consumers behave, and given the level of convenience coupled with uncertainty, these changes could well have a lasting impact as consumers become increasingly digitally savvy. Therefore advertisers and brands will need to continue to adapt to reflect changing consumer needs, and in doing so they are likely to increasingly rely on e-commerce and data-led strategies as our research suggests."