More Bang for the Buck

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The advertising world is increasingly looking at digital platforms and using data analysis to target specific audiences who may become their consumers

BY KRISH WARRIER


WHEN Heineken wanted to launch Desperados, a tequila-flavored beer, in south-east US in 2014, it tried out its advertising campaigns in two different media. In some states, Heineken ran traditional television commercials; in others, it ran ads only on mobile phones at specific times of the day.

The results of a survey that followed were an eye-opener: in the states that received the digital campaign, awareness of the millennial-targeted drink reached 23 percent—well above that in states that ran only the TV ads. According to Nuno Teles, Heineken US’s chief marketing officer, they were aiming to reach millennials for pre-party occasions. And obviously, on Fridays at 9 pm, they were not watching TV; they were on their phones checking social media.

One of the main reasons for Heineken USA to invest around 30 percent of its ad budget in digital platforms this year—up from 20 percent in 2014—is the ability to align marketing spend with outcomes. It’s apparent that a digital strategy gave them more bang for the buck.

USER DATA

Today, on account of proliferation of providers from Netflix and the BBC’s iPlayer to Facebook and Snapchat, consumers have greater access to more media on more devices than ever before. The key, therefore, is user data. It helps advertisers target their messages to the right people.
It’s a no-brainer that the way consumers are consuming content is becoming more and more digital.

In India too, companies have woken up to the power of the digital medium. Pawan Tiwari, director, Virtual Veda, a start-up that specializes in digital media, says: “Sooner or later, the predominant advertising format will become digital.”

There is a decisive shift in the way advertising is bought, sold and created, thanks to the availability of an enormous volume of data—from set-top TV boxes, credit card purchases, online profiles to retailer loyalty card programs. There is also the availability of select technology that allows marketers to access, analyze and implement that data. According to a reputed market research group in the US, chief marketing officers will boost the amount they spend on marketing technology to $32.4bn in 2018 from $20.2bn in 2014.

In the US, half of the marketers surveyed planned to increase their digital budgets. Around 40 percent said that they would spend more on data analytics. Tiwari says: “In India too, there is an attitudinal shift as far as digital is concerned. Marketers are waking up to its potential and budgets are being skewed towards the digital media.”

Advertisers face a different kind of challenge—that of deciphering the different pieces of data they have access to, namely, loyalty card and customer relationship information, a plethora of data from social channels and Facebook.

SEEKING ACCOUNTABILITY

The question companies are asking is: How does marketing data intersect with data coming internally through the company, through the chief information officer or the chief technology officer or the ecommerce group? The objective is to sort it out and make the data useful.
Data and technology are facilitating targeted advertising. Their extensive usage reflects the marketers’ demand for evidence that the money spent influences consumer behavior. In other words, this means advertising accountability. “Half the money I spend on advertising is wasted,” said marketing pioneer John Wanamaker, adding: “The trouble is I don’t know which half.”

Targeting is important to marketers because they are under pressure to show efficiency and ensure that they are not wasting valuable advertising money.

According to an article in Financial Times, Simulmedia, an advertising technology company, is so sure that targeted TV advertising can produce measurable business impact that it is guaranteeing that advertisers who spend $1m for a month on ads aimed at specific viewers will have better results than what they would achieve using their current TV plans.

The Trade Desk (a platform which offers the ad industry technology to manage various campaigns) advised a fast-food restaurant chain to stop advertising to anyone who lived more than 10 miles away from its 10,000 locations. “That eliminated 40 percent of America,” says Jeff Green, CEO, The Trade Desk. “Then, we focused on reaching those within five miles. We were trimming the fat, so to speak.”
The chain agreed to start with a five-figure budget to test it out. It ended up boosting the campaign to more than $10m, Green says.

TRIM THE FAT

Industry personnel say that focused targeting can improve consumers’ experience of watching TV or browsing the web by ensuring they are seeing ads relevant to them. The idea is to limit advertising to people who are more appropriate.

The other side of the coin suggests there are limitations to how far marketers should take targeting. While online ads tailored to specific consumers increase their intent to purchase items, there is also a negative effect. Targeted ads tend to reduce the likelihood of buying by 5 percent.

Even digital diehards were concerned about this. They knew they were being targeted by the marketing people. Result: they didn’t like it. No one wants to be used for target practice.

The future of media is the future of advertising and vice-versa. Design philosophies of the digital media will exert greater influence on traditional advertising than traditional advertising will hold over the design philosophies of the digerati (people skilled with digital knowledge). Tomorrow’s soft-ads are going to reflect the values of the Net. As for today’s advertising: the times are changing.

Krish Warrier is mentor and creative director, BCD-Blankstate Communication Designworks.