Special report: The future of digital marketing

19 Sep 2016  |  David Pidgeon 
Special report: The future of digital marketing

From the impact of AI, to the obstacles holding back the marriage between programmatic and creative, senior figures debated the biggest issues facing digital marketing at this year's Dmexco. Mediatel Newsline editor, David Pidgeon, reports.

Debate attendees: David Pidgeon (Chair) Editor, Mediatel Newsline // Nicolas Bidon, CEO, Xaxis EMEA // Ruud Wanck, Global CEO, GroupM Connect // Mark Pearlstein, CRO, DoubleVerify // Blake Cuthbert, Chief Digital Officer, OMD EMEA // Steve Chester, Director of Data and Industry Programmes, IAB // Hannah Rouch, Digital Creative Director, Bauer Media Advertising // Chris Marjoram, MD, Rapport London // Michael Jaschke, MD, Glomex

Even uttering the word 'programmatic' once made creative agencies shudder, but as adtech and the use of data has become more sophisticated, there's plenty of evidence that there can - given the right treatment - be a successful union.

A full-blown romance between the art and science of advertising is still some way off, but things feel like they have moved on in the last 12 months - and programmatic is now about much more than just serving a banner ad with little artistic merit.

There are now numerous examples of ads that are more personalised, designed to match or reflect the mood or need-state of the potential viewer, as well as ads that can be executed in multiple ways, far beyond simple segmentation.

Creative programmatic has, therefore, becoming a major talking point in adland and kick-started a wide ranging debate between senior figures at this year's Dmexco, Cologne.

"Creative programmatic still remains a goal rather than a reality for most of our clients," the CEO of Xaxis, Nicolas Bidon, says. "But I feel it has really risen to the top of their agenda as they continue to see more budgets going to digital, and more digital budgets going to programmatic."

Bidon says clients are also getting better at using first-party data, allowing them to unlock more of its value to deliver more creative messaging. However, one of the main barriers to making programmatic a creative reality are almost entirely linked to scaling the opportunity.

He argues that the industry now has the technologies to genuinely pull it off, but that a new approach is required to tailor the message in the rendering, based on data that will make the creative more relevant and give it cut-through.

To do that, Bidon argues, you almost have to break down and reassemble the ads - "intelligently" - before you deliver them. That is entirely achievable for most brands to do with a static banner or a rich media ad. It becomes a much bigger issue, however, with video.

"This is a challenge," Bidon says, "particularly given there is a trend moving towards video, only adding to the difficulty."

Yet with a change in workflows and processes - as well as making clients and agencies aware of what can be done - there is no reason the industry cannot leap this hurdle, he says.

For OMD's chief digital officer for EMEA, Blake Cuthbert, one of the main obstacles is understanding how to apply multiple insights and executions to the creative Big Idea.

"It's no longer a case of 'here's my brief and my one key insight'," he says.

"It's now a case of potentially having 50 briefs, 50 different need states of how we can be better with that message at that time. The problem is, the processes we currently use just don't work like that."

Mark Pearlstein, chief revenue officer at DoubleVerify agrees that it's time to change that, adding: "But this is the real promise of digital advertising. This is the chance to finally get away from the crappy banner ad that chases you around the internet and instead tell a relevant and meaningful story to users."

Has digital killed long-term brand building?

Crappy banner ads stalking users online is probably the biggest failure of the programmatic revolution. Critics argue it is a short-termist and opportunistic strategy that has done nothing to build brands. Targeting and re-targeting - as clever as the tech capabilities might be - are only serving rubbish ads, they argue, and proven brand-building channels like TV have been quick to point this out as they try to protect their ad revenues from online's encroachment.

Is that going to change any time soon?

"We think brands have to be built through huge, rich video and emotive storytelling," says OMD's Cuthbert. "Yes, that works. But now we can achieve the same outcome by being hyper-relevant and unblocking a challenge that [a consumer] has at that moment."

But that means bringing art, data and insight into internet advertising in better and bolder ways.

Ruud Wanck, global CEO, GroupM Connect, says that no one buys a car because they saw a banner ad. "People buy a BMW because when they are six years old they have experiences with the brand, they live the brand, they aspire to be able to buy the brand.

"But when I look around at what is now happening in many markets and regions on the internet, this is being turned completely upside down. We bombard people with last minute messages urging them to 'click here'. What we are doing has nothing to do with art any more.

"We just want that last click conversion. But I'm absolutely convinced that when the art gets into digital media as it has already done with traditional media, this problem will be solved."

Xaxis' Bidon argues that long-term brand building can be achieved online - citing Red Bull as the most obvious example - but said where digital has not helped is in the measurement, what he says is a "rabbit hole towards last-click attribution."

"However, if you look at the bigger picture, and incorporate everything from desktop to mobile, to out-of-home - which is all possible now - then you can piece together the customer journey and realise digital advertising can be just as effective as that big TV campaign."

Meanwhile, the IAB's Steve Chester says that too many structures exist within agencies, brands and publishers that undermine online's ability to truly build brands.

I'm absolutely convinced that when the art gets into digital media this problem will be solved."

"But those publishers that have direct client relations tend to get much better and deeper results," he says. "This is because they really understand the client and their business goals."

Chester argues that TV works because it embraces wastage, but smarter ways of working online can match its performance in building a brand over the long-term - but it will mean opting for organisational structures within brands that don't "scatter digital teams", as well as more effective use of first-party data to maximise its value.

Making traditional media stronger

Looking a media like out-of-home - that is relatively new to digital - it is interesting to see that it has clearly learned not to dive in head-first and instead take a more considered approach to using new tech.

Out-of-home, the world's oldest ad medium, is embracing everything from digital screens, beacon technology, geo-fencing and mobile. How does it hope do this without losing its renowned brand building capabilities?

Chris Marjoram, managing director, Rapport London, says he is in an "enviable position working in out-of-home."

"We're in this transition period at the moment moving from static posters to these amazing digital screens," he says. "Everything that is really good about out-of-home is still the same, but is so much better because of digital.

"Brands will still use out-of-home to build brand fame, but now we have much, much better data - from both clients and from audience insight bodies like Route. This means we can target more effectively.

"We're using digital media and data to be more selective."

This could mean an ad is served because it will have more impact at a particular time of day, or is more appropriate in certain types of weather. It could even be tailored to match the outcome of a sports match, making a medium that reaches many eyeballs more relevant without having to be 'hyper targeted'.

Cuthbert adds that more OOH campaigns are now being planned using mobile data to enrich the understanding of the audience.

"Once people have seen great out-of-home advertising, we can now have a second frequency that can compliment the user experience. Yes, brands are built through a number of little touches throughout someone's life, but we need to stop [using just one] message and use digital in a much broader manner."

Artificial Intelligence

2016 feels like the year machine intelligence finally hit the big time. Robo-journalism, predictive algorithms, facial recognition and job automation - it's an ad tech dream come true, but what are the realistic implications?

"The big data era is right now, and I think the next phase is going to be machine learning," says Ruud Wanck. "That's a completely new dynamic dataset that is evolving all the time that draws conclusions automatically."

For Wanck, it means a new era that will offer much more relevance in advertising and much more knowledge about the consumer.

For OMD's Blake Cuthbert the promise of AI is helping to process the multitude of messages born out of creative programmatic.

"AI can help us understand what's happening faster," he says. "It can allow us to make decisions faster and it's going to help us to be more tailored to the user experience."

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Cuthbert cites IBM's super-computer Watson which read thousands of cookery books to draw new conclusions about flavour combinations. It was successful because it had the ability to digest enormous quantities of information and turn that into a meaningful human insight.

"It's applying it in the right areas," he says, "to do what a human can't."

That could solve some of the current headaches marketers have with enormous datasets, making it more useful without the extra human resource.

"But human involvement with the technology is still key - AI will need to be constantly crafted and guided," Cuthbert adds.

For Michael Jaschke, managing director, Glomex, a new business specialising in online video, the one thing that is set to make waves is the rise of chatbots - computer programs designed to simulate an intelligent conversation.

"Chatbots will be very beneficial to our industry because they allow users to have an interaction that is quasi-human, relevant to a subject, but it's completely machine-based."

For Jaschke, it means getting closer to consumers at scale, offering personalistion and the delivery and optimisation of the right message at the right time. The consequences for discovering new insights whilst offering a new utility or fun experience could have "untold impacts" on media and advertising.

Xaxis' Bidon agrees: "Say you have 10 audience profiles you're trying to target and you have 50 different creatives you want to test, you could do this across 5,000 different websites at 5,000 different price points,

"That becomes quite a complex problem for somebody to then allocate the best possible budget to the right place. But that's something a machine can be fantastic at."

There are reasons to be cautious before getting carried away, however.

"What AI tries to do is already in the name: it's artificial intelligence, not human intelligence, not human creative," says Wanck. "It's designed to do something that's repetitive much better and much faster than human beings could ever do.

"But it's still not creative intelligence. It's still not art intelligence. I think it's important we use AI to do the things we simply can't do, but it doesn't bring art back into media."

Bauer's digital creative lead, Hannah Rouch, offering a publisher's perspective, agrees. "It's very much about looking at AI for the insights it can provide us to fuel human creativity.

"From a content point of view, data can fuel what we do, and I think with AI there's lots of opportunity in developing that, but you can't lose the human instinct - we must only use AI to make our instincts sharper."

Surviving as a publisher in the shadow of Google and Facebook

There aren't many conversations about digital advertising that omit Facebook and Google, and the panel discussed the strain the duopoly is putting on publishers, and subsequently the wider advertising landscape.

Recently, senior figures, including Thinkbox chair Tess Alps, have called for advertisers and agencies to rethink their investment strategies before premium publishers go extinct. Alps's comments came after the Guardian witnessed unnerving declines in ad revenues - figures published in the same week Facebook's own revenues sky-rocketed.

Indeed, Vice's co-founder and CEO Shane Smith voiced his concerns during an interview with WPP's Sir Martin Sorrell elsewhere at Dmexco, and said the reason the youth brand became "platform agnostic" two years ago was to ensure it would not be held "hostage to Facebook" and the other big online players.

Speaking at the Mediatel debate, Bauer's Hannah Roach, said that publishers need to build deeper relationships with clients to "bring some balance back".

"We have very strong audience insight, expert editorial teams and can create content that has a cultural and deep connection with that audience on behalf of clients," Roach said.

"Yes Facebook and Google can offer scale, but perhaps advertisers need to rebalance the weight of their spend and look at the value of the content publishers produce, and that powerful connection with their audiences."

Rouch added that what Facebook offers tends to be a one-size-fits-all approach, but publishers posses the ability to go much further - and that means more effective advertising.

"We can work much more closely with a brand client to meet their objectives; working in partnership with them to deliver successful campaigns but in a very different way to Facebook."

GroupM's Wanck says that it is unfair to criticise Google or Facebook for simply being very good at what they do, but there is some hope for publishers.

"Google with search, and Facebook with social, have truly discovered something unique, but that doesn't mean that the others must become obsolete or different," he says.

"In part, it's up to a media agency group like ourselves to make sure they can all work and exist together to deliver the best results."

The practical solutions to adblocking

"Within five years' time, we expect 100% of browsers to have enabled ad-blocking," says Glomex's Michael Jaschke.

This is, undoubtedly, a grim analysis, and something the IAB certainly does not buy, but the fact remains that the advertising and publishing industries are facing a crisis.

21.2% of Brits online are currently running an adblocker, a figure that has actually plateaued slightly in recent months, but that doesn't seem to make anyone any less nervous about the problem.

And now the industry's arch rival, AdBlock Plus, has got its ultimate revenge as it plays an endless game of cat and mouse: not only is it dictating its own definitions of what constitutes acceptable advertising, but it is launching a supply side ad platform from which publishers can self-serve pre-approved ads.

It's the sort of news making headlines far beyond media trade magazines and seems to be making lots of people - including the globe's biggest clients - nervous. So what did the panel think the practical solutions might look like?

"I think we're going to see more publishers pivoting their business models so they're not necessarily entirely ad reliant," says the IAB's Steve Chester.

"They're likely to start offering some form of subscription or micro payment system, to run alongside a broader ad-funded model - and that model will need to offer a much better user experience."

Meanwhile, Bauer's Hannah Rouch says publishers understand their audiences and create relevant content that they want to consume - and that is the same approach advertising must take.

"We need to educate people [about the value exchange of free content] and we need to serve people better and more relevant ads," she says.

"We're now working with our audiences in a much smarter way, offering less ads for logged-in users that are much more relevant to them [based on user profiles]. It's all about user experience."

However, DoubleVerify's Mark Pearlstein says that it is the user experience that far too many people in adland have lost sight of.

"We got into people-based targeting, we started buying audiences and we forgot about the person on the other side and what their experience is," he says.

"Users, therefore, should be driving us to where we need to be."

For GroupM Connect's Ruud Wanck - who circled the problem back to the start of the debate - once digital advertising truly embraces the art of creative, then adblocking will fade away into obscurity.

"If online advertising can become beautiful, compelling - but also targeted, and therefore relevant - then I genuinely think adblocking will be a temporary phenomenon."

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