Reaching the omni-channel consumer

Following Media Playground 2014, VisualDNA’s Jon Hewson investigates the impact on advertisers and brands as the juggernauts of digital video and programmatic buying collide in the market.

The advertising industry is undergoing fast and far-reaching change, and many of the existing approaches and models will need to evolve. As traditional TV audiences fragment across digital channels, advertisers will need to re-think their strategies and deploy new tools.

Meanwhile, programmatic trading is already rapidly changing the traditional agency model, automating and accelerating processes, and giving brands an easier, direct route to market.

Change is good, and these two trends represent an opportunity and an enabling technology rather than a threat. The simultaneous rise of digital video consumption and programmatic advertising gives advertisers and brands an unprecedented ability to zero-in on their chosen audiences, and to provide more relevant messages that cut through the growing background noise.

In particular, the combination of digital video with programmatic trading will make it easier to forge emotional connections with consumers by giving them high-quality, highly targeted content. People are absolutely not against watching ads – what they don’t like is being chased across the internet by display ads for a pair of trainers they bought weeks ago!

By intelligently combining rich demographic data with new data on viewers’ personalities, advertisers can target audiences with extreme precision and serve resonant video ads that appeal directly to each viewer’s emotions and aspirations. The results? Greater brand engagement, higher click-through and conversion rates, and happier consumers.

Programmatic buying is set to spread like wildfire through the market for digital video ads. Online display ads are already routinely bought and sold through automated exchanges in a $15+ billion market.

Magna Global estimates that 25% of all digital video inventory will be traded programmatically in 2014, potentially rising to 70% within the next three years. (Of course, the term “programmatic” is likely to disappear at that point, as it will simply be how the majority of ads are handled).

More online video is being consumed, and with it more digital video ad impressions. According to BusinessInsider, U.S. online video ads viewed in December 2013 were 100% up on the same month in 2012. The same report predicts that online video ad revenues will rise from $2.8 billion in 2013 to almost $5 billion in 2016, while TV ad revenues will fall 3% over the same time frame.

The outlook is similar in the UK, where a PwC Entertainment and Media Outlook report estimates that the UK market for digital video advertising will grow by almost 25% a quarter each year from now until 2019.

And in Europe as a whole, IAB Europe has reported an 11.9% rise in digital advertising spend, with online video ads growing by 45.4%. Finally, the Economist has weighed in with a prediction that digital video ad spend will grow 43% in 2015 (with TV growing just 3%).

Traditional TV isn’t going away any time soon. However, brands and agencies are clearly responding to changing viewing patterns, and complementing their TV spend with spend on digital ad inventory. Particularly where advertisers aim to target demographic groups that watch little or no broadcast TV, brand advertising is likely to take a growing share of digital video ad spend.

Today, the majority of digital video inventory is YouTube, but clearly there is a huge amount of higher quality inventory beyond that, and content owners – most notably, TV companies – need to wake up to the enormous scale of the opportunity. The market is crying out for high-quality video inventory – including ads within content – but the supply is not there yet.

Clearly, there is still work to do. The industry needs to address valid concerns around viewability and verification – but all the signs point to a successful resolution of these issues.

Equally, organisations like Nielsen must continue to refine their online metrics, and to develop standard brand metrics that span multiple digital and non-digital channels. Again, this is a highly creative industry, and we can fairly safely assume that these challenges will be overcome.

Faced with the accelerating fragmentation of audiences from conventional TV to a huge array of digital channels across numerous different devices, advertisers can be forgiven for feeling a little nervous. But far from being a problem, the evolution in viewing habits is a positive opportunity. People are watching more – not less – content, and in choosing more convenient delivery mechanisms for that content, they are also making it possible for advertisers to target them far more accurately and efficiently.

TV needs to see digital video as a complementary technology and opportunity: great content will always be in demand, in particular for its ability to reach people on an emotional level. Making emotional connections translates into better results for advertisers and brands, so it follows that this kind of high-quality video content will be at a premium in the coming year.

So rather than representing a race to the bottom, programmatic approaches to video will actually unlock higher value for all parties: publishers will be rewarded better for producing great content that drives up engagement, brands will achieve higher sales with more engaged consumers, and better targeting will drive down the cost of reaching the right audience for advertisers.

Both topics – programmatic and the ongoing rise of digital video – will certainly bring about significant change in the advertising industry, but together they will make it possible to segment and reach audiences with greater accuracy and speed, and to deliver relevant, personalised advertising that viewers will find less intrusive.

Naturally, accurate segmentation and targeting depends on having access to rich data on viewers, and audience fragmentation is helping here, too. The rocketing consumption of video content on tablets and smartphones is enabling smart advertisers to build up rich contextual data about where viewers live, work, shop and eat – all of which can supplement basic demographic data to support greater sophistication in ad targeting. Programmatic approaches then make it easier and more efficient to push video ads to specific market segments, and to measure the impact of campaigns.

So far, so good – but even knowing a viewer’s age, sex, income, and where they live, work, shop and eat will not provide any insight into their emotions, aspirations and buying preferences. For that insight, advertisers and brands need data on the personality traits that define who their customers are and what they feel: these qualities build brands and drive purchasing behaviour like nothing else.

By combining demographic and contextual data with data that explains who customers are and why they choose to buy, advertisers can carve out smaller and more precise segments, build the messaging that resonates best with each audience, and create campaigns that deliver better results.

This new approach will not work without the speed and scale of programmatic inventory buying, which enables advertisers to identify and understand viewers in real time, then serve video ads to them on an individual basis.

The combination of rich, personality-based segmentation with intelligent, rules-driven programmatic buying will help advertisers to personalise and target their messages at scale, in real-time and in a cost-efficient way.

Perhaps most importantly, using psychographic data to understand customers and prospects and appeal to their emotions will enable unprecedented brand engagement – not least because people respond more favourably to messages that appeal to their specific personality. So even as audiences fragment into niche segments and people split their viewing across multiple devices, advertisers and brands will be able to forge more powerful and longer-lasting connections.

Jon Hewson is sales director at VisualDNA, which brings together psychology and big data to deliver new levels of customer understanding.