It’s been more than a hundred years since marketing pioneer John Wanamaker declared, “Half the money I spend on advertising is wasted; the trouble is, I don't know which half”. A full century later, with a US$600 billion advertising industry, are we any closer to solving the problem? Do we really know what’s working in terms of real business metrics?
I think the answer is here at last, yes, but only in the past five years or so. In that time, the digital ad tech industry has come on leaps and bounds, helping advertisers to understand the performance of all inventory and focusing money on what works. There’s only one roadblock to extinguishing Wanamaker’s dilemma, which I’ll come to in a moment.
First, let’s take a quick look at the evolution of ad tech. It really started in 2009 with the advent of real-time bidding (RTB) across the major display exchanges and sell-side platforms (SSPs), such as DoubleClick and PubMatic. Inventory was bought based on performance, driving rapid demand. Buying platforms (DSPs), ad networks and agency group trading desks were quick to jump on board and take advantage of these new efficiencies. A year later, video tech vendors, such as Adap.tv, joined the ranks of the RTB enabled.
The problem with these early solutions was their over-reliance on cookies. They did a good job tracking web-browsing behaviour in a desktop world, but are less than adequate on mobile devices. Instead, as mobile becomes increasingly important, media and tech companies are focusing on probabilistic and deterministic methods to identify the user, and allow control of the targeting, frequency and messaging of their ads.
Probabilistic user matching algorithmically analyses thousands of different anonymous data points – device type, operating system, location and time, as well as a host of others – to create statistical matches between devices. For example, if a phone, a tablet and a laptop connect to the same networks or Wi-Fi hotspots in the same places every weekday, it’s safe to assume these devices all belong to the same user. It’s not an exact science, though. Accuracy generally ranges between 70% and 90%.
The ‘deterministic’ approach uses email addresses to match users across devices. The address can be hashed so it translates as a number or code for privacy protection. It’s an approach that provides user-matching accuracy in the high nineties and avoids the false positives that cause misattribution.
If he was around today, John Wanamaker would have been impressed, but perhaps also a little frustrated. You see the problem is that technology has evolved as a series of siloed platforms. Fierce competition meant the technologies rarely spoke to each other and, therefore, denied a holistic view of the consumer for the marketer. We can manage efficiencies in individual pockets, still not getting that holistic view Wanamaker craved.
Thankfully the situation is changing with the rise of open, transparent platforms that enable fully programmatic planning, buying and delivery across multiple media channels, using the best available methods of attribution, all through one account and one user interface. Measurement and analytics is key to this unified approach, enabling a holistic media understanding across each channel. Finally marketers can connect the dots between each consumer’s multiple touch points. If half of your campaign isn’t performing, you change it.
In fact, to solve Wanamaker’s problem we need to return to the fundamental principle of marketing, and focus on the customer, rather than the technology. We need to bring together the various adtech components into a single stack, organised around identity and the individual, rather than a cookie or device ID. For the marketer it gives the ability to personalise messaging on a one-to-one basis, whilst also providing the reach and scale that ‘one to many’ broadcast media delivers.
It means John Wanamaker’s dream will soon be realised. Marketers will know which elements of their campaigns are working well and can cut those that are not. That’ll free up time for the real job – getting the message right.
For that, we can turn to another advertising great, David Ogilvy, who said, “What really decides consumers to buy or not to buy is the content of your advertising, not its form”. He’ll be happy too, with the way things are shaping up.
Nikki Retallick
Senior director client strategy
AOL Platforms