In an overcrowded ad tech environment, those players and brands that will take into account the significance of direct-to-customer communication, supply-path optimization and FAANG prevalence, have the best chances to succeed and perch among the leaders.
Never-ending technology progress constantly accelerates the transformation of the ad tech ecosystem, while brands strive to adapt to the new rules in order to stay competitive. In such circumstances, companies that want to fully master new customer experience trends will have to work in new realities, which require learning new approaches to product positioning, advertising planning, management and optimization.
Technology-driven transformations that started in 2019 entail big changes, the consequences of which will be echoing far behind 2020. Understanding these transformations and their impacts will help brands adjust their strategies now in order to meet the market requirements of tomorrow.
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Customer Centricity as a Driver Of E-Commerce
Remember those good old Coca-Cola campaigns, when customers were incentivized to collect the codes from under the bottle caps or register their phone numbers on the website to win little prizes? In fact, the program is still running on MyCokeRewards.com; furthermore, the company added additional reward points to the program for review submission, website registering and other actions that encourage user loyalty.
This is a good example of a well-executed, direct-to-consumer advertising strategy that emerged in the 1990s. Although the strategy is not new, many companies have never communicated with customers directly by applying personalized tactics, prioritizing general awareness over personal touch. Direct-to-customer product promotion moves brands away from traditional intermediary channels (billboards, press, TV commercials) and puts the consumer at the center of interaction, in order to make it authentic and credible.
Such an approach is not only good for customers, but it is also especially beneficial for eCommerce brands. Forgoing third-party providers, they can act as tech operators, planning and testing their ad campaigns independently. Exactly for this reason, many companies shift to in-house advertising. For instance, an enterprise build its own ad network with a white-label, pre-build platform and integrate only those partners they trust. With proprietary data collected in the system, companies can also leverage DTC programs as a way to:
- Get the opportunity to collect customer data directly, which is especially important in regards to GDPR and CCPA restrictions for ad tech.
- Create their own CRM database of loyal customers and use it for segmentation.
- Apply self-collected, first-party data for advertising personalization for each customer segment on the demand-side platform.
- Re-use this data to redirect customer attention to subsequent promotions, instead of collecting information from scratch, over and over.
The Impact Of Faang On Business And Public Opinion
FAANG stands for Facebook, Apple, Amazon, Netflix and Google. These are not just media giants – each of these companies holds a great share of the advertising market and largely influences advertising. Even though FAANG stocks may have shown negative dynamics in the last couple of years, it’s certainly not the end of its golden age in advertising: Google, Facebook and Amazon together account for 70% of digital ad spending and cause ~99% of its growth.
Such a distribution of the advertising market among a few players means that there’s no way for advertising standards to be influenced by someone else in 2020. In relation to monopoly issues, the Department of Federal Trade Commission (FTC) is currently leading the investigation, considering advertising the practices of tech giants.
The FTC plans to investigate whether each company’s business practices have a negative impact on competition and whether Amazon, in particular, has too much power over the online retail sector. What actions will follow these investigations if assumptions will prove to be true? Currently, no one knows, but most certainly, the ad tech community will have to create some kind of regulatory watchdog that would loosen the monopoly impact and establish better conditions for SMBs.
As their growth is still exponential, the best move that companies can make now is to establish a partnership with them, not competition. The best survival strategy for agencies in this situation will be shifting to narrow niches and positioning themselves as experts in particular channels, such as mobile, addressable TV or audio advertising.
SPO and Lab Standards Will Help Good Publishers Win
Inventory authorization and verification tools, like ads.txt, ads.cert and app-ads.txt are all IAB initiatives that were launched during the last couple of years as a way to protect the advertising market from fraud. In the nutshell, applying ads.txt advertisers can verify all sellers and resellers of particular web inventory before bidding. Meanwhile, the app-ads.txt standard does the same for the mobile and relatively new addressable TV environment. Ads.cert is an upgraded version of ads.txt, that allows inspecting the entire chain of intermediaries between the advertiser and the website owner.
Media-sellers and media-buyers are equally interested in such solutions deployment as they remove the trust issues between buyers and sellers. They also remove unnecessary intermediaries and technological layers that simplify the process of ad purchasing and delivery, plus makes the ecosystem more transparent. Most importantly, traffic becomes clean and fraud-free. The majority of the big ad tech players have already enforced these standards adoption on their platforms. The hardest part will be persuading the rest of the publishers to embrace these solutions in order to accelerate supply chains transformation on the global level.
Supply-path optimization (SPO) drives the same quality transformations for supply chains. When the same impression is getting auctioned via myriads of platforms, it can reach the advertiser through multiple paths, and if it is a reseller path, then purchasing may be longer and more costly. With header-bidding auctions, advertisers might even end up competing against themselves. A DSP that adopts a supply path optimization advertiser can automatically define the shortest path that leads to a particular impression with an optimal cost. Likewise, SPO is able to drive transparency regarding transactions and quality: who is sourcing what type of inventory, how they are sourcing it, directly or not, and so on.
Publishers, in their turn, can also become winners from such a situation, since SPO and IAB initiatives will naturally redistribute advertising costs in favor of authorized, fair and trustworthy players.
What’s for the Outcome?
In 2020, those market players that embrace direct-to-customer communication, enrich their in-house systems with first-party data and switch to SPO and IAB standards, will definitely have a competitive edge over those who don’t. Meanwhile, smart martech and ad tech algorithms and technologies will help them communicate to the right audiences and optimize campaigns in order to reach peak performance.