The State of Digital Advertising


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Article ImageThe issues that have dogged digital advertising in the past have been a lack of trust and weaker customer engagement than in traditional media. Digital ads-more than print, radio, or TV-were mere ephemera in the busy lives of their intended audience, and they were easily filtered or ignored. Yet, over the past year, digital advertising started to get better results. In 2013, new forms of digital advertising got much, much better results and sprung a new source of revenue in the guise of native advertising.

Native advertising wasn't the only story of 2013. Trust in digital messaging tipped well into the majority, and we saw a commensurate rise in adoption of online video, as well as a sharpening of the tools available to advertisers. Armed with new, multichannel tracking mechanisms and state-of-the-art attribution reports, companies and agencies were able to hone their new strategies better than ever.

THE YEAR IN REVIEW

In the past, digital was simply not quite believable. As recently as 2007, only 26% of consumers believed banner content. According to a report by Nielsen released last September, trust in online banner ads jumped to 42%. Branded websites jumped nine percentage points and are now trusted 69% of the time.

Sincerity has always been an important advantage in advertising, and 2013 was the year when the formula began to work well in digital. Trust in digital is led, in part, by the prevalence of audience postings. Sixty-eight percent of survey respondents indicated that they trust consumer opinions posted online, which is up seven percentage points from 2007. Hence, advertisers began to leverage their brand's social media and Web 2.0 postings to inspire content that rang true.

"Really good, strong content is around a big idea," says Rebecca Lieb, senior analyst at Altimeter Group. Native advertising has allowed marketers to take a big idea and to create content around it that bolster their brands. Several big companies-namely Forbes, The New York Times Co., and Twitter-have used or plan to step up their use of native advertising. The New York Times Co. announced, in late fall 2013, that it plans to introduce branded content areas in a 2014 website redesign. Meredith Kopit Levien, the new executive VP of advertising, says that The New York Times will roll out a native advertising platform.

For Prudential Financial, Inc., the insurance and financial services giant, this strategy has seen several manifestations. For instance, Prudential incites visitors to post their personal stories through its Facebook and Twitter feeds by asking the question, "If you could pay yourself to do what you love in retirement, what would you do?" The visitor content generated is used in future advertisements. If visitors approve public access, these stories may, in turn, run on an electronic billboard in New York's Times Square and are added to the Prudential Retirement database. The content in these new forms of advertising is about real people, but Prudential is present all the way.

No discussion of digital advertising in 2013 is complete without a look at online video. Internet users are receiving links to videos regularly, no matter where they sit along the consumer spectrum from Millennial to Baby Boomer. Robert Davis, SVP of digital marketing at PJA advertising + marketing, cites 2013 Pew Research Center's Internet & American Life Project research, noting that "72% of adults are watching video on sites like YouTube. That's up from 36% in 2006." Davis underscores the importance in the growth of online video, asking, "When was the last time you heard anything about a broadcast television audience doubling in six years?"

Davis believes that most people watch videos for entertainment. This assertion holds up in the results Prudential is getting. "A light-hearted video, like ‘Secrets to living longer' clearly went viral and has gathered over 1.1 million views. At the other end of the marketing funnel, a content-rich video on alternative investment strategies had about 35K views," says Colin McConnell, VP and head of advertising at Prudential.

Like Prudential, advertisers owe a lot of the year's achievements to the new tools at their disposal through marketing attribution. Notably, the sector has grown, and it's now seen as a specialty that is hard to in-source. Companies that are looking to analyze their customer behavior data to inform marketing and advertising strategists, to see where they should allocate their spend, and to learn which behaviors are useful to track, realized this year that marketing analytics meant more than hiring data scientists. Very large media organizations aside, one of the year's findings is that this is a discipline best outsourced to experts, and the trend in 2013 showed a double-digit increase in revenues in the marketing attribution sector.

Last July, Google saw fit to examine this trend. Google, which surveyed more than 600 marketers and agencies across all major industry sectors, found that 90% of the organizations that have adopted marketing attribution tactics say they are seeing significant benefits. The most cited reason is gaining a better understanding of the customer journey.

For Prudential and others, the data from marketing attribution reports has helped companies better understand the value of their marketing mix. Among other things, it has lessened concerns that the banner ads don't play a part in conversion, because the reports show that they do, even when not clicked. Still, 1 in 10 consider "last click" to be a significant indicator, and 50% are still using it as a metric, according to the study.

A LOOK AHEAD

For the coming year, be prepared to be inundated with wonderful, well-produced, and heartwarming personal stories brought to you by mega brands. Likewise, content will find new forms and travel in native advertising. Additionally, there will be more discussion of the occasional friction in the marriage of native with its surrounding real, editorial content. Expect vintage content to be taken out of the archives and dusted off; imagine a Harper's Magazine cookie recipe from 1967 finding its way into a seasonal ad, as publishers find ways to monetize old content for ads.

Publishers in particular will need to be careful how native is used: The Federal Trade Commission (FTC) began holding hearings at the end of 2013 to ensure that consumers can tell the difference between actual editorial content and native ads. Lieb, who has testified on other topics before the FTC, says customers will ask, "Are the mechanisms in place to inform us that these are paid and not spontaneous?" This will be positive in the long run, and it may work to support the upward trend in trust in digital.