Author: Dan Cohen, Regional Director, Tradedoubler
Consumer shopping behaviour is changing constantly, Forrester calls this new era the “Age of the Customer”, in which consumers are in control of their interactions with a brand and demand targeted and contextually relevant advertising. According to Tradedoubler’s Digital Connections study*, 65% of European consumers stated that they buy more online than they did a year ago, making it more important than ever to make sure that online advertising is optimised for conversion, not just focused on reach and branding objectives. As consumer behaviour changes so must advertisers’ approaches to targeting and optimisation.
Advertisers that focus on driving traffic, rather than serving personalised ads to highly targeted audiences are risking their relationships with prospective customers. With 49% of consumers rejecting brands that bombard them with too much or irrelevant advertising, it’s clear that advertisers need to get their strategy right and target the right people at the right time, to avoid potentially irritating their future customers.
Of course consumers will never love receiving advertising, but a balance needs to be achieved between privacy and personalisation. Serving contextually relevant ads helps achieve this equilibrium; Tradedoubler’s research concluded that consumers want to receive advertising that is relevant and 36% of the consumers surveyed said they are more likely to buy from a business that sends them tailored messages. It’s clear that there is also a willingness to share information, because 42% of European adults don’t mind giving their personal details in return for a relevant offer. Brands have a responsibility to manage and respect this relationship.
For many advertisers, identifying consumers that are likely to convert when presented with an ad for their products or services is the first challenge and why so many turn to sociodemographic insights to purchase inventory on a CPM basis. But these data points alone can’t define a consumer’s interests, their likelihood of making an online purchase or their potential affinity to a brand.
To identify new customers brands must first invest in understanding their existing customers, this will allow them to find similar consumers who they can reach online and are likely to convert when presented with their ads. Using machine learning and artificial intelligence marketers can listen to their website traffic and identify patterns that they wouldn’t otherwise be able to. These insights can be plugged into a DMP (data management platform), which observes millions of customers’ online purchase journeys, to identify similar online users that are likely to convert when shown a brand’s ad. As a result, less users are targeted but conversion rates increase, resulting in higher ROI.
Online advertisers have been fixated on reach and have bought inventory on a CPM (cost per thousand impressions) basis as standard for years. This is a cost effective way to generate reach but it doesn’t necessarily drive sales. These days marketers are increasingly under pressure to demonstrate ROI and CPM can lack accountability as a measurement, because it doesn’t lend itself to evaluating the effectiveness of acquisition campaigns.
On the other hand, performance metrics such as cost per acquisition (CPA) — where a fee is only paid when a new customer is acquired — is a more accurate measure and encourages a more targeted approach. It is still appropriate in some cases to buy inventory on a CPM basis, if you require a large reach for example, but tracking conversions can provide a CPA metric and enhance the measurability of a campaign.
Omnichannel marketing is no longer optional, consumers don’t see boundaries between channels or screens and they expect relevant and targeted messages. This consumer expectation requires brands to understand how their existing customers engage with them, and the use of this insight to intelligently identify and connect with people just like them. It sounds simple, but many companies fail to effectively utilise their data or they don’t have the right partners to allow them to gain actionable insights that they can then use to drive their remarketing and acquisition campaigns. There is a real customer demand for contextually relevant marketing messages and more accurate targeting will improve both a brand’s ROI and its customers’ loyalty.
* The Digital Connections study was conducted for Tradedoubler by Arlington Research in March 2016. The research questioned 4493 consumers aged between 16 and 64, in the UK, France, Germany, Spain, Italy, Netherlands, Poland, Sweden and Switzerland. - www.tradedoubler.com/en/about/resources/route-to-your-next-consumer-digital-connections-whitepaper/