Six trends in advertising you need to know for 2014
Ashley Friedlein, chief executive of Econsultancy, picks six key trends that are likely to affect the advertising market this year - are you already prepared?
1. Real-time bidding trends
Investment in online display advertising showed strong growth in 2013, as illustrated in our Online Advertisers Survey Report. The levels of take up of real-time bidding and programmatic approaches, by both media owners and advertisers, have been strong. Sixty two per cent of advertisers using RTB saw improved performance as a result. And on the publisher side, almost 60% plan to increase their involvement in private marketplaces and SSPs (supply side platforms) to gain more control over their inventory.
The demise of ad networks has long been predicted but not yet materialised. In 2014, I expect the use of RTB by advertisers and their agencies will continue to rise but the complexity of the SSP/DSP/exchanges ecosystem means there will continue to be a role for broader and niche ad networks albeit increasingly RTB-powered.
Publishers will continue to try to derive more value from online advertising. In part I, expect we will see a return to the ‘old-fashioned’ tenancy type deals, or sponsorship, which (along with buttons and banner ads) characterised the early years of internet advertising. These will be for the larger publisher/advertiser relationships and to support brand and positioning objectives: arguably a form of ‘content marketing’.
Publishers will continue to try to maximise the value of their inventory through private market places and SSPs but I expect there to be more focus on how they can use programmatic and RTB approaches to make their inventory more attractive to advertisers whilst not losing control of it to intermediaries like networks. This year will see publishers continue to invest in their own ‘first party’ data and insight into their audiences in order to grow ad yields through more premium selling.
2. Native advertising trends (and new formats)
‘Native’ advertising, known by a number of other names including ‘organic advertising’ or, sometimes, ‘sponsored content’, was a big buzzword in 2013 and this looks set to continue in 2014. Native ads are in formats designed for a specific platform, which take advantage of the way in which people use that platform.
The growth in use of the Facebook Exchange (FBX) in 2013 has led to experimentation in the form of ‘Sponsored Stories’ and ‘Suggested Posts’, which relate to the user’s interests and activities on the platform. Insurance company Standard Life experimented with native advertising on Facebook and reported a 100 per cent increase in clickthrough rate compared with standard targeted ads.
Native advertising is being embraced by a new wave of publishers such as Buzzfeed. Seventeen of the top 25 native ads, according to ShareThrough/SimpleReach’s Native Ad Leaderboard, are hosted on Buzzfeed. The site is currently the 167th most-visited in the world, according to Alexa. Other new formats of advertising to watch out for include Pinterest’s ‘promoted pins’, which were trialled last year, ads on Instagram and branded Vines.
Brands expect to be spending 24 per cent of their budget on native ads within a year, according to a survey carried out by Hexagram. So 2014 will see continued experimentation by media owners, advertisers, and their agencies, alike. Initial evidence is positive but perhaps this is just because native ads are new and users are not yet tired or ‘blind’ to them. Equally it is not yet clear how to make creating, measuring and optimising native ads scalable enough to be efficient in the long term – their very nature means they are all different across each platform.
3. Video advertising
Video was huge in 2013, especially for YouTube which, according to Nielsen, reaches more US adults aged 18-34 than any cable network. YouTube receives more than 1bn unique visitors every month, to watch more than six billion hours of video.
Between mid-2012 and mid-2013, mobile video advertising grew by 1,260 per cent to £23m, and video’s share of online and mobile display has grown by 50 per cent to 18 per cent. Social is key for the success of online video advertising, and this trend will continue into 2014. The best video adverts of 2013 were shared up to 4.3 million times, containing great content that people wanted to share, rather than overt marketing messages.
Changes are being made in the way that marketers advertise via video, with new formats emerging to help engage users for longer as well as directly sell products. New formats such as shoppable video were being tested by Google last year, and platforms such as WireWax and Kiosked are gaining momentum. Dynamic, personalised content can be generated using geo-targeting and service-provider data to display relevant prices, promotions, product information and more within the video.
Interactive video ads, containing games, surveys, or simply social sharing buttons will all feature in 2014, using ever more unique ways of engaging with consumers.
The vast amounts of data available to marketers are increasing the options available for targeting and retargeting. Improved cleansing and segmentation of data, and increased targeting options from Facebook, LinkedIn and Twitter are allowing advertisers to target the user in intelligent ways, increasing clickthrough rates and conversions.
In 2014, technologies will start to improve for matching up the consumer journey from online to offline, allowing advertisers to target consumers based on their high street purchasing behaviour, as is currently being attempted by I-Behaviour and Exponential among others.
Micro-targeting and micro-messaging are also set to be buzzwords in 2014. These are forms of targeting which take advantage of a multitude of datasets beyond demographic, combining these with consumer attitudes and behaviours to target like-minded people motivated by similar things. This could vastly improve efficiencies in display advertising, and 2014 is likely to see progress in this area, though mass adoption is some way off.
5. Localised and geo-targeting
Geographic personalisation can allow advertisers to identify and serve personalised advertising relevant to the user’s location. In the US, the mobile network xAd has begun to do this by letting advertisers re-target ads to people in the vicinity of a brand’s billboard, via a partnership with Posterscope.Increasing smartphone use is again having a major impact on the potential of this technology. Through owned apps, businesses are able to collect a large amount of data on consumers, and in particular, their location using a smartphone’s GPS.
As consumers grow more comfortable with using mobile devices for browsing and shopping, they have become more open to receiving messages from brands via their mobiles. This introduces opportunities in 2014 for the increasing use of geo-targeting tools such as geo-fencing: targeting customers within a virtual geographical perimeter who have opted to receive messages.
Technology such as this will be limited by consumer acceptance. Though increasing numbers of mobile owners have used their device for making a purchase and allow apps to access their data, concerns still abound around data privacy, which are not likely to abate in 2014.
6. Mobile advertising
At the start of 2013, more than half of UK smartphone owners said they had never seen an advert on their smartphone, according to a Mobile Consumer Report published by Nielsen. However, 2013 was the year in which many brands finally reached the point where smartphones and tablets now account for a majority of their site traffic.
This meant an increasing focus on mobile marketing strategy. 60% of businesses are now implementing strategies for integrating mobile into their broader marketing campaigns. The past year also saw Google making mobile a priority in its Hummingbird update, which looked to accommodate the fact that more searches are being conducted, and more content consumed, on smartphones.
As 4G is rolled out across mobile networks, using mobiles for, and while, shopping is becoming an increasingly enjoyable experience. Research from eBay showed that purchases from the site were more likely to be made via a tablet than any other device. With more eyes than ever on mobile devices, the opportunities for advertising to this audience are ripe for exploitation. According to the Econsultancy/Responsys Cross-Channel Marketing Report, the proportion of respondents who were advertising via mobile search and mobile display advertising had increased significantly from 2012 to 2013.
Brands are likely to get further on board with mobile advertising in 2014. However, before mobile advertising becomes a standard part of every marketing strategy, we will first see an effort to optimise websites for mobile.
Brands have realised that there is little point in a mobile campaign driving customers to a site which is not properly optimised for the device, as this leads to the customer being frustrated, and therefore low conversion rates and poor return on investment. Mobile advertising will really start to take off once the part of the customer journey after the mobile click is fixed. This should be towards the end of 2014.