The Marketing Bureau


Specialist Marketing & Communications Resourecs

07

Dec

5 Predictions For 2011


By Sam Barnett
First Published on www.imediaconnection.com


It won't be just William and Kate tying the knot next year, display advertising will begin to see growth through smarter ways of harnessing data and creating relevant ads, creating a happier and profitable union between brands and consumers.

The year 2010 -- what an adventure! Facing recessionary pressures, the European online advertising industry defied the gloom and doom mongers and worked smarter and harder than ever before to return to double-digit ad spend growth (IAB/PwC, H1 2010). With our busiest seasonal sales period still to come, I reflect on the lessons learnt this year and what's to come in the New Year.

Here are my top five predictions for 2011.

Prediction 1
Display growth rate to double in 2011


Around 90 per cent of our clients at Struq don't use standard display advertising, 73 per cent of our advertisers' budgets are taken from search. Until recently, these advertisers did not consider display advertising as part of their marketing plans. What has made them change their minds? The answer to that is measurable performance where display can act as a cost of sale along with new technologies that enable dynamic ways of creating a relevant and quality brand experience for users. This is leading to marketing dollars flowing into this channel at a very rapid rate.

Typically, the retail and FMCG sectors spend on online display advertising has considerably lagged behind the industry. But FMCG is now the third biggest spender and retail increased its share of spend by 18 per cent in 2010 (IAB/PwC, H1 2010). The benefit of increased growth in display advertising spend helps support the production of innovative online start ups and free content that creates an engaging environment for advertisers.

Prediction 2
By the end of 2011, at least a third of all display advertising will be personalised


Relegated as the poor and ineffective cousin to search for so long, banner advertising has positively bounced back into the marketing arena this year with spend increasing 14 per cent in the first half of the year to £272m (H1, 2010 IAB/PwC). We are seeing more advanced and more relevant forms of display advertising and this trend is set to continue. For example, Struq's Advanced Personalised Retargeting (ART) has shown that personalised ads deliver 15 times higher click-through rates compared to static display ads and a cost of sale that is lower than search on a post click basis (Jobsite case study, Struq, April 2010).

Personalisation allows a brand to create an ongoing dialogue with their customers to up-sell, cross sell, conduct service questionnaires and deliver custom offers. Personalised display advertising then becomes an always-on, real-time communications channel that is more effective than search and as immediate as social media.

The widespread early endorsement of personalised display ads by major brands in 2010 combined with proven scalable platforms to deliver these new ways of creating a conversation between brands and consumers will drive major market adoption in 2011.

Prediction 3
Creative production will be turned on its head and outdated approaches will continue to die out


In March this year, Saatchi & Saatchi Canada created a viral that predicted the death of advertising agencies unless they embrace the power of digital creative. You may laugh, but I don't think this is an extreme view. Failure to understand the power of dynamic digital creative will lead to campaign failure. Locking down a static creative at the start of the campaign, putting it live and then waiting patiently for a month for the results is advertising suicide. Campaigns should start with understanding the brand metrics and consumers buying behaviour. Then it's like a Rubik's cube, finding the perfect combination of ad elements, using a dynamic approach and constantly testing creative in a live environment to create the perfectly delivered message.

It is in the client's best interests to deliver a better brand experience for users, enabling their brands to communicate more effectively with their target audience and thus enabling them to acquire users at the lowest possible cost.

Creative agencies that don't embrace the technologies that benefit their clients could be sowing the seeds of their own downfall.

Prediction 4
Consumer demand for 1:1 brand communication will lead to an acceptance of personalisation

Consumers can pick and choose how they consume media more than ever before and, therefore, how they interact with brands. In a study by Experian (May, 2010), 83 per cent of respondents said they wanted organisations to treat them as individuals and 62 per cent of consumers agreed that they are more receptive towards marketing that is tailored to their needs and circumstances. At Struq we see a very small proportion of users actually opting out of personalised advertising. More interestingly, 10 per cent of those that have opted out subsequently opt back in, perhaps because they are missing the more tailored advertising approach and perceive it as a helpful service. This greater expectation of the online experience coupled with companies creating better and more innovative approaches to delivering online privacy will help make personalised advertising the norm as consumers see this as useful and relevant to them.

Prediction 5
2011 will be the year of effective processing of clean data to power real advertising performance


Data, data, data everywhere... But what to do with it all? Much of it is incoherent, unclean and cannot be used effectively. 2011 will be the year where a select number of smart companies are able to 'clean' and process the data effectively, so it can be analysed, models applied and algorithms built. I predict that the companies that can apply smart science to gain an understanding of consumers and marry this with brand objectives will be the winners. For example, performance specialists Efficient Frontier use mathematical models to weight risk and return across numerous variables, and at Struq we've invested in our proprietary ART technology to create algorithms that use machine learning to anonymously predict the profitability of users and identify which products they are most likely to buy. We then format the display ad in a way that these profitable users are most likely to respond and purchase. It's a sprint not a race, but it's important that the industry as a whole takes an ethical approach that results in continuous, solid understanding to benefit the ongoing growth of our industry.

And now I am going out on a limb. Feel free to hold me to these predictions. I believe they are the right outcomes for the industry. I also believe that there are like minded people and companies out there that can help make this happen and make 2011 a royal year indeed.

Sam Barnett is CEO at Struq Ltd

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