Advertising Should Be More Like Marketing, And Privacy Laws Will Accelerate This Disruption
February 11, 2020
Brands have been moving toward an adtech/martech convergence for years, but a new emphasis on data privacy will both accelerate this trend in 2020 and open up meaningful opportunities for CMOs to make measurable contributions to their businesses.
Why CMOs Currently Struggle With Accountability
CMOs have a tough job. From a CEO’s perspective, not enough CMOs speak the language of business and accountability for results. When a CEO turns to their head of sales and asks, “How are we doing?” sales can talk to the CEO about bookings and revenue versus plan and other business oriented KPIs. When the CEO turns to the head of product, that executive speaks the language of adherence to product roadmaps, business strategy, and ship dates. But when CEOs turn to their CMOs, they may hear about metrics like media impressions, reach and frequency, views, clicks, and web page views. Most of these media metrics are very distant from business outcomes, and make it hard for marketers to get a respected seat at the strategic table. According to a survey of nearly 600 C-level executives, only five percent of CMOs are highly confident in their ability to impact strategic decisions. Meanwhile, only 27 percent of CMOs say they do a good job of demonstrating financial impact.
One reason for this struggle is that marketing and advertising — the two key tools of marketers — operate from two different frames of reference. Marketing involves research, understanding customers, what they need, what they buy, and why they buy. Advertising, by contrast, is too often about hammering the same message at a target set of prospective customers, so squishy media metrics like impressions dominate, even though they aren’t connected to the business. Advertisers — because of what they measure, and how they score success — do little to respond to consumers’ common feeling that they are besieged by irrelevant and uninteresting advertisements.
CMOs have done their best to reconcile the conflicting frames of reference here — the market research frame of reference which listens closely, and the advertising frame of reference which talks incessantly — but ultimately, most don’t square that circle. They leave the two tools in their toolkit — market research and advertising — to occupy separate worlds, which they never reconcile structurally. The net effect is that CMOs continue to operate with one foot planted in the future, and another stuck in the past.
The Marketing/Advertising Distinction Is Obsolete: The New Model Is One-to-One Conversation
Not too long ago, the marketing/advertising distinction evolved for two reasons: first of all, market research was slow, cumbersome and had long lead times and limited responsiveness to events, and secondly, advertising in the pre-digital world was inherently one-way. Market research attempted to measure the effects of advertising, but the cycle time between action and learning was often months or even quarters. Today, the world has changed. The marketing/advertising distinction is obsolete because the new model is about brands having meaningful one-to-one conversations with their customers, turning every interaction into an opportunity for listening and two-way interaction.
Email and chat provide excellent models for meaningful one-to-one conversations. Marketers talk (with permission), listen to the customer’s response, understand what that response means, and then deliver the next logical message in sequence. But while email is typically owned by the marketing side of the organization, the same virtuous cycle of conversation is achievable on the advertising side as well.
How do we achieve that shift? First, we need to evolve from media metrics to measurements that track audience sentiment, intent, expectations, perceptions and the like. Second, we need to leverage the dollars flowing through digital advertising to turn advertising into a two-way conversation. Broadly speaking, email-style practices (listening to what consumers tell you and reacting) tell marketers how to segment at scale, allowing them to ignore consumers who don’t want to engage, while speaking with increasing relevance to consumers who express interest. A similar process can be applied to channels that are traditionally considered advertising.
Consider digital video, a medium that combines the highest emotional resonance with the power of interactivity. Advertising convention dictates that any consumer who views an ad to completion will see the same ad over and over again — even after they’ve bought the product — because the mechanism which determines who sees what ad involves putting consumers into targeted sets and continuing to show them the same thing over and over. In conversational terms, that’s akin to preaching to the choir (at best) and shouting into the void (at worst). That’s why many new generation marketers see traditional advertising as wasteful, and consumers consider it annoying.
Instead, marketers should treat videos more like they employ email. If the consumer doesn’t finish the video or indicates they’re not interested, remove them from the media plan. If a consumer watches a video to completion, ask them a question that informs the next video they’re shown. Just as each subsequent email moves customers through a sequential buying journey, each video can do the same thing. AI can extrapolate from the hundreds of thousands of consumers who interact with an ad to hundreds of millions who are in the target set.
Marketing Needs to Evolve, Too
While advertising needs to look more like marketing, the shift isn’t unilateral. The same tools for speaking with audiences also empower market researchers to gather information inside advertising campaigns and learn in real time. A consumer might not want to buy the product, for example, but the right follow-up question can reveal the reason behind that choice. Perhaps, consumers are trying to convey that they don’t like the brand. Maybe they love the brand, but they want different features — ones that address a need the product development team hasn’t yet discovered. Maybe consumers love the brand and the product, but it’s too expensive. Marketers already spend time and money trying to answer these questions, but by integrating that two-way conversation into every single campaign, marketers can unearth that information at a much faster pace and distribute the knowledge inside the organization constantly, much like the continuous stream of data and learning which comes from sales, manufacturing and product development conversations with customers.
How Privacy Will Accelerate and Shape This Merger
Broadly speaking, new privacy laws divide the world between permission-based first-party data (essential to personalization) and third-party data (with significant limits for targeting). The new laws, along with the demise of the cookie and new browser privacy settings, fall hardest on advertising. But, the bigger picture is that these laws force marketers to adapt to distinct methods for speaking with consumers.
First-party data will continue to fuel marketing because the most meaningful conversations occur within an existing relationship. Marketers know many things about existing customers, information captured in CRM systems, loyalty databases and email lists.
But on the advertiser’s side, marketers need to recognize that they’re often talking to strangers. Instead of segmenting advertising audiences by attributes gleaned from third-party data, the new approach will be driven by the questions advertisers ask through two-way conversation, campaign by campaign. Based on those answers, advertisers can segment and sequence conversations to any number of objectives from sales to brand perception to market research.
While both of these approaches differ in terms of where they start, they ultimately use the same methodology (conversation) to arrive at the same place (understanding). It may be tempting to look for workarounds that allow advertising to continue as usual in spite of new privacy laws and the forthcoming death of third-party cookies, but the better play is to embrace the new paradigm. Because whether it’s advertising or marketing, what brands really need to do is talk with and listen to their customers — both current and tomorrow’s prospective ones. Advertisers need to know something inside the heads of people they’re engaging with, so the conversation can be productive, engaging and profitable.
Tod Loofbourrow is the chairman and CEO at ViralGains.
The views and opinions expressed in Marketing Maestros are solely those of the contributor and do not necessarily reflect the official position of the ANA or imply endorsement from the ANA.