The boundary between branding and performance is starting to wear off - Part I

Amante Inc

New Member
Here AmanteMedia Inc offers you a forecast of how we feel the market of digital-agencies will look like in a few years.

Internet advertising market is not only growing rapidly, but also changing very rapidly. If we look back and trace its development, we can see that over the past 10-15 years, not only media landscape, but also the approach to online advertising has changed dramatically.

Ten years ago, advertising on the network was bought mainly on CPM basis, and the approach to placements reminded approach to television commercials. The primary metrics were the cost of contact and coverage, and almost the only target was to assess the relevance of the audience of the platform, which was determined by advertisers in the best case on the basis of TNS data.

Now for many businesses the Internet has become, if not the main sales channel, but one of the most important points of interaction with the audience. And digital-marketing market is divided into two areas: branding and performance, duplicating the logic that has long lived in offline - branding and direct sales promotion.

It is interesting to note that if a few years ago, digital-branding budgets of larger advertisers were significantly superior the performance-budgets, but now the situation is rather the opposite. Internet is a unique sales channel, and this channel is huge.

It would seem that agencies that have made a bet on performance-marketing must rub their hands and look at the others down upon, but we wouldn't recommend it at least. Digital-market, as though it may sound controversial, is still in its formative stages. In the next few years we should expect major changes, including in the ecosystem of digital-agencies. And that's why.

Who is not performance, is not digital

The popularity of performance-marketing is growing, and it seems that no one is going to reduce investment in Internet sales. Expenses for native advertising, which is still the main channel for performance-marketing, are growing from year to year (in the first three quarters of 2016 native advertising was the only online channel, which showed an increase).

Technologies which are connected with both demonstration of advertising and its analytics, are rapidly evolving. Advertisers want to be very targeted in their communication and contact the individual segments of the target audience, giving consumers exactly what they may be interested in, in a particular point of time.

Branding technologies also changed - advertisers slowly moved from buying placements on platforms to buying audience. And metrics with which advertisers measure the effectiveness of placements, are no longer connected with coverage.

Both performance and branding campaigns are becoming more targeted, personalized and are optimized in real time. So the line between performance and branding is starting to wear off. Campaigns, aimed at informing and involving of consumers, flow one into another and find their continuation in campaigns that stimulate sales. The latter uses the data resulting from the first, and the first are optimized basing on the sales data.

In addition, the line between online and offline is worn off. Gradually the traditional offline channels become measurable and optimizable: already there are programmatic platforms for advertising on TV; digital online radio stations increase the share on the market; outdoor-advertising starts to work with the trigger data and facial recognition technologies.

In the near future, using mobile devices, advertisers will be able to address a message on the billboard, if not to a specific person, then to the specific segments of the target audience in those moments when its concentration in the immediate vicinity will be sufficient.

All this changes the approach to digital-marketing as a whole. Strategies, which consisted of different sets of activities, the mutual influence of which often was not measured, are in the past. They are replaced with complete solutions in which advertisers can track all the ways to the consumer and assess the real impact of advertising placements on sales, not only in online, but also in offline channels.

The market already has many successful cases. For example, FMCG-companies, which have historically focused on the development of brands, not sales, now launch online shopping and implement communication strategies, which are based on the full path of the customer - from the first contact with a message to a purchase.

In this regard, the story of L'oreal is indicative - the company launched its first online store five years ago, and today many brands have their own online stores. Strategy of L'oreal is to establish direct relationships with Internet users and increase the share of e-commerce (both via own channels and partnerships).

What do you think, who will help L'oreal solve the task? A performance-agency or a global partner with a high creative and media expertise, but pretty average for the market ability to work with the sales? Both candidates in the current coordinate system do not look like super-heroes, able to cope with such a task. But the network agency has greater chances to quickly build performance expertise than the performance-agency to acquire those competencies in integrated customer service, which a network structure has.