GROW - The future of the Advertising Business Model

Data are the new currency in the advertising world. Data enable “consumer-centric” targeting with highly relevant ads

• selling the right product, 
• on the right channel 
• at the right moment in time. 

Data processing technologies & 1st-level data ownership are key to future-proof advertising success. The future of advertising is also affecting very different stakeholders:

• digital platform companies
• media companies, agencies,
• advertisers, and consumers.

All stakeholders will strongly shape the future advertising landscape, each facing completely different challenges and opportunities in their respective worlds.

Apart from traditional advertising players, the transition is also fundamental for numerous new market entrants, largely with innovative technology- and data stack. 

Agencies

Agencies need to focus on the things that they can control: clients & costs. For example - WPP implemented a $70m cost savings program after posting a “not acceptable” $227.57m statutory net loss - driven not only by market conditions, but also client losses. WPP admitted to have underestimated “the magnitude of the government’s response to the crisis, our ability to work, and the business models of many of our clients”. WPP saw a 22% drop in net sales in April 2020.

COVID-19 is accelerating WPP’s strategy to focus on its most important differentiator - that clients are happy.

Digital platform companies

Search & eCommerce is an ever-changing beast; a digital channel that keeps marketing professionals on their toes, in a constant state of learning and adaptation. Amazon’s eCommerce Marketplace is steadily growing and Google Shopping is fighting the threat of irrelevance. 

In terms of market share for product searches, Amazon continues to flex its muscles. Amazon holds a 26% grip on eCommerce sales and, according to eMarketer, it’s the only company expected to grow its share further.  

Amazon’s marketplace model continues to grow in popularity, because it

• delivers a seamless experiences – with one-click purchases & no click-out model,
• provides a vast universe of products,
• dominates - with more than 50% of all U.S. internet users beginning their product searches on Amazon.  

Of course, Google does not ignore the shadow Amazon’s popularity casts by 

• offering free product listings, thereby
• broadening product range and helping retailers during the worst of crisis, and
• attracting new merchants likely to become revenue generating advertisers in the future.  

However, introducing free listings alone will not move the needle significantly for Google. Looking closely, Google’s free listings represent between just 1.5% to 5% of the average advertiser’s total Shopping volume. The vast majority of sale conversion still happen where free listings are not eligible - the SERP. 

It’s interesting that Google has chosen to separate its paid and organic listings, especially when rival solutions like Amazon’s make little effort to do so. And this soaks up a fundamental problem: as a product, Google Shopping is too complex - focussing on selling ads, not products.

Consumers

Shopping 3.0 - Digital marketing is evolving every day, and users are quicker than ever to adapt new digital habits. Think about how our interaction with computers has evolved just over the past 10 years - Keyboard, Mouse, Touch, Voice.

And with any advancement in the “human interface” - almost unnoticeable - we also change our behaviour. We are again at such an inflection point. Today, this new technology is called AI and a particular sub-set of AI, Natural Language Processing (NLP). And while the technology itself is not simple, its convenience, rampant usage and change in behaviour especially to the younger clientele engaging with brands are easy to understand.

Think Amazon Alexa, Apple’s Siri, or Google voice search app – all of them allow users to communicate with their devices by voice only:

• 58% of consumers find local businesses using voice activated search,
• 32% of people use voice activated search daily instead of typing,
• 30% of web browsing will be "screenless" by the end of 2020.

(Source: Searchengineland.com, Google.com)

Advertisers and Brands

For advertiser or Brands looking to establish themselves as authorities within their market, targeting quick answer results as part of their SEO strategy is smart - increasing overall CTR to their site, boosting brand recognition, and capturing valuable real estate within Google’s SERPs and Amazon's Alexa. Thought leaders of tomorrow employ position 0 optimization strategies today.

SMBs and the smallest companies seem likely to enjoy the biggest benefits. A minor increase in clicks may be just enough to keep them engaged on Google’s and Facebook's new SHOP platform (in collaboration with #Shopify) - and maintain their product feed uploads as a result.  Google’s move entices new advertisers to join its Merchant Center, thereby boosting the number of items Google can promote within its product assortment. 

Research following Google's switch suggests that data from paid ads influences the ranking of free listings. The jury is out for now. If this proves to be the case however, it means you as an advertiser have to take Google Shopping’s organic accomplishments into account when measuring performance. 

The Bottom Line

The future is sooner than we think. Due to many simultaneous advancements, customers are changing their behaviour and are now asking direct questions to get the products / information they want - with profound changes in all aspects along the customer journey:

• attracting & converting new customers,
• serving loyal, returning customers, and simply to
• remain visible and relevant to consumers.  

For agencies, NLP and position 0 optimization is affecting their entire marketing stack and helps to automate, scale, and increase profitability. As voice search and its advertising model continues to mature, it will also continue to present key conversion touch points for companies and brands. This presents a huge opportunity for digital content producers.

For advertiser and brands looking to establish themselves as authorities within their market, targeting quick answer as part of SEO strategy makes sense - Thought leader of tomorrow employ position 0 optimization strategies today.

For consumer engagement surrounding search results will continue to skyrocket. Consumers want seamless, easy, and relevant search as well as purchasing experiences. Search integration into our everyday lives is becoming commonplace. Whether a user commands their phone to look up "How old is Biden" or asks their smart fridge "How many ounces are in a pound", consumers are increasingly becoming reliant on the omnipresent search capabilities of their most-used devices and appliances.

It has never been a more exciting to be a marketer...

About eScoring:

Predictive eCommerce Analytics — putting data into practice

Digital Marketing Mix Modeling for Brands, Manufacturers & Retailers by connecting advertising, pricing, promotional, and digital shelf data. Based in Munich, Germany, eScoring provides a flexible and scalable eCommerce Performance Analytics Platform.

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