Traditional ads will lose the battle of the ‘last click wins’

Behavioural targeting is reducing the scope of the creative by delivering relevant ads online, with other media set to follow.

How long does the advertising industry as we know it have left? I ask because a number of recent conversations have left me wondering. The first was with a search expert who was explaining the possible end-game of behavioural targeting. Up to now, behavioural targeting has been used mainly to help media owners increase the revenue from unpopular parts of their sites by tracking visitors’ browsing. Someone who regularly visits the motoring section can still be served lucrative car ads when they move on to other pages, for example.

More recently, behavioural targeting technology has been used to increase the response rates to advertising by presenting people with more relevant ads. The result, as this week’s Digital Strategy supplement explains, is that a third of online advertising campaigns now use behavioural targeting. But as behavioural targeting becomes more popular, it points towards another development, one that is already in process at Google.

This would see all online display advertising sold following the same auction model as paid search uses, but based on the viewer’s prior browsing behaviour.

Advertisers would bid for specific viewer characteristics and, when a person meeting those criteria visits a site, the highest bid would win and the appropriate ad would be served.

Because the ads would be so targeted, the importance of the creative would be significantly reduced. And because the market would be so highly automated, with both ad placement and advertisers’ bidding managed by computers,the traditional media agencies role would beall but irrelevant too.

This scenario might seem to be of concern only to the online advertising industry, but that doesn’t mean it should be taken lightly. The over-arching trends in the market mean the effects will be far more wide-reaching. The amount of time people are spending online continues to increase, as does the amountof money advertisers are spending to reachthem there. What’s more, the increasing digitalisation of media means other channelswill inevitably be affected.

If you want more from media, the media owners know who the audiences are, and where they are, more than the media agencies.

Jef Vandecruys, global project leader for digital connection at Anheuser-Busch InBev

As television and the internet become more closely linked, for example, the set-top box will allow far more data to flow back to broadcasters and the insertion of far more targeted ads into the broadcast stream based on that data.

If this is potentially devastating for the advertising industry, it could be great news for media owners and content producers. If they can use the data available to them to understand their audiences better and create content that serves those audiences, or distinct niches within them, the bid-matching software will do the rest.

This idea was echoed by Jef Vandecruys when I interviewed him for the current issue of New Media Age. Jef, who is global project leader for digital connection at Anheuser-Busch InBev, the brewer of Budweiser and Stella Artois, told me: “The media owners are moving in the direction of the advertisers.

“If you want more from media, the media owners know who the audiences are, and where they are, more than the media agencies. We need to engage with consumers, so we need to integrate more closely with the media owners.”

Certainly I’m hearing criticism from digital media owners that media agencies are not responding to the increased targeting abilitythat the internet offers. They argue that the media agencies simply aren’t set up tohandle the complexity and cost that such granularity of targeting creates.

However, before advertisers and media owners start looking to cut agencies out of the picture, it’s worth sounding a note of caution. The future in which all ads are behaviourally targeted and bid-matched is based on an extension of the phenomenal success of search – its measurability and accountability.

But one of the by-products of search’s success has been to focus attention at the point of conversion. This is the problem known as “last click wins”, where the desired result, whether it’s a sale or sign-up, is attributed to the medium that delivered the customer to the point of conversion, ignoring any other marketing messages they’ve seen along the way.

The result is an undervaluing of any messaging that doesn’t generate a click, certainly in the digital space. Canny, integrated agencies know that money spent at the start of the journey can cut search costs at the end.

So this is where the future for advertising agencies hangs. At the moment there is still a role for brand advertising at or before the start of a consumer journey, to create trust in the brands serving up the highly targeted offers. But the rise of social media has eroded the power of brand advertising by making customer opinion easily available. What matters increasingly is what people are saying about your product or service – basically, whether it is any good.

So the advertising industry finds itself squeezed between the value of data and the power of conversation. There will always be marketing communications between companies and their customers, but traditional advertising is going to look increasingly like a sideshow. v

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