2023 Game Plan: Measurement in a privacy-first world
As we enter the fourth quarter of 2022, the media and advertising industry's collective minds focus on 2023. With a predicted global recession on the horizon, marketing and advertising budgets are likely to be squeezed, requiring marketers to do more with less. Against this financial uncertainty, marketers must focus on strategies protecting current revenue and enticing new customers with less disposable income.
A key component of optimizing advertising spend is measuring the effectiveness of previous campaigns and using those learnings to plan future campaigns that deliver a greater return on advertising spend (ROAS). But measurement techniques today are fraught with challenges.
Data access: Current measurement models require large volumes of data from multiple parties, including the walled gardens, which are unwilling to share data outside their walls, and search, social and video performance is notoriously challenging to measure. Privacy legislation such as the GDPR and CPRA makes accessing this data difficult.
Identity: Identity, the ability to identify an individual across multiple devices and services, is also a significant challenge. With no common identity across TV, web and audio, fragmentation has worsened with the deprecation of the cookie, the introduction of Apple's ATT framework, and new cookieless identifiers coming to market.
Cost and speed: Current models such as multi-touch attribution (MTA) and other advanced attribution solutions require in-house data science resources or access to a third party with limited transparency into fees, modeling techniques, and privacy practices. As a result, these models come at a high cost and can take 12 to 18 months to execute.
A shift to performance marketing
Against an uncertain financial forecast and the challenges we have outlined, marketers are shifting their media plans to focus on performance marketing strategies with a select few partners that can deliver more bang for their buck.
At the core of these performance marketing strategies is first-party data. Over the past few years, we've seen the growth of first-party data, with organizations focused on collecting as much of this consented information as possible. First-party data is an organization's most valuable insight into its customers, as it is forged through direct interactions with those individuals.
The value of first-party data is already being proven by some of the world’s largest brands:
- 63% increase in brand awareness (Channel 4 and a food delivery company)
- 38% increase in brand consideration (TSB Bank and Global)
- 61.5% increase in advertiser spend YOY (FuboTV)
As brand and media owners increasingly rely on first-party data to drive planning, activation, and measurement, new patterns are emerging to reflect the power and sensitivity of this asset.
Privacy: With global privacy legislation increasing and consumer awareness of how their data is collected and used at an all-time high, brands and media owners are prioritizing data privacy and protection. This has led to a rise in privacy-enhancing technologies (PETs) and data clean rooms that enable organizations to safely harnass the full value of their first-party data and collaborate across partners to plan, activate and measure data-driven marketing campaigns.
New Media: As consumer behavior becomes predominantly digital-first, we are seeing opportunities to drive new-new and diversified revenue streams for organizations with both customer data and customer attention. Retail media networks, predicted to be a $200bn opportunity within five years, are leading the charge, with gaming, streaming audio and advanced TV following, and new emerging opportunities around travel.
Direct Relationships: As brands spend each marketing dollar as efficiently as possible, the shift to performance marketing strategies will result in organizations building more strategic and direct relationships with media owners. These direct collaborations will enable brands to use their first-party data, matched against a media owner's audience and enriched through data providers, to build powerful custom audiences that deliver the right message to the right people at the right time.
These trends present an opportunity for organizations to invest in measurement solutions that have already proven to be effective - focusing on fast, clean, and valuable calculations that drive immediate optimizations.
Getting back to basics - incrementality
Incrementality measures a campaign's impact on the overall business goals by comparing the results of both control and test groups. Unlike MTA or other cumbersome and costly solutions, incrementality only requires a few simple calculations to deliver accurate results. Incrementality provides a fast and effective way to measure the practical impact of your marketing across individual channels and media owners.
Incrementality requires three datasets.
- An exposure group served the advertising campaign
- A control group that has a similar composition to the exposure group but will not be served the campaign
- Outcome data such as purchases
These three datasets are highly sensitive. Therefore, incrementality has previously been a challenge for organizations that relied on technology with limited data security, control, and privacy mechanisms, most of which required shared and commingled data to drive this analysis.
As we have already covered, the emergence of the next generation of data clean rooms has changed that. These secure collaboration environments allow datasets from brands, media owners, and other influencing parties (media agencies, data providers, identity vendors) to be matched and analyzed as scale, with no sharing or movement of data, eliminating the risk of leakage, exposure, or misuse. Additionally, the analysis results are available to all parties, meaning there is complete transparency.
Organizations are already taking advantage of this measurement approach. Earlier this year, Channel 4 and Deliveroo used their first-party data to quickly and accurately calculate the incremental impact of that campaign, demonstrating a 20% increase in app sign-ups.
Focus on transparency and effectiveness
With so much uncertainty ahead, organizations must focus on implementing transparent and effective strategies. As brands reduce the level and breadth of their advertising spend across media partners, incremental lift analysis can provide invaluable insights into which partners deliver the most reliable results.
Here are our top four tips to prepare for 2023:
- Lean into fragmentation and focus your media strategy where it can drive the most value and influence. Bifurcate your targeting strategies to deliver a meaningful experience unique to the time, place, device, and content where the ad is served.
- Build close relationships with your media partners who have direct line-of-sight and unique perspectives of their audience. Work with them to construct an audience segment that will drive high performance.
- Never risk privacy for performance. Incremental lift analysis as part of a data clean room is a safe and secure way to calculate performance without sharing or exposing your proprietary data.
- Test, learn, and optimize often. Now is the time to test new technologies to protect customer data and extend addressability. Take stock of your media and data partnerships to establish deeper and more strategic relationships to maximize performance and drive competitive differentiation.
Finally, download our guide to build your measurement strategy for the privacy-first era.