By Sri Hari
Half the money you spend on advertising is wasted. The problem is, you don't know which half. – John Wanamaker
Brands are constantly on the quest to improve cost-efficiency for their advertising spend. Digital bridges that gap and helps brands identify the “which half”. Previously used as just a copycat channel, digital now holds a major chunk of every brand's wallet. Digital media spend in 2023 will cross Rs 39,000 crore, indicating the rapid adoption of digital. With such a large scale of digital media spend, technology has had to evolve to maintain the economics of revenue for brands. This technology alleviates many of the issues that consumer-obsessed CMOs and CEOs deal with daily.
An entirely new revenue channel
Digital has now established itself as a powerful revenue channel. Some brands have increased their revenue share from digital channels from 5% of total revenue to 40% of total revenue for many brands. Not only that, but revenue from digital has increased significantly as margins have increased due to automation. Finding channels that have the potential to bring a larger portion of revenue to your P&L is very appealing.
Technology has overcome distribution challenges for brands, most brands now have a plug-and-play connection with fulfillment partners like Ship Rocket, Delhivery etc, which allows them to sell their products directly, reducing distribution and retail costs.
Testing Center
CMOs and CEOs are always keen to test consumer hypotheses, insights and communications to know if their advertising is hitting the mark. Previously, this required cumbersome and expensive feedback mechanisms through on-ground testing, surveys and market research. Often, this research failed to capture the subconscious responses of consumers and only provided inaccurate feedback. Now, thanks to technology, brands can conduct Brand Lift Studies (BLS) across various dimensions such as recall, awareness and consideration to more precisely measure the impact of marketing results. These studies have evolved to automatically separate control and exposure groups to drive more statistically significant learnings. One such example is when we worked with a personal care brand and tweaked minor elements based on BLS to increase awareness by 20%.
measurement
For the first time in history, CMOs can even measure the effectiveness of their awareness campaigns. Advances in technology not only provide full funnel visibility but also help measure cross-environment conversions. CMOs can now establish paths to conversion that allow them to measure which publishers are making the biggest impact on their brands. Brands measure the effectiveness of their communications using proxy metrics such as CTR, FFR, TSR for each target persona. Brands now use tools such as MS Clarity, GA4, Adobe Analytics to measure behavioral and interaction metrics that help brands understand their customers better.
Frequency Construction
One of the most important components of any advertisement is frequency – how many times a consumer sees an advertisement. Frequency determines the effectiveness and impact of a campaign. Many branding experts recommend a minimum frequency of 3-5 times per week. Brands can now control or target the number of ad exposures for each targeted consumer group. And now, thanks to advanced advertising technology, brands can spread their ad frequency across different platforms. Many brands are leveraging this for sequential storytelling – creating an audience pool of customers who saw their first ad, then targeting them with their second ad, and so on. This approach to storytelling was not possible before.
Engagement and Retention
Today, brands are in control of messaging and offers to each target audience, which helps them attract customers and increase retention. Customer lifecycle management tools like clevertap, moengage etc. are used to model customers into different buckets. Brands can build retention strategies for each of these buckets. One example is Recency, Frequency, Monetary RFM modeling. It is a customer loyalty modeling framework that categorizes customers into buckets like loyal, promising, at-risk etc. This allows brands to take appropriate measures to retain their customers.
In conclusion, technological advances are redesigning the way brands interact with their customers, empowering them to have the nuanced interactions they desire and helping them understand their customers better.
(The author is Sri Hari, Chief Business Officer, GenY Medium and the opinions expressed in this article are his own)
