Commentary

Why Signal Loss Could Be A Net Gain For The Marketing Industry

The data “boom days” for the marketing industry may be coming to end. Our industry’s efforts to insulate itself against data depreciation is a consistent front-and-center topic in trade media and at conferences like the recent ANA Media Conference

We’ve been hearing “the cookie will crumble” for years and while Google has decided to wait until late 2024 to take the last bite, the data or “signals” the industry uses to target advertising are already being lost left and right. As agencies and brands put together their plans to tackle this changing addressability, signal loss may actually drive better outcomes for everyone if we plan it right. 

It goes without saying that media targeting is only targeted if it’s accurate. And that’s not always the case. While third-party data partners will happily sell data sets for agencies and brands to activate on, they’re barely better than randomly distributing impressions and the accuracy virtually never outweighs the cost. In fact, an analysis of 19 leading data providers shows that advertising using third-party data was less likely to hit age and gender targets than campaigns using no data at all. While cookies are only one piece of this issue, the signal loss that’s getting rooted out of the system is the most ineffective form of targeting, which will inevitably lift the quality of data that agencies and brands use. 

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In reevaluating targeting strategies to future-proof buying in a world without cookies, transparency remains a key concern. Black box solutions where the algorithm takes care of it ought to also be brought into the light. Algorithms are very good at finding people who are in-market to drive low CPAs, but most of those conversions represent people who are going to buy anyway. Rather than driving an investment, these tactics end up being a tax on the business by paying for people who were buying their brand regardless. 

A key part of many advertisers’ strategies is to begin collecting more first-party data. This is good for consumers due to the opt-in nature of this type of data collection. It’s also good for advertisers because the data is tailored to the business. 

That said, few if any advertisers will be able to achieve scale the way third-party data providers historically have, and many of these data sets will be heavily reliant on existing customers. While a data set like that is great for CRM and loyalty efforts by enabling or improving personalization, it reduces the potential for prospecting new customers. 

With fewer signals to transact on, programmatic buyers may hit capacity against niche targeting groups and will need to shift spending to things like contextual targeting, which may be less likely to convert in the short-term but more likely to drive net-new customers over the long-term. Alternatively, those budgets could get shifted out of direct response and into brand-building media altogether — and there’s ample evidence the industry needs to be doing more of that. 

Only looking at marketing in a short-term timeframe is something that plagues the whole industry, and it’s come at a huge cost. Work by Les Binet and Peter Field shows the effectiveness declines that came from a dramatic shift to direct-response media in the 2010s and from neglecting higher-reach brand-building work that contributes to long-term growth. An over-reliance on signals and tightly targeting individuals to drive immediate sales has been a huge factor in that trend. 

In this reevaluation of targeting strategies amid this period of great signal loss, we’re getting the chance as an industry to pull ourselves out from the bottom of the funnel, take a long-term view and drive long-term growth. So, while advertisers may be looking into strategies to reduce the impact of signal loss on their business, there’s an opportunity to embrace the idea of having fewer markers telling us who someone is and when they’re in market. It may just be the kickstart the industry needs to get back to building brands and driving sustainable growth.

 

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