You wake up one day and everything you thought you knew about marketing is obsolete. Welcome to digital age disruption in media buying and consumer messaging as marketing processes undergo a massive data-driven transformation.
You sit in your office buried under a mountain of data, but what does it mean and how do you analyse it? The biggest challenges advertisers, brand managers and publishers are facing is how to interpret all the data we have access to. Internet technology has made it possible to receive huge amounts of data about customers and expect more to keep coming. According to Forbes.com researchers at Cornell University have developed algorithms that can learn by merely observing human behaviour, these are computers so advanced they can detect and act on patterns in real time without having to understand them.
According to a 2015 CMO.com survey, digital marketing is expected to grow by 14.7% next year compared to a negative growth rate of 1.1% for traditional advertising. Marketing spend will see mobile triple from 3.2% to 9% of marketing budgets over just three years and 126% on social media over the next five years. This will see marketers spending more on marketing analytics. Currently analytics accounts for 6.4% of marketing budgets; this is expected to increase 83% to 11.7% in three years.
Don’t panic. You don’t need to go back to university. If you are stuck in a traditional style of marketing and decision making, you are going to feel challenged by data technology. This is when to call in the experts.
“We find that brand developers and advertising agencies often find themselves with simply too much information to handle. It is the old needle in a haystack conundrum; they know that somewhere there is something of real value but don’t know how to find it in order to manage or manipulate it. This is where programmatic media buying’s automation comes in to save the day with time efficiency, costs and meaningful results,” says Chanel MacKay, MD of digital media agency Atmosphere Orange.
The Pro Shop, which has been in operation for 40 years, had just this marketing challenge. Says Marketing Manager Trevor Rebello: “At one stage, we did dabble with online advertising but found we had to think hard about which websites would work for our products and where our market would be visiting. We were stuck with outdated thought processes which focussed mainly on traditional forms of media and on an older LSM as we felt this was where spend was. Working with Atmosphere Orange changed our approach. We moved away from a static product information focus to new product launch initiatives instead. We now have 30 000 – 40 000 unique visits to our own website each month and are probably one of the biggest golfing websites in South Africa. When customers want to buy golf clubs they come directly to us. As a result, we currently set aside monthly budgets for our online advertising. Atmosphere Orange finds the golfers for us,” says Rebello.
MacKay confirms that much of their role involves an educational factor: “We introduce brand managers, CMO’s, CIO’s and CEO’s to programmatic media buying, we manage the data and audience targeting for the brand and guide the brand’s marketing strategy along an effective online communication strategy that will quickly transform their business model.”
Another leading company on the marketing fast track is Cape-based agency Tag 8. “We currently partner with Atmosphere Orange on the digital aspect for two of our clients, and we have seen a real boost in business for both our clients,” says Belinda Taylor, Media Mind at Tag 8. “Programmatic marketing in the digital space has reach and offers such a defined target market across a variety of sites. It’s affordable and it’s trackable and it delivers on a brand’s campaign objectives. When a client has clearly defined objectives and KPIs they need to meet, we always motivate for RTB if it aligns with the campaigns goals.
As advertising technology continues to develop new marketing processes, the automation of buying and selling advertising online has progressed beyond that of human capabilities. Technology is a useful tool when you know how to use it. If you don’t, hand it over to the experts. Data gathered regarding consumer behaviour must first be translated into technical metrics for programmes and machines to understand it.
It is marketing professionals that drive innovative campaigns that speak to consumer emotions. It is digital media buyers who must still make decisions on where to reserve inventory and how to remarket the message back to consumers, supported by the skills of the brand’s creative teams, to execute a cross channel communication strategy.
What will success look like?
1) A new world of informed decision making.
2) Increasingly more effective creative and brand messaging.
3) The automation of processes that were previously time consuming and repetitive. 4) Swift execution of one brand message across multiple channels.
5) Effective measurement of campaign success.
6) Further optimisation of your brand message as more data is gathered following interaction with individual consumers in real time.
7) More effective use of marketing budgets and better returns on investment.
What will you have gained?
Improvement of your skillsets, efficient marketing processes, and the use of intelligent data to promote your brand. When marrying your marketing and communication strategy, your brand is elevated towards a more interactive customer-centric offering.
“Programmatic marketing takes a brands marketing strategy and transforms it into a cost-efficient communication strategy. Today, it is how you deliver marketing ideas that count. With consistent messaging across all channels of mobile, display and video, programmatic media buying provides the influence required to make the sale,” says Chanel MacKay, MD of Atmosphere Orange. “Our job is to ensure efficiency in the buying and selling of advertising in the digital space. We are able to demystify the newest technologies and show non-technical marketers how to use them to precisely target each message to each individual.”
Whether a brand wants to prospect, brand or convert, a programmatic communication strategy decides on the ‘how’ as well as the ‘where’ of the best medium to apply the marketing plan. “We sit on the execution side of selling,” says MacKay. “We are all about the relationship function. We understand the tactics needed for the technology and time-sensitive value propositions required for potential customers spending time on the digital platform.”
The rules have changed. Online display ads are routinely bought and sold through automated exchanges. Demographic data is just the first step on the programmatic marketing journey in finding and reaching your target audience on a one-to-one and personalised brand communication basis.
If your key focus for your brand is not on the impact technology has on a new way of doing business, you run the risk of lethargy. One of the greatest obstacles to innovations in companies is executives who fear change and remain anxious about their technological limitations. But responds Mackay: “Where in life are you expected to know everything. If you have a toothache, you book an appointment at a dentist. If your car needs repair you go see a mechanic. With big budget campaigns, you want to know that you are receiving high returns on your investment, that your campaign is transparent, that it is reaching exactly who you want to be talking to in any given moment.”
What conversations are you having with your customers on their digital journey? Do they know you even exist?
South Africa, having already embraced this relatively new trend, is experiencing a steep learning curve that is supported by an increasing understanding and uptake of its benefits. However, there is still a lot of confusion around what PMB is exactly. One such misconception is that programmatic marketing is only about real time online bidding.
Programmatic is a term that includes everything from behavioural and intent-based targeting to real-time bidding and exchange-based buying of media inventory. More specifically, it provides a brand manager with the ability to take a specific ad or campaign, set parameters on where, when, how, and who will see it. It measures impressions online and sets the pricing for what the buyer is prepared to pay to an online publisher or SSP (Sales Side Platform) to market the product.
With access to many digital publishers, such as Google, a Demand Side Platform (DSP) uses computer algorithms to maximise access to the different publishers’ space inventory to provide the best pricing, and most accurate audience optimisation for the brand.
Using a variety of data partners, the SSP identifies and buys a custom exchange for the brand, and so Real Time Bidding (RTB) begins. The bidding takes place in milliseconds for every digital ad space on the page, based on the product’s previously set parameters and price limits. The winning bid serves their impression. The important differentiator here is that the brand is ultimately targeting people and not properties. Each impression retains a value.
Digital media management agencies, such as Atmosphere Orange, track and control a campaigns performance through weightings, placement, dynamic creative and positioning in order to get higher impressions, click through or conversion rates. This means that campaigns can be optimised and spend adjusted following consistent, accurate feedback from granular targeting tools.
Craig Utermark, CEO of Atmosphere Orange explains further: “We micro-manage the outcome of a campaign based on the data that we collect on a daily basis. Digital media’s dramatically shortened response time allows us more transparency and the flexibility to quantify campaign successes, or identify what is causing a campaign to fail and rectify the issue within a very short period of time. Working with such organic data the client is given a meaningful view into their target market which then triggers further creative adjustment and refinement. Digital media advertising is accelerating in South Africa, especially with CEO’s and CFO’s demanding more accountability for spend from their CMO’s.”
It is necessary that South African brand managers wanting to stay ahead of their game, start taking advantage of PMB’s efficiencies, targeted reach and accuracy of data across all media channels.
Guidelines for brand managers eager to get on board will require a shift from the traditional negotiation skills of a media buying professional towards more analytical and technical skills, which is where digital agencies like Atmosphere Orange come in. Their industry knowhow ensures that via reporting, brand managers pay attention to quality by constantly refining, targeting and optimising advertising media. In this way brand managers are assured of not making a poor purchase or paying for un-viewable advertisements.
Atmosphere Orange offers an induction process where brand marketers are given a customised insight into the power of programmatic marketing for their brand, which includes training, strategy, reporting and delivery of dedicated digital buyers.
The technological advancements, control, and cost efficiency gained through programmatic marketing is shaping the future of digital marketing. Use of programmatic advertising has grown 20% in the last six months and as much as 65% of global publishers now sell their ad space through networks, with the rest coming online fast.
For those still resisting the age of digital disruption, there is always the comfort of the bottom line to refer back to, with brands such as Kellogg’s, experiencing digital media ROIs of as much as six times. It’s clear why South African media strategists are making calculated decisions and embracing the shift to digital media advertising.
One of the most basic principles of economics – opportunity cost – according to the Economist’s definition, is ‘the true cost of what you have to give up to get it.
Brad was shopping for his first hi fi stereo and had spent an hour debating between a R6 600 Pioneer and a R5 000 Sony. Fearing Brad’s indecision might cost him a sale, the salesman interjected saying “Think of it this way – would you rather have the Pioneer, or the Sony and R1 600 worth of CDs?”
Brad’s face lit up. The decision was clear, the Sony – and by a large margin. Fifteen new CDs were too great a sacrifice for the slightly more attractive Pioneer. Although Brad was quite capable of doing the math, he hadn’t considered that until the salesman pointed it out.
One constant in all our lives is that we must make choices. You make choices from the time you get out of bed in the morning until you go to sleep at night. All decisions involve opportunity costs, no matter the size of the decision.
Opportunity cost is your next best alternative – your second choice – and something you value. A brilliant ad by De Beers depicted two large diamond earrings with the tagline “Redo the kitchen next year.” Implying the cost of the diamonds was merely a slight delay in a renovation.
Why is opportunity cost important? Opportunity cost is what you give up when you make a decision. When you ask yourself what you are giving up when you make a certain choice, it forces you to think more critically about all of the other options that you are not choosing. It also forces you to think about the follow-up question connected to your decision – is it worth it? You may find that when you think clearly about all of your options and identify the opportunity costs of your choices, perhaps your choice is not worth what you will choose to give up.
How much is your time worth?
Your time is valuable, but how much is it really worth? When your flight is delayed by two hours, you might say ‘what a waste of time’ but do you ever say ‘that’s R1 000 of my time down the drain? It’s whatever your salary works out to per hour.
The opportunity-cost equation simply tells you what the cost of your time is, not how you should spend it or how you want to spend it. If you would prefer to read a book than work another hour, that says that you value the time relaxing more than your salary rate. All this calculation gives you is a benchmark against which to consider what you are doing with your time. The crucial application is in thinking about how you want to spend your time
Consider stationery shopping. You can order through your stationer and have the supplies delivered in a day or two. Or you can go to a wholesaler and spend two hours out the office. There’s no delivery fee for the former, but maybe there are higher priced items and a markup. Which is the better way to shop? This opportunity-cost idea makes the decision easy: Is the markup or higher prices smaller than the value of two hours of your time? If yes, delivery. If no, head to the car.
Applying opportunity-cost theory won’t always change your behaviour but can simply be a useful tool to understand why things are the way they are.
In South Africa, digital advertising on smartphones and computers will generate 52% of the total increase in ad spending during the next five years, with over half of South Africa’s internet traffic on mobile phones, making it the greatest opportunity for growth in the immediate future, according to digital media buying agency Atmosphere Orange’s Media Director, Chanel MacKay.
She points out that, ”Ninety-five percent of South Africa’s major brands use Twitter and 92% use Facebook to advertise. With 53% more YouTube users and 65% more Instagram users over the past year alone, marketers are increasing their social media budgets as they grasp the potential for market share growth on their doorstep”. According to the Chief Marketing Officer Council digital ad spending across the Middle East and Africa is ripe for expansion and will skyrocket to $1.35 billion in 2015, more than four times the global average.
The Pro Shop is just one example of South African businesses forging ahead. Says Marketing Manager, Trevor Rebello: “Online spend now makes up about 8% of our total budget and we realise that even this is a low figure. We were very clearly shown that for less money we can target more golfers across all age groups. Our budget spend has to continue to increase in this direction. We are also putting more focus on our social media profiles and all have grown as a result, in just one year. We realise digital is the way forward, we definitely see the results.”
Media is consumed over tablets, mobile smart phones and desktop with the average South African spending five hours online. Digital advertising is bought and sold on automated and superior targeting tactics with as many as 80 differentiating measures, including age, geography, and gender, far more than traditional advertising. This allows advertisers to sharply focus their campaigns and reach and communicate on a one-to-one basis with their market wherever they are and at whatever time of day they are online.
PwC South Africa entertainment and media industries leader, Vicki Myburgh says, “By embracing digital as the engine of their business‚ companies can position themselves to meet consumers’ changing demands through any channel and format – and more effectively and more profitably than ever before.”
Atmosphere Orange identifies three major trends. MacKay says, “media consumption is moving to mobile, outbound marketing has shifted to inbound and content marketing, and there is an increasing understanding of the advantages of programmatic media buying’ and with that comes remarketing and cross-device targeting.”
Clear advantages are gained with the automation of the media buying process. Not only does it streamline the inventory process on the buy and sell side, it can compose new audiences on the fly, across different content properties. Marketers can access millions of data points as to who saw their campaign, who engaged with it, what message they were attracted to, and how they converted.
A host of new insights about their consumers offers the best value for marketers, says MacKay, improving a campaign’s effectiveness and answering strategic questions . “Psychographic, behavioural and lifestyle data adds dimension to marketing communications. For example, a retailer may see that while they are getting a high click-through rate, their sales remains low. We can understand why. Looking at criteria such as geographical areas and specific times of day we might find consumers are visiting the site while at work but waiting to get home to order the product or service; or that there is high demand for the product but no retail site within reach of that location. Using this information the brand can then decide on where to build a bricks and mortar store within reach of new markets; or plan for a digital retail store to reach and service the geographic area.
“Brandwatch highlighted Hyundai integration of digital into their traditional marketing campaign by changing their website for five minutes whenever one of their TV ads was aired. They built a new landing page related to the model advertised on screen at the time, with a call to action. Testing was done by alternating the old site with the new site whenever the ad was run. Conversion rates for a brochure download or to book a test drive went from 0.7%of visitors to the regular site, to 3.3% on the new site, showing a 480% increase.
“Brands must now be super agile and ultra-relevant across all digital mediums and on a minute-by-minute basis,” advises MacKay. “Digital has put the marketing channel on an upward trajectory. Its influence is everywhere and it is creating and cementing relationships with the core focus of any marketer, their customers.”
Digital advertising maximises the return on investment for brands, by giving brands greater control with reduced display advertising costs. The advantages of programmatic marketing’s fine-grain tactics, dynamic creative and optimisation, also allows the consumer to benefit as they are less likely to be served ads that are not relevant to them. With increased relevancy comes an upsurge in quality conversions for the advertiser.
“Programmatic digital advertising requires less budget as there are lower costs per ad and wider, more targeted reach. Using the campaign’s key performance indicators (KPIs) the campaign might start off small and grow according to which channels deliver the most high-quality leads. Working 24/7, data is analysed, optimised and reported on regarding traffic, pricing, impressions, clicks, conversations and the time between every action, allowing the brand to react dynamically to market changes and keeping the brand marketer front and centre of the campaign’s performance,” MacKay said.
The Pro Shop opened its first store in the heart of Johannesburg’s CBD in 1976, today this iconic sports brand represents South Africa’s largest golf superstore offering sportsmen and women a full range of professional golfing equipment.
A focussed approach to its brand marketing and an understanding of its core target market has seen continued success for the brand following a decision to embrace programmatic marketing with the support of digital media buying agency Atmosphere Orange.
Today it continues to hold its position front and centre as the biggest golfing website in the country. The Pro Shop’s Marketing Manager Trevor Rebello discusses their campaign and the process which took them to the top of their game.
How did you first come to understand programmatic marketing and initiate the campaign with Atmosphere Orange?
We engaged Atmosphere Orange a year ago, around the time of our annual August sales and we saw immediate results. Since we had never used online campaigns of this nature before we have no benchmark to measure against but I can say that the company is doing better than it has compared to results of the past five years, while the industry as a whole is down over the same period.
At one stage, we did dabble with online advertising but found we had to think hard about which websites would work for our products and where our market would be visiting. We looked at sites such as Golf Weather, Super Sport or Golf Digest assuming golfers would be online there, but the CPMs we were being quoted were too high for the number of visitors they were seeing. We were spending the money but we weren’t able to track the results to leads or sales and so the pricing was too high.
Teaming up with Atmosphere Orange has definitely shifted the way we think about marketing. The Pro Shop has been in operation for 40 years. We were stuck with outdated thinking which focussed mainly on traditional forms of media and on an older LSM as we felt this was where spend was. We had never considered either our website or an online presence as part of our total sales turnover. Our main product, golf clubs, are also a high ticket item transaction, so The Pro Shop typically sees less online purchase averages than other types of online stores. Our target market likes to be able to try their golf clubs out before they purchase, so they come in store to get a feel for the clubs and see if they match their swing. The budgets from online couldn’t compare to our in store retail levels where clubs are custom fitted. Working with Atmosphere Orange, we moved away from a static product information focus to new product launch initiatives instead.
We now have 30 000 – 40 000 unique visits to our own website each month and are probably one of the biggest golfing websites in South Africa. When customers want to buy golf clubs they come directly to us. As a result, we currently set aside monthly budgets for our online advertising. Atmosphere Orange finds the golfers for us.
What was different with Atmosphere Orange and why did you decide to try them?
Atmosphere Orange reversed the approach. Instead of us advertising on a few websites where visitors were seeing our ads on TV and in magazines, they said they would find us golfers over many websites who weren’t already our customers, they would be unique views. I was impressed by their scientific approach. They were able to reduce the CPM and at the same time increase the number of impressions and all their claims were validated.
Were there any surprises in the process or in the results?
There were no surprises in the process. From the first meeting I was able to gain a good idea of how it was going to work. They would define the target market for the individual campaigns and the final pricing invoices matched the figures quoted in our initial meeting, together with the guarantees being met of a higher click through rate and a lower CPM.
Has it changed the way you think about your clients, branding, advertising or your business?
Prior to this, The Pro Shop was spending almost zero on online advertising. We were focussing on TV coverage at events and in magazines and paying massive amounts of money for a magazine circulation of about 40 000. Now we spend R20 000 per campaign over a two to four week period and get a million impressions. There is no guess work. For R20 000 we are getting at least 8 000 customers clicking through to our website, searching for information or making an online purchase.
Online spend now makes up about 8% of our total budget and we realise that even this is a low figure. We were very clearly shown that for less money we can target more golfers across all age groups. Our budget spend has to continue to increase in this direction. We are also putting more focus on our social media profiles and all have grown as a result, in just one year. We realise digital is the way forward – we definitely see the results.
A quick look at the pros and cons of entering the online retail market
Online shopping in South Africa has continued to hit record highs, especially during last year’s holiday season when online spending increased between 30-40% compared to previous years. The country’s internet economy has been projected to double to R103bn by 2016 from the R51billion recorded in 2011.
Recent studies reveal that the internet economy contributes 2% to South Africa’s GDP and this contribution is rising by about 0.1% every year, resulting in 2.5% increases by 2016.
What does this mean for South African’s retailers?
An increase in online shopping is driving structural changes in the retail sector, according to a recent report issued by PwC.
Online users in South Africa tend to fall within the medium to high-income sector of the population. “This group appears to have a strong pent-up demand for online services,” says John Wilkinson, PwC Retail and Consumer Leader in South Africa.
However, Wilkinson says that South Africa’s online retail market is still relatively small and niche with a strong focus on consumer products such as books, music and DVDs. “This is unlike many of the developed markets, such as Asia and Australia, where there has been an explosive growth of online retailers. Suffice to say there is huge online potential that has yet to be discovered and tapped in South Africa.”
Having already set up an important channel for their long-term future are Edcon’s CNA division, Walton’s with their e-store and Mr Price which are all already operating in the online retail market.
So how easy is it to tap into this market? Let’s consider the pro’s and con’s:
There’s no loss to theft
You have access to 24 hour sales
You have national and international reach
Less employees are required
You can collect more data and get better visibility of your customers buying behaviour online, from age and location demographics, initial search terms, related items they are interested in and much more, easily collected via a simple analytics program.
You look bigger than you actually are
You van stock more items. A retail storefront will perform better for a business that sells a select amount of products, while an online store may work better for a business that carries an extensive selection.
Environmental factors such as position, weather, traffic, parking or increased petrol prices don’t affect you.
No bottlenecks or customer queues
Your customers can easily promote your products via sharing on social platforms such as Twitter, Facebook and Pinterest at the click of a button. (Word of mouth marketing is very powerful and it is much easier for you to encourage this via an online store.)
There is more competition online – the web is where people go to get bargains and consequently competition is fierce. Margins in online retail tend of be lower than on the high street and so retailers need to compensate by selling more.
There is more admin required
There is less customer contact
There is no touch or feel of quality for customers and returns are time-consuming
There are lower margins. It has been found that consumers pay significantly more for products they can view in person and for the ‘experience’ within a retail store.
Postage and shipping costs can be expensive
There is no passing foot traffic
There is less impulse buying
There is a dependency on hardware
There is less trust of the brand or product.
The solution? To have both of course.
What you will need:
An online payment system such as Paypal for example.
You will need to pay for web hosting and technical support
You will pay for shipping and accepting online payments.
You will pay for your desired domain name and for someone to develop your website and e-commerce platform.
You will need to handle fulfillment and shipping
You will need to maintain it.
Building a customer base is one of the most-essential components of starting a successful retail business, online or offline. With a retail store, the potential customer base is limited to the surrounding area. Online, the customer base is limitless.