This content relates to : DIGITAL TRANSFORMATION
Managing Director, Deloitte Digital
I am a partner here at Deloitte Digital, I lead our marketing science and ad performance practice. I’m a 20 year vet in the advertising and marketing space and it is a really exciting time to be in the space because there is all sorts of change, change for the good for marketers to really understand, you know, how their marketing and advertising is driving business growth and impact across all channels, you know, not just online, but offline as well. And so we here at Deloitte Digital, you know, are specialized in this area.
We work with our clients, we leverage our marketing science data science teams to help our clients drive better outcomes for their marketing advertising spend. And this year we invested quite a bit of time and market research, really to understand where marketers are in terms of adopting new measurement methodologies, the attribution services. And with that effort we went out and surveyed 800 companies to do some primary research to really understand where marketers heads were at, where they were making investments, where they were stuck from a transformation perspective and adopting new different technologies and methodologies. And I’m going to share some of that research with you today.
One of the things that we wanted to do is really talk to our clients and really understand where they’re heads were at in regards to are they adopting new measurement methods, methodologies. How are they changing the way that they look at advertising and return on investment? And so last spring we went out and interviewed 800 marketers and we really wanted to do some research to fully understand where the market was, who were the front runners and what were they doing and then who were the laggards and where were they spending their time and what were some of the barriers for the laggards to adopt new technologies and trends.
And so as a result of that, we published three white papers really to not only cover the research that we’d found across marketers, but also with our experts here at Deloitte around measurement and attribution really to kind of share what we’re seeing some of our clients do, and on some of the trends that we’re advising our clients on adopting best practices in the space. And so one of the things that’s really important to understand is that the effect that, you know, if we go back 20 years ago, in advertising, there’s an old saying, and this is actually going back way before 20 years ago but it’s an old saying saying, you know, my advertising, you know, 50% of it works and 50% of it doesn’t work. And I don’t know what 50% works or doesn’t work but I just know half of it works. And that’s sort of old school advertising and then over the digital age we were able to track ads that were shown to people and what they did after that. And so we got much, much further away from that sort of old school methodology.
However, in the last 3 years, what has happened is that there’s been significant changes that companies like Apple and regulatory bodies have made in the essence to protect consumers’ privacy. So, you know, and to protect consumers say “Look, consumers don’t want to be tracked. People don’t want to know if they surfed an ad, where’d they go and did they go buy something.”
So all these laws and industry changes is really moved away from the ability for marketers to track individual people, what ads are shown to them and what they do. And then for fairness for consumers, they don’t want all that information shared. And so as a result of that, what we found in our research number one is that, you know, using these tracking technologies, measurement frontrunners are beginning to move ahead in using new forms of methodology that aggregate data across all marketing channels in order to really understand, you know, the marketing effectiveness.
And now yes, it doesn’t necessarily give you individual aspects of how did this person, you know, they were exposed to these ads and that they did these actions, it’s more about the overall impact that advertising is having on maybe different customer segments or in different geographic regions.
Now there’s granular data that comes with that and so there are deep forensics and analytics that you’re able to do, but we are definitely beyond the time where we’re going to be able to do things and look at things at an individual level, which is, you know, that was sort of last 20 years we’ve been doing that.
Going forward, there are a number of technologies that are emerging that are really the next generation of measurement analytics. And one of the technologies that we talk and we feature is a new version of market mix modeling. Market mix modeling was invented by Kraft in the seventies and it was ability for them and most consumer package goods companies to understand, “Hey, you know, we don’t know and we don’t see sales data.
So we need to understand at an indivu, you know, how do we understand the impact that marketing and advertising having about, you know, if it’s Kraft Macaroni and Cheese, like how many boxes of macaroni and cheese did we sell? Is it TV that’s driving it? Is it digital that’s driving it?” and so market mix modeling was sort of the first generation of aggregating marketing data using an econometric model in developing a methodology to understand cause and effect of marketing and impact on sales.
A new technology has now and methodology has emerged, calledgranular market mix modeling. Instead of looking at aggregate marketing exposures, let’s say we’re looking at over a period of time, maybe a month or a week television spots in different markets, digital advertising in different markets, we’re now looking at a granular level. So what granular means is that we’re looking at daily impressions and daily television spots and understanding, even at a creative level or an audience level, a deep down and if you’re running ads, all of that data coming up.
And the beauty of a granular market mix model is that it allows you to really understand on a daily basis, a weekly basis, the impact that advertising is having across all channels. And so this is something that we saw in our research that more and more companies are either moving towards a merged approach, which is using something called a MTA and market mix modeling or beginning to adopt granular marketing mix modeling methodologies.
The other aspect when you think about modeled approach to measurement, is that there’s something called the halo effect. And so again, when we think about digital advertising, the reality is, is that digital advertising works, but television works, too. So if you were to run ads, let’s say digital campaign in New York and L. A. and only run television in L. A, you’re going to sell more widgets in L. A. than New York. Why? Because large screen TV exposure works. You can’t click on it, at least on linear television, but certainly on Hulu and other channels, you can click on it.
And so understanding that the correlation between advertising that you can’t clicked on and advertising that you can, is really important to understand the synergy of media and how that ultimately drives better return on investment for brands.
One of the other things that we uncovered in our research was that about 65% of all companies that we surveyed are aware that their current, you know, individual tracking measurement solutions are not accurate because it’s missing a lot of data and that 65% of companies are slated to acquire and invest in new measurement methodologies in the next 12 to 18 months.
And so that was really an important finding to validate that there is a shift going on right now to new methodologies. And the other thing that we also found in the research, it was a significant amount of interest and activation when it comes to testing new measurement methodologies and different types of tools such as ad cleaning rooms such as testing control formats and experimentation, AV testing and control, these are all different types of things that, you know, in testing and understanding different types of tools that you could use to measure the outcome either of a single channel or of an Omni channel approach of looking at all channels together.
And so that was definitely a finding and how companies are doing that. And it’s interesting in the industry, you have a lot of new tools coming out from Alphabet, from Amazon, from Meta, different tools that may be based in underlying privacy enhancing technology that allows data to be comingled at an individual level for analytics but none of that data comes back out to the people that are doing that analysis at an individual level.
So it’s brought together, but it’s only for an aggregate analysis approach. And so we’re seeing more of those tools adopted by the big ad platforms. And there are different disparate tools or separate tools within each platform, so in addition, you know, and it just adds complexity to the equation. So you could have a tool and a brand that manages holistically, you know, the impact of television and digital and social and print and get a pretty good feel of which tactics are working. But if you really want to go under the covers and really understand a little bit more about how many ads, maybe in YouTube that it takes to drive an outcome versus let’s say TikTok, this is where clean rooms come into play where you can go in to different ad platforms and really do that forensic and understand from a digital perspective what are the tactics, what’s the creative that’s driving this particular audience cohort or a particular geographic market.
So these are new tools that we work with our clients and certainly in our research, it was pretty clear that, you know, there’s a lot of investment being made, not just in tools, but in people, data scientists. And, you know, data scientists only go back, I’d say what we see, what we heard a lot and saw in the research is that there are significant investments being made by most major companies, especially measurement frontrunners and people. And the skill sets they’re investing in this data science, marketing science, these are skills that are fundamental to improve marketing performance that apply to measurement, that apply to attribution, but do much more than that.
So again, you know, from a data science, marketing science perspective, you could look at media and apply those skills to understand the correlation of media and the outcome that media is driving. But again, you also want to understand, “Well, if there was a sale going on this week, how did the sale impact and the decrease in price? You know, how did that factor into the equation?” So you drop your price 50%, of course, people want to buy more.
You do need marketing to make people aware of that of that sale but at the same time, understanding the correlation between price, incentives, marketing and advertising is a very complex model. And that’s where key skills like data science and marketing science come into play.
And again, what’s really exciting about the market and where the market’s going is that, again, these are very new methodologies that are being born from an industry standard, from particular companies like the big advertising giants, but these are all new. And so it’s important and we found, you know, having the core skill set at a brand is very important. But the tools that have been used for last 20 years are basically being sunsetted as a result of all the different, you know, changes in privacy and different industry changes and so it’s sort of a new world.
Managing Director, Deloitte Digital