STATE OF Ad Tech 2019

Executive Summary and Intro

Since AT&T debuted a campaign with the very first banner ad in 1994, the world of advertising has never been the same. With the advent of advertising technology, new channels and devices started to offer different ways for advertisers to connect with customers.

From the pop-up-happy 90s to Google’s debut in 1998 and Facebook’s launch in 2004, there has been one clear direction for ad-tech: personalization. But how are advertisers working toward that direction? And what is the state of ad-tech going to be in 2019 and beyond?

In this report, we’ll be diving into exclusive research findings from our work with research firm Euromonitor International on our survey, “Acquire, Convert, Re-engage.” We spoke with 901 marketers around the globe about how they convert customers today - and what works best..

Read on to discover:

1 The Ad-Tech landscape
2 The Art & Science of Conversion
3 The Secrets to Re-Engagement
4 The Ad Platform for the Open Internet

The Current Ad-Tech Landscape

Today, more than 3.5 billion people are regular Internet users. Online is now the second largest and fastest growing ad spend channel in the world, accounting for 34% of total ad spend in 2017. Soon, it will overtake global ad spend on TV.

Our research projects that by 2022, there will be 4.66 billion internet users in the world and 56% will have two or more connected devices.

Transparency, Transparency, Transparency.

The world is digital. The majority of people will have multiple devices. So you’d think it would be easy for advertisers to reach their target consumers. But ad-tech has never been more complicated. Here’s what we see for the top 2019 ad-tech trends:

Ads Won’t Advertise, They’ll Tell Stories.

Top 2019 Ad-Tech Trends

More Ecommerce Companies Become Ad Companies.

Ecommerce giant Alibaba is often referred to as an ad company, instead of an ecommerce company. That’s because 60% of the company’s revenue actually comes from ads, not the products sold. Amazon’s ad business is growing massively – with expected growth of 55% in 2019 alone, according to J.P. Morgan.

In 2019, ecommerce companies will continue to rethink how brand partnerships and product placements work together. CPM will take a front seat next year. Through sophisticated technology, it’s possible to maximize revenue from all the visitors to an ecommerce website, even if they don’t buy – as long as retailers can show brands that those impressions are valuable.

Transparency, Transparency, Transparency.

Marketers want to know where their ads are being placed. They want to know which ads are working and how much revenue each ad contributes. Consumers want to know how their data is used. Publishers want to know how audiences interact with the ads on their websites and how much revenue is really being generated for partners.

Wherever you are in the ad-tech ecosystem, you probably want more transparency. As the big tech players keep consolidating – and building higher walls – it’s hard to really dive into the details on ad performance.

With the passage of GDPR and more privacy laws on the way, we know that transparency, privacy, and security are intertwined. Ads are at the center of the storm.

How can you personalize content but ensure customer data is secure? How can you know that a partner is using your ad dollars to create the best possible campaigns?

All of these issues are at the forefront of the industry. New solutions, strategies, and partnerships will happen next year as companies work on adapting to this new reality.

Ads Won’t Advertise, They’ll Tell Stories.

When we look at the success of direct-to-consumer companies like Away, Harry’s, and Warby Parker, it’s not the product that grabs our attention – it’s the story. By matching quality product with a unique and shareable story, these companies have carved out a niche in the market.

Consumers can get great discounts anywhere on the Internet. Ads need to be personalized to the point of telling a story to the individual consumer. That means creating a full funnel ad experience – through data.

Great ads will matter more than ever, but especially those that understand a customer’s needs and tell a great story through product and content. The best ads in 2019 won’t sell. They will entertain, educate, and inspire.

Ad-Tech by the Numbers

When it comes to tactics, marketers are spending the most on paid display. Social media ad spend is increasing as well. Globally, 16% of marketing budgets went to paid display, with 41% of that budget spent on retargeting. The second highest share of ad spend (14%) went to social media. Traditional marketing (TV, Print, and Radio) takes up 13% of marketing budgets, as TV remains a major channel across the globe.

The Awareness-Consideration-Conversion Methodology

All of these marketing tactics are meant to build customer relationships throughout the shopper journey. At Criteo, we define this by the “Awareness, Consideration, Conversion” methodology.

Each phase has its own objectives. For awareness, marketers need to think about how to maximize reach and views. During the consideration phase, the focus turns to traffic. Are you getting the right audience to the right product pages? Are you seeing noticeable increases in app installs and engagement?

Monetize

Revenue per impression

The Art & Science of Conversion

A conversion can happen in an instant or it can happen over the course of a few months.

That’s also why it can be a challenge to define a methodology for conversion tracking. Unlike measuring web traffic, conversion campaigns can’t be measured by looking at just one marketing vehicle. With a variety of tactics across channels that can all contribute to a conversion, it’s also hard to measure which tactics are bringing the highest ROI.

What we found is that marketers distribute their budgets across 10 primary channels. They face different challenges across the board, but shared with us some of their strategies for success.

Unifying fragmented data

Our survey found that marketers worldwide experience these three challenges when running conversion campaigns:

1. Multiple teams and multiple systems means fragmented data. As marketers use so many different channels and tools to execute conversion campaigns, it becomes difficult to keep everything unified. Without a single view of what’s happening on a customer level, marketers can’t link conversions to the advertising driving those conversions.
2. Difficulty in measuring the return on investment. Attribution is a challenge for conversion campaigns. Marketers must balance the competing demands of generating high ROI while managing ad spend costs. The diffusion of ad spend across channels makes it hard to calculate a clear ROI.
3. Connecting online and in-store shopper data.

The Conversion Tactics that Work

When we asked about the most commonly used tactics for conversion campaigns, marketers pointed to social media marketing. Paid display and email weren’t far behind. SEO was the fourth most popular.

(% of marketers using given channel in their campaigns)

1 Social Media Marketing (53%)

2 Paid Display Advertising (43%)

3 Email Marketing (41%)

4 Search Engine Optimization (SEO) (38%)

Strategies for Success

Globally, marketers told us they have their two top strategies for success:

Maximize ad placement quality.
Provide compelling and unique offers.

Maximize ad placement quality.

For marketers everywhere, it doesn’t matter how good your ads are if they’re not seen. According to global marketers, having high-quality ad placements is key to conversion campaigns. In APAC, leather goods brand Bellroy makes sure their banners appear on top regional newspapers, which over-index for their target audience, a person in-market for a new wallet.

Provide compelling and unique offers.

Marketers said that ongoing campaigns with compelling offers is one of the surest ways to maximize revenue at the conversion stage. These offers should go beyond the basics, such as sign-up discounts, and focus on linking the offer to limited-time promotions. Australian skin-care brand Asarai’s summer 25% off event and Sephora’s “Beauty Appreciation” event are both examples of using targeted, timely offers to drive additional sales from brand-preferring consumers.

Want to really figure out how to fix fragmented data, get stakeholder buy-in, and measure ROI?

Start by defining the objective that matters to you. Marketers worldwide told us that there is no one true metric when measuring conversion. The top ten listed were:

Source: “Acquire, Convert, Re-engage,” Euromonitor & Criteo, 2018, N=796

Conversion campaigns are as much about attribution as they are about sales numbers. Without being able to show which channels and tactics really move the needle, marketers won’t be able to secure the budget or stakeholder buy-in that they need. When you have the proper tools and partners in place to measure data-driven attribution, then you can rest assured that your marketing dollars are being well-spent.

The Secrets to Re-engagement

Research shows the success rate of selling to an existing customer is between 60-70%, while that of selling to a new customer is 5-20%. Also, returning customers can bring in up to two-thirds of your brand’s profits.

Marketers indicated that campaign KPIs depend on the type of campaign. For example, an app-engagement campaign might focus on driving a new qualified visit from a lapsed user. An app-repurchase campaign might focus on in-app post-click conversion rate.

The US Leads in All Three Campaign Types

Our research found that while globally, over 60% of marketers ran three types of re-engagement campaigns, the US leads all other markets in all three campaign types.

% of Marketer with Targeted Campaign for

Additionally, we found that pure play online companies are ahead of brick-and-mortar companies in terms of re-engagement activities. Online-only businesses need to be more active digitally, whereas a business with brick-and-mortar locations may focus on marketing initiatives for in-store campaigns.

Source: “Acquire, Convert, Re-engage,” Euromonitor & Criteo, 2018, N=901 (Global), N=551 (APAC), N=150 (EU), N=100 (USA)

Metrics Used to Measure Re-engagement Success

Globally, marketers measured re-engagement success using the following metrics:

Source: “Acquire, Convert, Re-engage”, Euromonitor & Criteo, 2018, N=601 (App Re-Engagement), N=558 (App Re-Activation), N=653 (Repeat Purchase)

The Challenges of Re-engagement Campaigns

Why aren’t more marketers investing heavily in re-engagement campaigns? Here is what respondents said when we asked:

1. Lapsed users are difficult to re-engage.
2. Limited channels available to re-engage.
3. Data available is limited or has quality issues.

The Re-Engagement Tactics that Work

So how do marketers solve re-engagement challenges? Respondents pointed toward tactics like compelling discounts, high-quality ad copy, and targeting prospects at the right time and place:

• Offer compelling discounts
• Target prospects at the right time and place
• Deliver high-quality ad copy
• Make ads visually appealing

The Ad Platform for the Open Internet

Every tactic in our survey goes back to data. And, in turn, personalization. As marketers, we know that personalized ads are effective. As more marketing budgets go digital around the world, personalization has to get more sophisticated.

That’s why the biggest tech giants today do so well. With massive amounts of data, it’s easy to create an individual experience for every shopper at every touchpoint. Most other companies can’t collect or activate the data on that scale. But, by working across the Open Internet, it’s possible.

Advertiser and Consumer Benefits

The Ad-Tech Ecosystem of the Open Internet offers value to consumers and companies of every size. No one business controls the market, so consumers get more choices. Advertisers get more flexibility, and publishers get more control.

In effect, the Open Internet allows for a diversity of ideas and innovations that drive opportunity for all, instead of distributing power and control to just the big players.

When companies work with the Criteo Ad Platform, their advertising campaigns are powered by data from 1.4 billion active shoppers and more than $615 billion in annual sales transactions.

That amount of data allows ads to be extremely personalized and extremely intelligent – and allows companies to own the relationships with their customers from start to finish.

About Criteo

Criteo (NASDAQ: CRTO) is the advertising platform of the open Internet, an ecosystem that favors neutrality, transparency, and inclusiveness. 2,700 Criteo team members partner with over 18,000 customers and thousands of publishers around the globe to deliver effective advertising across all channels, by applying advanced machine learning to unparalleled data sets. Criteo empowers companies of all sizes with the technology they need to better know and serve their customers. For more information, please visit www.criteo.com.