What's Next for Online Advertising? (Q3 2013)

White Paper

The online ad industry continues to evolve at breakneck speed and marketers must stay abreast of the changes if they are to remain competitive. Digital advertising spend in the UK hit a record £5.42bn in 2012, surging £607m from the £4.81bn generated the previous year. So what's next for online advertising?
This whitepaper draws on the results of a recent survey by marketingfinder.co.uk in association with ad:tech London, to outline what's on the horizon for online advertising and how digital marketers can stay ahead of the competition. Download your free copy today.

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Digital advertising spend in the UK hit a record £5.42bn in 2012, surging £607m from the £4.81bn generated the previous year, according to the latest Digital Ad Spend report from the Internet Advertising Bureau (IAB) and PwC.

Mobile ad spend fuelled over half of the growth, reaching its own half-billion milestone, while video advertising saw a six-fold increase in the last three years, growing the total ad spend to £160m in 2012. Social media advertising also saw a bigger chunk of businesses’ budgets in 2012 with a 25% spend hike taking the total to £328.4m. Yet paid search and display media still account for the majority – with PPC accounting for over half of annual digital ad spend (£3 billion). It has since been reported that £3 in every £5 spent in the digital budget goes on paid search.

The rise of programmatic buying has seen the display ad trading model evolve swiftly from being bought solely on a cost-per-thousand (CPM) basis to adopt the real-time auction model of paid search advertising, via real-time-bidding (RTB). The methods and technologies behind programmatic trading and the arrival of private marketplaces are encouraging more investment in RTB from brands, and the market is estimated to be worth over £500 million by 2015.

BskyB now invests 40% of its annual £15 million display budget on real-time bidding in the UK and Kellogg’s is among brands ramping up their focus on this area and is looking to extend programmatic trading to video in the UK.

Meanwhile the rise of private marketplaces from the likes of eBay and Facebook (FBX) are expected to inject more premium inventory into the RTB environment – a factor critical to its success and growth.

marketingfinder.co.uk and ad:tech’s own poll of marketers revealed 77% of respondents are planning to increase their digital advertising budgets in the coming year, while the remainder said they would maintain the same budget.

Yet the worlds of display and paid search advertising are on the cusp of some of their biggest evolutions to date, and marketers must be ahead of the changes if they are to reap the opportunities. To find out more, Ad:tech London and marketingfinder.co.uk conducted a survey examining what forms of online advertising marketers think are the most effective and how they see the online landscape changing over the next 12 months. This paper examines the findings.

What is Google Enhanced Campaigns?

In February this year (2013) Google overhauled AdWords to cater for multi-device search, a move aimed at helping marketers hone paid-search targeting across multiple devices, while letting them adjust bids for ads according to three core variables: devices type, location and time of day.

Given the majority of the annual UK £3 billion paid search budgets are spent on Google this was a significant change and one which could encourage those less proactive in mobile to become multi-device brands by default.

The upgrade, called Enhanced Campaigns, is designed to simplify the process for marketers running multi-device campaigns by letting them plan and execute from a single place. Marketers can adjust bids according to their target demographics’ location, for example bidding 25% higher for people searching a half-mile away, 20% lower for searches after 11am and 50 per cent higher for searches on smartphones.

Enhanced Campaigns also includes features such as ads optimised for various user contexts, meaning marketers can run ads across devices with the right ad text, sitelink, app or ad extension without having to manually edit each campaign separately for different devices, locations and time of day.

It also means marketers can view people’s searching behaviour regardless of which device they are using and manage their ad experience accordingly. For example, someone searching via a desktop can be sent an ad for a brand’s ecommerce site, whereas someone searching on a smartphone could be sent a click-to-call ad and location extensions, all within the same campaign.

Enhanced Campaigns: Benefits and pitfalls

The rollout of Enhanced Campaigns triggered mixed reaction from marketers. For years Google has advised marketers that best practice is to separate their campaign targeting and measurement by each smartphone and tablet device.

Google set an enforced migration date of 22 July, meaning every marketer who hadn’t moved their paid search accounts over to Enhanced Campaigns by this date has had them transitioned automatically. With Enhanced Campaigns Google has merged desktop and tablet targeting, stating that extensive research has shown consumer behaviours across the two to be distinctly similar, so should therefore be measured as one channel.

However, advertisers can use the ValueTrack parameters to track PPC performance by device. They must tag their URL destination with a “c” for computer, “t” for tablet, or “m” for mobile, to see performance across each device.

Yet some brands have been frustrated by the loss of the ability to target to specific mobile handsets since the rollout. For example, Enterprise Holdings, owner of brands including Enterprise Rent-a-Car, used to target Apple but not Blackberry devices, finding that the former provided better conversions. Now its campaigns run across Blackberry, and all other handsets by default, a factor which it initially found frustrating.

In fact the rollout caused confusion and angered many brands that had embraced mobile early on and as a result had become adept at understanding the nuances and consumer expectations across different devices.

The changes also sparked concern in the industry that mobile cost-per-clicks (CPCs), which had always been cheap compared to desktop, would spike as a result of the additional competition in the mobile PPC space. Some brands and agencies did see mobile CPCs rise as much as 10% within weeks of the rollout.

However, marketers that tackled the transition well ahead of the 22 July cut-off are already seeing benefits from the additional targeting options and bid adjustment features.

One of the biggest upsides to the AdWords overhaul is that those that haven’t been proactive in mobile can now become multi-device brands by default.

MySingleFriend has actually overhauled its entire mobile strategy since using Enhanced Campaigns, and its agency Periscopix has estimated that enhanced Campaigns has led to15% “time savings”, which is now being redirected back into other strategic planning. The brand has also reduced the number of campaigns it was running from 70 to 10 and restructuring its entire approach to mobile as a result.

Case study: MySingleFriend

Dating site MySingleFriend has overhauled it's mobile strategy after restructuring it's campaigns for Enhanced Campaigns. Previously it had struggled to make a case for mobile, stating that it was yet to see the channel drive any conversions. The result was it had halted all mobile marketing until it could make a clear business case for investing in it.

After working with PPC agency Periscopix it restructured its AdWords account to revolve around Enhanced Campaigns prior to the 22 July cut-off. This involved ensuring it had mobile landing pages ready so it could direct people through to the right pages so the user experience was consistent.

MySingleFriend managing director Gail McLaughlan said the arrival of Enhanced Campaigns has proven the value of mobile for its business, having previously not thought it a useful channel for the brand. She admits she was initially concerned that the changes would raise costs, but has since found that by adjusting the right parameters it has managed to bring desktop and mobile cost-per-acquisitions (CPAs) inline with each other.

The advanced reporting features of EC have also helped inform how best to tweak it's ad creative and landing pages to ensure better click-through rates as well as making the sitelinks more useful.

MySingleFriend has also discovered, through it's work with Periscopix, how full layering of bid multipliers allows for a more aggressive auction position for users who are most likely to convert, based on combinations of keyword, time of day, location and device. As a result it has seen total conversions jump 100% across all devices.

The agency also reported that using enhanced campaigns directly led to a 25% increase of non-brand clickthrough rates. It also recorded efficiency gains from only having to run single, rather than multiple campaigns, with the agency claiming 15% time savings.

Targeting the right creative to the right device

All paid search campaigns running in AdWords will now be split across all mobile devices by default. This means that marketers must ensure that any creative that was previously tailored separately to desktop or mobile should be merged so relevant to all devices. This will be easier if adopting responsive design-based sites, rather than designing separate mobile sites. However, if an advertiser does not have a responsive site and there are certain creatives they would like to be mobile targeted, they can opt for “mobile preferred” rather than sending to desktop. Yet if the ad contains a telephone number in the creative, text won’t be approved, so marketers must ensure any mobile preferred ads feature call extensions.

Directing consumers to the right mobile / desktop landing page

Advertisers that invest in responsive design-based websites, which can automatically resize the page to fit the device a user is searching, will not need to use the Google ValueTrack parameters to direct to the right site.

Advertisers that want to direct traffic to deviceoptimised landing pages will need to use Google’s new ValueTrack parameters {ifmobile} and {ifnotmobile} in their destination URLs to ensure the consumer is always sent to the landing page optimised for the device, which reduces bounce rates and creates a better user experience.

Display advertising: the rise of programmatic trading

The rise of programmatic trading has seen display advertising move from being bought and sold on a cost-per-thousand (CPM) basis to the auction-based model of paid search, called real-time bidding (RTB). Whether it is for display, video or mobile, RTB is rapidly becoming the buying model of choice.

This disruptive and exciting new technology-driven method of trading is transforming many organisations, agencies and publishers and challenging the status quo and established practices that have governed the display sector for years.

New skills sets are increasingly required to navigate this, with some agencies moving their paid-search and RTB teams closer together.

But despite the growth in this area, the majority of marketers still struggle to understand what role it can or should play in their overall marketing mix.

Programmatic trading enables the trading of audiences rather than impressions, all of which can be bought and sold through exchanges – bought through demand side platforms (DSPs) and sold through supply-side platforms (SSPs).

Although traditionally seen solely as an effective direct response medium, RTB is now being increasingly regarded as an effective tool for branding mediums like video.

Pain points for marketers

The trend toward programmatic trading has resulted in a highly complex landscape overcrowded with technology providers all jostling to differentiate their services.

This fight to differentiate, along with an overreliance by technology providers on complex terms and measurement, has led to an explosion of acronyms, which has prevented many marketers from seeing the benefits of how online advertising has really changed.

The online advertising world is already measured on acronyms such as CPMs, CTRs and CPCs and with realtime bidding (RTB) even more are thrown into the mix.

Now advertisers need to understand what is meant by demand and supply-side platforms (DSPs and SSPs) and also demand-management platforms (DMPs), created to make sense of the extremely valuable, firstparty data of the advertiser.

Confusion over the role of RTB in the marketing mix

It is clear there is still much confusion regarding the role of RTB within the marketing mix. Our survey highlighted this uncertainty. Although more than half of respondents said they believed RTB to be “very important” or “critical” to the display space, a quarter said it was of no importance and 10% said they didn’t know.

However, more than a quarter said they plan to invest more in RTB in the next year, with 28% saying they would invest the same, while only 5% said they would invest less. Nearly half said they were undecided.

Perhaps an unsurprising finding of the survey was that nearly a third of respondents believe the complexity and over-use of jargon to be a barrier to investment. Whilst over half did say it wasn’t a barrier, the majority (77%) did say that they felt the complexity is holding them back from investing more.

These figures alone prove there is still a need for education on the subject and how it can be used by marketers and publishers to maximise return on investment.

Private marketplaces

Over the years RTB has become associated with cheap, scalable remnant inventory, but the arrival of private marketplaces is helping inject more premium inventory into the space. Facebook’s entrance into the exchange space with FBX has been cited by some as being a game changer in the market, letting marketers show ads to people on the social network based on their browsing interests.

It is now extending FBX to News Feed, opening up a huge amount of premium inventory to RTB marketers in the process. Although it is in the early stages of rolling this out, some believe it will help bump RTB well and truly into the mainstream, making it a part of every marketer’s media plan. It will be the access to the News Feed inventory across all devices on Facebook that could really see Facebook take a giant step forward in the online display space. Twitter is also reportedly following in its rival’s steps and planning the launch of its own ad exchange.

Private marketplaces have evolved due to the need on the publishers’ side to control their part in the RTB environment and protect their yields. The publisher will allow select advertising partners to access their inventory via an RTB integration, and can then set it's own floor prices and volume.

A recent study by PubMatic showed that 74% of brand advertisers would increase RTB budgets if they had direct access to publisher inventory via RTB.

Demand Management Platforms

One of the most exciting recent additions to the private marketplace equation has been first party data, which is audience data the publisher holds and securely passes through a data management platform (DMP). This gives advertisers access to more granular ways of targeting that publisher’s audiences in a controlled environment, and without compromising their valuable audience data.

The availability of premium inventory is still fairly low and publishers are having to adapt quickly to the latest media buying trend if they want to keep pace with the continually advancing RTB environment. Managing audiences across digital channels that can be bought via RTB but cannot be tracked using cookies – mobile and connected TV – is a major challenge.

Barriers to investment lack of transparency

There are a variety of ways to go about planning and buying RTB. One is to go through an agency group’s trading desk, which plugs your inventory into a host of exchanges on the advertisers’ behalf. These include WPP’s Xasis, Aegis Media’s Amnet, Omincom’s Accuen and Publicis’Audience-On-Demand trading desks. This then gives the advertisers access to huge volumes of audiences via RTB.

Alternatively the advertiser can choose to plug into an independent third party DMP and DSP provider such as Mediamath or Rubicon. The benefits of this over using an agency group trading desk are that the advertiser can maintain absolute control and transparency over their first-party data while retaining all data insights in-house.

Moneysupermarket is among some of the first brands to ring-fence its first-party data, and work directly with independent DMP and DSP providers rather than an agency group trading desk to ensure it has complete control of its first-party data and full transparency around its spend.

Measurement and reporting

It is widely acknowledged that the display advertising sector’s reliance on last-click attribution is by no means the most effective way to measure the success of a campaign. There is a general acceptance that it is no longer just about the big number (traffic or clicks), given that they don’t always lead to conversions.

Marketers must focus on the multiple touch points in the consumer’s path to purchase, so they can identify the value of each channel, whether it be a paid social media ad, a regular display or PPC ad, and therefore move away from last-click attribution toward multi-touch point-based attribution.

For example, it may be that a social ad doesn’t lead to a click or conversion straight away, but that it does influence a person’s decision and prompt a conversion later on in the purchase funnel. If marketers can assess the value of running paid social media activity within the overall path-to-purchase they can then attribute budget more effectively and reduce any wastage.

It is by targeting content of value to real prospects that can ultimately help those prospects make decisions for a particular product or service.

The term branded content is having to make way for a new buzzword: native advertising, which some are hailing as the future of online advertising, given it's ability to embed a marketer’s message contextually within a piece of editorial content in a way that doesn’t jar with consumers but entertains and engages.

The ability of this kind of ad to fit into a user’s online experience at the right time and place means it draws on the capabilities of both paid search and display, further merging the two already complementary mediums together.

Yahoo! has already begun running native advertising, which it calls InStream ads, across it's platform in the US and has seen click-through rates rise seven times higher than regular display ads.

Native advertising may disrupt the traditional purchase funnel model as it hits consumers at different stages in that funnel. Marketers must also ensure that the native ad experience does not jar with consumers but instead feels like a natural part of the editorial content.

This means search marketers must think more like editors when creating the content – dropping product images and logos for compelling images that encourage click-through.


The online ad industry continues to evolve at breakneck speed and marketers must stay abreast of the changes if they are to remain competitive. Google’s latest upgrade to AdWords is it's most significant to date, and is likely to radically change the face of paid search, while forcing advertisers to pay more attention to their mobile strategies, which is no bad thing.

Meanwhile, there is no doubt that programmatic trading is the most exciting development in the online display arena. It is still early days for this new way of trading media; suppliers and facilitators must work harder to stamp out confusion, mistrust and the lack of transparency currently alienating the majority of advertisers from investing. Better policing of ad placement is also called for if real-time bidding is ever to be taken seriously by broadcasters, who are accustomed to trading in the strictly regulated TV environment.

It will be the likes of private marketplaces, including Facebook’s exchange, that will help push more premium inventory into the RTB landscape. Marketers need to look closely at the details when it comes to signing away their data to an agency holding group’s trading desk. It is the brands who recognise the value of their data - and how to use it - who will be the winners in the coming years. Advertisers must ensure they are the ones in the driving seat.

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