“Data-Driven Thinking” is written by members of the media community and contains fresh ideas on the digital revolution in media.
Today’s column is written by Sam Appelbaum, general manager at Yellowhammer Media Group.
At its annual meeting, the IAB [PDF] highlighted a shift in today’s brand economy from a supply chain-driven paradigm to one defined by a brand’s access to the customer and their data.
This shift from retail to direct-to-consumer is not new. In 2016, Andy Dunn of Bonobos coined the term “digitally native vertical brands” for brands that are obsessed with delivering differentiated value to consumers. As he points out, their growth model is slower than a broad ecommerce play, and so they must continuously offer a value-add for consumers.
Traditional brands must take notice: The disruptors in their industry are uniquely equipped to succeed in driving customer growth through programmatic advertising. Digitally native vertical brands, such as Caspar and BirchBox, tend to get better results more quickly, with less fraud and higher-quality consumer interactions than other brands. They do this by combining the best of brand and performance marketing in a single strategy – something traditional retailers have struggled with.
Fraud-proof metrics even for brand campaigns
In digital advertising, everything – strategy, tactics, targeting – flows backward from the success metrics defined by the brand. The types of success metrics chosen is crucial. Brands often use traditional reach and frequency metrics on programmatic, focusing more on targeting specific consumers than performance. In this quantity-over-quality approach, viewability mandates and brand-safety partnerships serve as an inadequate prophylactic
As Andy Dunn described, digitally native vertical brands are driven by creating authentic relationships with their customers. These relationships manifest by way of concrete digital touch points – whether they be sales, profile sign-ups or customer lifetime value. These metrics give digitally native vertical brands “see-in-the-dark goggles” when evaluating programmatic tactics, and they can quickly weed out fraudulent traffic.
Whether a brand wants to drive sales or increase awareness, they must first ask themselves if the metric used to determine the efficacy of these efforts is easily faked. If the answer is yes, the brand would be well-served avoiding programmatic entirely. Honda’s decision to only pay for ads that drive people to a car showroom is a step in the right direction.
First-party data to unite every campaign
Brands without a big online retail presence use third-party data to target consumers on programmatic channels, leaving these campaigns in a silo from other, better-targeted marketing efforts. Yet, a lot of third-party data is a mess of conflicting outdated information that does little to improve a campaign.
Digitally native vertical brands own their customer data and use it to fuel their enterprises, making it easier to evaluate their programmatic efforts together with other marketing channels. Yes, they’re selling primarily online and so it’s easy for them to do that, but they’re not the only ones to do this. Five years ago, P&G worked with AudienceScience to build a huge first-party database that it used as the core of its programmatic targeting.
It takes discipline to say no to large-scale, low-value third-party data on programmatic and turn inward. A brand needs to see if its marketing team has a customer data platform to integrate with and build up its data management platform with first-party data from every advertising campaign, loyalty program and online sale.
The information is not only more stable and accurate, it’s more relevant for a multichannel marketing campaign that flows to the website, email and other places where the brand touches a consumer’s life.
Focus on customer experience all the time
Programmatic has long been maligned as a channel fit only for direct response, incapable of driving awareness and brand lift. Today, many traditional brands save their best-quality messaging for direct publisher channels and leave programmatic advertising to third parties, with stale creative and no personalization.
A startup selling kids’ clothing, competing with everyone from Walmart to the Gap, had better be memorable, in a good way. Digitally native vertical brands are consumed with their cultivating customer relationships, even on programmatic channels. Annoying a consumer by targeting them with a product they just bought is horrifying to a digitally native vertical brand, as is an intrusive pop-up or autoplay audio ad – par for the course on programmatic.
Quality and quantity should matter on programmatic. No more “lowest CPM possible.” No more “set it and forget it.”
The integrated, data-driven approach of a digitally native vertical brand gives them the freedom to experiment with new formats – like Instagram stories and native advertising – without fear, because they can reach their real customers and measure the results quickly. Digitally native vertical brands stand out on these channels because they are showing thoughtful, beautiful ads at the same time that they are targeting and measuring accurately. Consumers notice the difference, and traditional brands should too.
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