A game changer for advertisers

In brief

• Platform proliferation, competition for eyeballs, and data privacy shifts are causing a battle for advertising share of voice and attention.
• Advertisers are at a critical inflection point, and survey data reveals that almost 1/3 are at risk of falling behind due to four common challenges.
• There are seven key steps advertisers can take to ensure they are building towards future-ready advertising models.
  

Building an intelligent foundation for navigating the attention economy

Since 2020, the phasing out of third-party cookies, along with digital content innovation, has forced advertisers to rethink how they engage with audiences and measure success. As the world contends with the latest economic turmoil and technological advancement, advertisers have more on their plates than ever and can’t afford to be left behind. The time to act is now.

Advertising is at a major inflection point

The migration of advertising from offline to online, caused by the dominance of entertainment platforms, has created intense competition for consumer attention and targeting of the most valuable audiences. This dizzying shift has created a complex environment for advertisers needing to continually generate ROI.  

As a result of this evolution of marketing, two-thirds of advertisers are feeling the pressure to keep up with the growing and increasingly complex demands of their audiences^{1, A}.

However, tracking audiences and measuring how ads perform across the omnichannel audience journey has been further complicated by privacy changes introduced by governments and tech companies. These changes restrict the use of third-party identifiers (also referred to as “signals” or “cookies”) - which used to be essential to retarget audiences and gauge intent. Around half of advertisers have already seen privacy changes negatively impact their campaigns. Just as many expect upcoming privacy changes and challenges to reduce campaign effectiveeness¹.

To help advertisers determine how they can optimize their ad strategies today and de-risk their ad spend for the future, Accenture has conducted in-depth research on SMB and enterprise advertisers. Our findings are informed by real advertiser performance data^2,3 and enriched by multiple surveys (fielded by Dynata) of 500+ advertising decision-makers^1,6,B, as well as interviews with a range of advertising, data privacy and marketing-measurement leaders.

Advertisers have the opportunity to evolve faster 

We discovered that 45% of US and UK advertisers have been using the same approach to advertising for the last five years, and 71% of this group don’t plan on changing their strategy in the next year^C, leaving 32% that will continue to use outdated advertising playbooks¹.

But if they want to succeed in today’s fast-changing market, advertisers have to evolve. Those that are lagging behind face serious risks if they don’t catch up:

• Declining performance / returns:
  The drop-off in legacy third-party identifiers could cause marketing efficiency to decline by between 10% and 30%.

• Major measurement gaps:
  With the loss of third-party identifiers, many legacy paid-media analytics approaches will simply no longer work (e.g., last/first-touch attribution).

• Reduction in company investment:
  74% of advertisers budgets have been impacted by the economic downturn4 and 47% of advertisers say they've grappled with rising campaign costs, the #1 challenge faced last year¹.

• Getting caught underprepared:
  60% of US and UK advertisers are underprepared^D for the loss of third-party identifiers and 1 in 4 don't see the shortcomings in their current strategies¹.

The risks of inertia in the face of change are clear

These are the four common barriers impacting advertisers:

1. Misalignment of marketing metrics with business goals
   Even though 77% of global CMOs have said they feel pressure to prove ROI⁵, only 17% of day-to-day advertising decision-makers in the US and UK consider return on investment/ad spend a top marketing objective¹.
2. Lack of data-driven skills and resources
   Gaps in first-party data and data-related skills are the #1 and #2 challenges preventing the US and UK advertisers from experimenting with future-ready targeting and measurement strategies¹. In fact, half of advertisers, large and small, don't have the necessary data to confidently measure attribution¹.
3. Major misconceptions about privacy changes and solutions
   Though more than 80% of advertisers across the US, UK, and Brazil are aware of major privacy changes, only 8% say that they actually understand what the majority^E of these changes mean⁶. Even fewer understand the wide array of strategies and solutions that are available to address the changes.
4. Fear of change
   A significant number of US and UK advertisers (roughly 1 in 3) are worried about their job security if they try a new channel/platform or targeting strategy that doesn't deliver¹. 73% would implement signal resilience solutions if they understood them better or had proof that they are effective¹.

Many advertisers don’t realize that there are some ‘no regrets’ actions open to them all. For instance, we found that, globally, advertisers on Pinterest using strategies that do not rely on third-party identifiers, like interest and keyword targeting, run no risk^F to their return on ad spend or conversion rates when compared with retargeting alone^2,G.

And when using the most granular interest-based targeting, advertisers globally saw 45% higher ROAS than advertisers leveraging retargeting alone across a 30-day attribution window^2,H.

Seven key actions to thrive in a cookieless world

To help them evolve with the market, we have identified seven key actions for advertisers. These will ensure that advertisers have a strong foundation for success in the new, fast-moving – and soon-to-be cookieless – advertising landscape. Some advertisers are already well on their way. Others need to take stock of their own progress in this journey.

Nail the basics

1. Centralize and fortify in-house customer and audience data: As advertisers unify and build out their customer data across marketing, sales and product, they’ll be able to see the full customer – their values, needs and behaviors – without overly relying on third-parties. Establishing interoperable customer data is essential not only to create the 360° experiences that customers expect but also the impact measurement that executives demand. While it might sound familiar, this recommendation bears repeating for good reason: it establishes a critical foundation for advertisers to make informed decisions about when, where, and how to engage current and potential customers. For large and mid-sized advertisers, this means getting cross-functional C-suite support to build the right data repositories (e.g., integrated warehouses, CDPs), pathways and protections. For smaller advertisers, it means holding someone accountable for maintaining and mapping all customer data.

2. Test resilient targeting solutions without disrupting current strategies: To mitigate the impacts of privacy changes and drive even more relevant audience targeting, advertisers should ramp up their experimentation with new audience-based solutions (e.g., unified ID and customer-matching solutions) and strategies that don’t rely on third-party-identifiers at all but lean on the context of the site or the user’s onsite intent (e.g., contextual and interest-based targeting). These are among the most readily accessible strategies that even the smallest businesses can deploy - and many platforms have enriched their user data to help advertisers better gauge intent.

3. Use revenue-based ROI as the core metric: To ensure advertisers and the business are on the same page, both sets of teams and leaders need an agreed definition of ROI that’s tied to revenue. This means that “success” isn’t just measured by reach, but by actual dollars returned. And that’s for every campaign, channel and strategic decision. This cultural shift lays a critical foundation for advertisers’ ability to identify the data, tools and leader support they need to succeed.

Enhance the foundation

4. Build or enhance resilient measurement and attribution capabilities: Today, 65% of US and UK advertisers are still using last-click attribution to optimize ongoing campaigns^1,I. Not only is this method prone to inaccuracy, but it also depends heavily on third-party identifiers that will fall away with privacy changes. Instead, to measure impact and inform channel and platform spend decisions, advertisers need to align their measurement strategies toward incrementality. They need to invest in better marketing-mix models (MMM) with more frequent data refreshes that update at the tempo of business decisions. More advanced advertisers can embed AI into their models to accelerate speed to insights (including optimization recommendations) and greater granularity. To address gaps in more immediate campaign measurement and optimization, advertisers can also explore additional publisher solutions (e.g., conversion/server-side APIs, clean rooms, etc.).

5. Diversify content development and activation strategies through AI and creators: Advertisers should also look to enhance their content development and activation strategies with Generative AI and the new wave of content creators. AI has never been as accessible as it is right now. We expect that advertisers who embed AI into their core operations – to create initial copy language, image ideas, soundbites, etc. and/or drive more real-time optimization of audience cohorts, ad personalization, etc. – will drastically improve efficiency. Advertisers should also explore content-creator partnerships. Around three-quarters of advertisers do this to tap into what already resonates with audiences and drive deeper connections⁷. We have seen companies create stronger relationships with their audiences, drive significant efficiencies, and exercise whole new levels of creativity in the last few months by embedding these approaches into their content and campaign strategies.

Advance ahead of the pack

6. Invest in identity resolution capabilities: To truly measure incrementality across different campaign tactics and channels, advertisers need comprehensive 360-degree visibility into their customers’ and audiences’ non-linear purchase journeys. Identity resolution solutions allow advertisers to match identifiers across devices and touchpoints to a single profile. This is absolutely essential for verified attribution and incrementality measurement to optimize marketing spend. There are a number of identity resolution solutions on the market, so it’s important that advertisers find the right one for them – some include data clean rooms, ID graphs that integrate multiple data sources, and direct connections to other marketing platforms. By building out these capabilities, advertisers not only solve for privacy changes, but they also create new opportunities to build deeper and more transparent relationships with their audiences.

7. Redesign the organization to drive shared full-funnel accountability: Advertisers should reevaluate their operating models to align them better with business needs. Today, over 70% of US and UK advertisers are only focused on one or two parts of the funnel¹. But these overly siloed “awareness” and “performance” campaigns and teams need to become a thing of the past. From now on, they must work together to provide a holistic, full-funnel view of customer and business value. To that end, advertisers need to build cohesive, connected teams and KPI strategies so that every marketing team and every campaign is unified by shared business goals and measurement.

No choice but change in a fast-evolving market

Our market analysis highlights essential steps that advertisers need to ensure are effectively embedded into their ad strategies to optimize their advertising performance and de-risk spend in the new, cookieless advertising landscape. Advertisers – especially the nearly one-third operating with outdated playbooks – can’t afford to sit on the sidelines. The time for action is now.

Sources:

<sup>1. Accenture Proprietary Research, State of Advertising Survey (N=505, US & UK, Feb 2023)
2. Pinterest Ads Measurement Analysis conducted by Accenture (N=20,000+, Global, Jan 2021 – Dec 2022)
3. Accenture Proprietary Research, Third-Party Cookie Loss Case Study, 2021
4. World Federation of Advertisers 2023 Media Budgets Flash Survey Results, 2022
5. MarketingWeek + LinkedIn Research, Majority of CMOs under pressure to prove short-term ROI, 2022
6. Accenture Proprietary Research, Signal Resilience Survey (N= 653, US, UK & Brazil, Jun 2022)
7. eMarketer, Creators are becoming a serious business for brands, 2021</sup>

Footnotes: 

^{A. Two-thirds of advertisers feel under pressure to “keep up” with at least one of the following trends: marketing content innovation (e.g., AI, creators and Web3), growing content demands and shifting customer behavior and preferences.
B. “advertising decision-makers” / “advertisers” refers to people involved in social, web, and/or search advertising strategy decisions (e.g., platform selection, spend allocation, audience targeting strategy). The 2023 study includes 236 SMB (<500 employees) advertisers and 269 enterprise (500+ employees) advertisers with social, search, and display ad spend levels ranging from less than $10K to $1M+; the margin of error is +/- 4.4%. The 2022 study includes 327 SMB advertisers and 326 enterprise advertisers spanning a similar spend range; the margin of error is also close to +/-4%.
C. 58% of all advertisers surveyed do not plan on changing their strategies within the next year.
D. ‘preparedness’ for privacy changes is determined by a company’s implementation of both first-party and second/third-party data solutions – in accordance with subject matter expert guidance.
E. Only 8% of marketers understand at least 75% (6 of 8 assessed) policy changes.
F. No statistically significant difference between interest-based targeting with retargeting and retargeting alone was found for all groups tested (regions, company size, etc.), suggesting there is little to no risk to incorporating this strategy on top of existing retargeting strategies.
G. These results reflect those of advertisers that layer interest and keyword targeting onto existing CRM-based and/or 3rd party-based retargeting strategies compared to those using 3rd party-based retargeting strategies alone.
H. Higher volume of clicks and conversion volume was found based on median differences between targeting strategies used in a 7-day attribution window.
I. 71% of advertisers that use marketing mix modeling for platform budgeting are optimizing campaigns on last click attribution, resulting in a misalignment in how budget is being optimized.}