practitioners' perceptions of ads strategies for digital media

709International Journal of Advertising, 29(5), pp. 709–725 © 2010 Advertising Association Published by Warc, dOI: 10.2501/S0265048710201439Practitioners’ perceptions of advertising strategies for digital mediaYann T ruong and Rod McColl ESC Rennes Business SchoolPhilip KitchenBrock University, ESC Rennes Business School digital advertising is set to become a serious challenger within the rapidly changing media landscape. T oday there are concerns that advertising strategies based on models and experiences developed with traditional media may need to be reviewed in the digital market. T o provide insights into how online advertising strategies might need modifica-tion, 21 in-depth interviews were conducted across organisations representing key stake-holders in the digital advertising market. findings identified five key trends relevant to advertisers including: a move towards permission-based advertising; higher levels of per-sonalised advertisements; more three screen advertising campaigns; increased levels of interactivity and the development of performance-based metrics. In the context of these trends, nine propositions are posited concerning the effective formulation and manage-ment of digital advertising strategies.IntroductionIn 2008, global business directly or indirectly connected to digital media was worth €2,740 billion including sales of 1.25 billion mobile phones (+6% from 2007), 302 million PCs (+11%) and 94 million lCd screens (+30%) according to Idate (2009). future growth in the broadband mar-ket is assured given current PC penetration rates of below 20% (Idate 2009). In terms of usage, many consumers now spend more time navigat-ing online than viewing television (Berman et al. 2007a). Mobile phone usage among younger consumers is also increasing at an exponential rate (Rappaport 2007). despite the fact that the amount of digital data already produced is estimated to be three million times the combined informationINTERNATIONAl JOuRNAl Of AdVERTISING, 2010, 29(5)contained within all books, the digital explosion is expected to continue in the foreseeable future (Gantz 2008).The growth in digital advertising correlates with this increase in digital media consumption. PricewaterhouseCoopers (2009) estimates that the digital media advertising market approximately reached $60 billion in 2009 and will surpass $90 billion in 2013. These content and consump-tion trends make digital media the most promising format for advertising growth over the next decade as advertisers’ attention shifts from tradi-tional media (Okazaki 2006). Advertising practitioners acknowledge this trend, with 76% believing that digital media and advertising could even dominate within the next 10 years (Coghlan 2007). Irrespective of the impact of the global economic downturn on advertising budgets, growth in digital advertising expenditure is likely to continue to account for an increasing proportion.for advertisers these developments represent unchartered waters. Various papers allude to these trends, however to date there has been a paucity of research into how traditional advertising strategies might need to be modified when the content is digital and diffused through interac-tive media and this is in accordance with data that shows TV advertising is not dead, and currently can still get reach not standard yet in digital (Sharp & Wind 2009). According to Berman et al.(2007a), today’s mainstream advertisers seem to lack insight on many related issues such as how to respond to shifts in consumer behaviour, or what synergies exist for using traditional and new media. The authors also warn of significant risks in applying current thinking to the new digital era.T o address this important knowledge lacuna, the extant literature sur-rounding digital advertising was reviewed and 21 in-depth interviews were conducted across organisations representing key stakeholders in the digital advertising market in france. Important trends within the digital advertising market were identified which generated nine propositions concerning how these might impact on digital advertising strategies. The paper begins with a review of the empirical research on digital media and advertising. It is followed by an outline of the research methodology and discussion of the findings. The paper concludes with a presentation of the study’s limitations and directions for future research.710AdVERTISING STRATEGIES fOR dIGITAl MEdIAAdvertising on digital mediaIn the mid-1990s, some authors predicted that new (interactive) media would have fundamental strategic implications for all businesses (Benjamin & Wigand 1995; Cronin 1994; deighton 1996). The term ‘new interactive media’ was, and still is, associated mainly with the Internet since it revolutionised how companies and their customers were interacting (Sahay et al. 1998). digital media broadly includes any media that publish or diffuse information in digital formats (Shapiro & Varian 1999). In this definition, a distinction is made between digital content delivered through traditional channels – television, radio, and digital media diffused through the internet or mobile where interaction is per-mitted and encouraged.Consumer adoption of digital media has accelerated due mainly to wider broadband access, enriched contents, and increasing adoption of third-generation mobile phones across the uSA, Europe and Northern Asia (Berman et al. 2007a; ferris 2007; light & lancefield 2007). Online advertising has been defined as ‘deliberate messages placed on third-party websites including search engines and directories available through Internet access’ (Ha 2008, p. 31). T oday online attracts around 12% of advertising budgets in many developed economies and is fore-cast to grow at between 20 to 40% per year over the foreseeable future (Berman et al. 2007b). The growth of new media options supplementing traditional ones has led to a fragmentation of audiences whose atten-tion has become far more difficult to capture (Ranchhod 2007; Scherf & Wang 2005). further compounding the challenges for advertisers in this sector, recent studies suggest that consumer perceptions of online advertising and advertising in general have become increasingly nega-tive (McCoy et al. 2007; Rotfeld 2006; Shavitt et al. 2004).The rapid acceleration of new media usage will provide both oppor-tunities and challenges for advertisers. New media’s interactive tech-nologies permit advertisers to deliver an enhanced brand experience to consumers by offering online games, instant feedback and content exchange, resulting in improved impacts on consumer behaviour (T aylor 2009).711INTERNATIONAl JOuRNAl Of AdVERTISING, 2010, 29(5)MethodologyThe research questions addressed in this paper concern identifying key trends in the digital advertising market and to understand how advertisers should respond to these changes. They were addressed using qualitative research techniques. The choice of research methodology was justified based on the link between the four basic elements of the research process: epistemology, theoretical perspective, research methodology and research method and their relationship to the research questions (Carson et al. 2001; Crotty 1998).The study follows a realism paradigm, which considers that there is a ‘real’ world to discover even though it may not be immediately com-prehensible (Godfrey & Hill 1995). Realism is a relevant paradigm for qualitative researchers in marketing (Healy & Perry 2000; Marshall & Rossman 2006), particularly when researchers require a novel slant on a phenomenon or where the intricate details of phenomena are difficult to convey or access via quantitative methods (Carson et al. 2001; Strauss & Corbin 1990).The research methodology consisted of in-depth, personal interviews across 21 different organisations within the digital advertising industry. Major stakeholders in the field of digital advertising were selected from a pool of companies based in france but who operate internationally. Organisations were targeted using snowball sampling and were selected based on their leadership position within the industry. T able 1 outlines the function for each participant with most operating at director level and the location of each firm within the advertising value chain.Interviews were conducted until a convergence of views was obtained, as recommended by Miles and Huberman (1994). That is, until no new themes were emerging from additional interviews. Respondents were selected using the key informant approach suggested by Robson and foster (1989) and each participant held a senior management and/or director position. The interviews followed the guidelines recommended by Minichiello et al. (1995), based on the recursive model of interviewing. This consisted of a more conversational interaction based on the funnelling approach, whereby the flow and the type of questions moved from the broad to the specific (Patton 1990; Thietart 2001). A list of general topics placed in a logical order was adopted rather than a structured question-712AdVERTISING STRATEGIES fOR dIGITAl MEdIATable 1: Study participantsParticipant Role Sector Company roleParticipant A Communication and marketing director Soft beverage AdvertiserParticipant B Internet and mobile marketing director Bank AdvertiserParticipant C Internet and CRM director Cosmetics AdvertiserParticipant D Internet director Beverage AdvertiserParticipant E Marketing director Transport AdvertiserParticipant F Marketing director Food AdvertiserParticipant G Vice-president Advertising Advertising agency Participant H Director Advertising Advertising agency Participant I Marketing director Internet Advertising agency Participant J Mobile marketing director Mobile Advertising agency Participant K Consultant Press Advertising agency Participant L Director Media planning Media planningParticipant M Director Media planning Media planningParticipant N Market research director Media buying Media buyingParticipant O Project manager Adserving Technology enabler Participant P Research director Networks Technology enabler Participant Q Consultant Software Technology enabler Participant R Research director Telco TelcoParticipant S CEO Mobile Mobile marketing Participant T CEO Mobile Mobile marketing Participant W Director Mobile Mobile marketingnaire as answers to open questions are more likely to reflect a respondent’s own thinking, thereby improving the validity of the results (dey 1993). Interviews lasted between 60 and 90 minutes with each being audio tape recorded and transcribed verbatim for analysis.data analysis followed the sequence of steps described by Miles and Huberman (1994) who suggested that the analysis should consist of three concurrent flows of activity: data reduction, data display, and conclusion 713INTERNATIONAl JOuRNAl Of AdVERTISING, 2010, 29(5)drawing/verification. data reduction was undertaken for each of the 21 interviews using in vivo codes (Strauss & Corbin 1990). The computer-based analysis software QSR NVivo2 (QSR International Pty. ltd. 2002) was utilised to arrange the codes in the form of a matrix which were syn-thesised into fewer cross-cases capturing the attitudes of the participants. FindingsThe literature review and interviews revealed five main trends around which advertisers will need to be sensitive when formulating digital adver-tising strategies. Each of these trends is discussed in turn and include: per-mission-based advertising; higher levels of personalised advertisements; three screen advertising campaigns; increased levels of interactivity; and a move towards performance-based metrics.Permission-based advertising strategiesThe first trend which emerged was defined as the need to engage in permission-based advertising. Respondents agreed that online advertising will need to be less intrusive than traditional advertising, particularly for advertising diffused through mobile phones. This view is characterised in the following participant observation.People don’t use their mobile phone the same way they use internet or watch TV. Their mobile phone is becoming a personal assistant which accompanies them everywhere and keeps them in touch with others (Participant N).Consumer acceptance of interactive advertising is therefore likely to be more effective if it is permission-based. The scope of permission-based advertising includes pull strategies which can be formulated to arouse consumers’ interest and attract attention resulting in requests for further information with regard to advertised products or services. unsolicited advertisements are more likely to be received as irrelevant and intrusive.A typical comment follows:In our adserving research and development projects, we fully integrate the idea that consumers may want to skip or just tell the system that this product714AdVERTISING STRATEGIES fOR dIGITAl MEdIA or service is not suitable to them either permanently or for a defined period of time (Participant O).T o reduce consumer tune-out, participants suggested limiting the number of daily ads per consumer or the systematic use of online opt-in and opt-out programs. This would allow consumers to choose to self-select advertisements that are relevant to their needs and interests. In such cir-cumstances, there may be a need for sophisticated customer databases for profiling customer interests to assist in this process. Based on this discus-sion we propose that:P1:Permission-based advertising will be more effective than unre-quested advertising.P2:diffusing unrequested ads over time may jeopardise a brand’s value.Higher levels of personalised advertisementslinked to the first area, the second area to emerge concerns the need for digital advertising messages to be more personalised and contextualised. Advanced adserving technologies used in conjunction with profiling data-bases identify who is using a particular device and allow advertisers to target consumers with more relevant and localised messages.We have been providing geolocalisation services to corporate clients for a few years now. firms use this service mostly for surveillance and control purposes (Participant T).If timely, relevant and personalised to fit individual needs, this type of message could even be perceived by consumers as providing a value added service. The following comments reflect this point.We believe that advertising should be as relevant as possible, which means that it should be local but also deliver value to consumers (Participant f). Proximity leads to more relevant ads which should make them more interesting and therefore effective (Participant K).715INTERNATIONAl JOuRNAl Of AdVERTISING, 2010, 29(5)Many respondents used the term ‘personalisation’ when describing dig-ital advertising. Personalisation refers to custom-fitting ads to individuals within a specific context. Optimised relevance would improve consumer awareness, trial and purchase. This insight is characterised by the follow-ing respondent.The development of real time tracking and profiling technologies seems to make this reality not so far away (Participant J).The technology for geolocalisation of individuals has been available for several years, allowing online advertisers to localise ads by identifying the geographical position of an IP address without identifying the user. However, the accumulation of personal data from user generated content (uGC) websites has set off alarm bells for legislators seeking to prevent the abuse of consumer data and constrain the future of personalisation as envisaged by some of our respondents. for example, making further use of personal data in france would require changes to privacy legislation. However, despite these current limitations, we posit that:P3:When advertisements are contextualised and personalised, they provide more perceived value to consumers who are more willingto accept them.Three screen advertising campaignsAll respondents highlighted the importance for stakeholders to understand the specificities of each of the three screens (TV, internet and mobile). T elevision is perceived by respondents to be the most powerful advertis-ing medium and is most suitable for brand awareness-related objectives. The Internet is also considered as a quasi-mass medium but the develop-ment of behavioural targeting technologies can help advertisers segment their audiences using relevant behavioural criteria such as fields of interest according to keyword search, browsing interests or even email contents. The mobile phone is the most personal medium since each device is associated with one particular individual, and therefore allows very per-sonalised targeting campaigns. One respondent added that the difference in the screen sizes between the three media should be compelling enough to justify that advertising contents be specific to each medium. Contrary to716AdVERTISING STRATEGIES fOR dIGITAl MEdIA traditional advertising campaigns which communicate the same message across all analogue and printed media, the three screens should be seen as complementary rather than as just an addition of three channels for diffus-ing the same message.It is critical to us that our advertising agency is able to offer end-to-end solu-tions to our clients for their marketing needs, and this means that we must be able to market their products on three screens. … However, marketing on three screens requires very specific competences as they are very different from each other in their functions … Showing the same content on three screens produces different impacts that could be positive on a screen but negative on another, hence the need for adapting or even changing the content…(Participant R). Participant N, employed by a global media planning firm, revealed that they have commissioned studies to assess the effectiveness of each medium for a series of recent campaigns. T wo relevant quotes which char-acterise this theme of integrated three-screen technology follow:T elevision, internet and mobile should not be seen as competitors but comple-mentary in their roles. The Internet is currently the best medium for audience targeting, customer interactions, and format possibilities, but fails to reach mass audiences and the fragmentation of online audiences is creating diminishing ROI.T elevision is great for reaching the mass, and mobile phones in contrary are suitable only for very personalised messages (Participant N).As a result of these discussions concerning the impact of the three-screen campaigns, we propose that:P4:Three-screen advertising campaigns will yield higher return-on-investment (increased reach and response) when the threescreens are used complementarily rather than independently, andwhen the contents and messages are specific to each screen. Increased levels of interactivityThis theme addresses the increased levels of interactivity between adver-tisers and consumers. As traditional media switch toward digital broad-casting, there will be feedback channels to allow interactivity between users and advertisers. T raditional media such as television and radio are broadcast using one-way diffusion. digital television and radio offer the717INTERNATIONAl JOuRNAl Of AdVERTISING, 2010, 29(5)possibility for advertisers to interact with consumers via a two-way chan-nel, which means that a product’s brand experience can be individualised and enhanced. With two-way channels, consumers can send feedback, play online games, request information, opt-in for promotional news, and sign-up for branded events. These technologies deliver more power to consumers who can choose where, when and how they want to interact with a brand rather than the reverse. The discussions highlighted some recent campaigns which have illustrated this point. One company made available for download a mobile phone game which offers consumers the opportunity to save money on their energy bill every time they win the game. Set-up boxes allow viewers to receive increased information about the advertised product, and IPTV (internet protocol television) can connect viewers to the Internet for online orders. Advantages for consumers are increased involvement, enhanced brand experience, and simplified purchase processes. for advertising service providers, interac-tive campaigns represent significant business opportunities but they tend to be more expensive given their complex requirements for advanced technologies and specialised marketing competencies. One of the mobile marketing agencies provided several arguments in favour of interactive campaigns:Interactive campaigns require consumers to become active and to play a role in the campaign. There are several examples of advertising campaigns which use uGC as contents for their messages. Interactive campaigns are focused on users rather than advertisers (Participant W).Based upon the above discussion, we propose that:P5:Interactivity will enhance the brand experience and contribute towards increased sales.P6:Consumers will be willing to participate in digital ads which are highly interactive.Moving towards performance-based metricsThe final theme which emerged concerned measuring effectiveness in the digital advertising market. digital technologies and adservers allow718AdVERTISING STRATEGIES fOR dIGITAl MEdIA for real-time metrics to provide new and additional measures of ad effec-tiveness. T echnically speaking, all actions performed by a consumer are recorded into the adserver. for example, ad impressions, links clicked, or keywords searched are systematically recorded and potentially avail-able to advertisers. In concrete terms, impression-based metrics such as potential audiences for television and cost per mille (CPM) for online ads will likely become performance-based. Actual viewership will most likely replace potential audiences measured by panels, and click-through rates combined with actual purchase or registration will replace CPM. One respondent noted that they already provide metrics that approach real-time return-on-investment (ROI) data. Many other performance metrics can be derived from online advertising: cost per click (CPC), cost per action (CPA), cost per mille (CPM), or number of unique visitors. Advanced technologies allow ad-effectiveness metrics to shift to these types of measures as reflected by this interviewee:IPTV allows us to know if an ad is being viewed and how long it has been viewed. We can also count the exact number of viewers of an ad. … Mobile phones are even more sophisticated since we can target specific individuals, send him/her a text message and know if the text message has been read (Participant R).Participants representing advertising agencies highlighted that adver-tisers are now interested in performance-based metrics in order to better estimate their ROI. The development of performance metrics is critical to industry development since better metrics will provide efficiency gains and encourage further expenditure. New entrants in this market may well come from internet service providers who are currently investing heavily in advanced targeting tools and measurement tools. We therefore posit that:P7:Performance metrics will replace impression-based metrics on digital media.P8:Population-based data will replace panel-based data in audience measurement on digital data.719INTERNATIONAl JOuRNAl Of AdVERTISING, 2010, 29(5)P9:Providing performance-based measurement services will become the most powerful value driver for advertising agencies and tech-nology enablers and should become a management priority.The findings may be summarised in figure 1. The participants agree that digital advertising will mostly be three-screen based (television, PC and mobile phone), as these devices are complementary in their roles. Three determinant factors can improve consumer acceptance of digital advertising: permission-based, personalised and interactive advertise-ments will likely reduce reluctance to exposure and increase implication from consumers. Therefore, all three factors can contribute toward bet-ter returns on investment for advertisers in terms of consumer response to their marketing activities. finally, return on investment will be more accurately measured as digital technologies allow real-time aggregate data collection to estimate the exact audience or actions that are directly imputable to an advertisement, which lead to performance-based rather than impression-based metrics.Discussion and implicationsThe objective of this study was to explore stakeholder views within the digital advertising industry as to what issues they saw facing digital advertisers. The findings indicate that advertising practices for digital advertising will need to be modified in a significant way compared with 720AdVERTISING STRATEGIES fOR dIGITAl MEdIA approaches taken with traditional media. for academics, this paper provides valuable insights into how stakeholders perceive and manage consumer behaviour on digital media. The extant literature has alluded to these various trends in the digital advertising market but has largely ignored how these might impact on advertisers. for example, several stud-ies have suggested that consumer acceptance can be improved if advertis-ing campaigns are permission-based and personalised (Barwise & Strong 2002; Carroll et al. 2007; Maneesoonthorn & fortin 2006; Nasco & Bruner II 2008). The results of this study suggest that stakeholders are conscious of the need for opt-in/opt-out features that would allow consumers to self-select the advertisements that they wish to receive. Nevertheless, there seems to be technological, legal, and privacy obstacles preventing further development. first, stakeholders across the value chain will have to con-solidate their customer databases in order to avoid a multiplication of data-bases that may lead to ineffective cross-media campaigns and incoherent delivery of advertisements. Second, legal and personal issues still mean questions with regard to the limits of how far and to what extent content publishers and aggregators such as social networks websites and telcos can use personal data for commercial purposes. Besides, although the issue of intrusiveness has been well developed in the literature (Edwards et al. 2002; ferris 2007; li & lee 2002; Maneesoonthorn & fortin 2006; Merisavo et al. 2007), little is known on how practitioners actually intend to cope with it. Our participants claimed that their major concern is to find effective ways to reach their advertising objectives and attempt to com-ply with consumers’ desire for non-intrusive advertisements. Although none of the participants had a proven solution for this, there seems to be a common agreement that personalised and interactive advertisements can greatly improve consumer acceptance and involvement. finally, little has been said about the growing need of advertisers for performance-based metrics. Yet, the advertisers in our study have strongly insisted on their need for ROI-based metrics that help them assess the cost of each customer acquisition. Given that current technologies in digital media allow real-time measurements, performance-based metrics are likely to replace impression-based metrics in the near future. The respondents who worked for technology enablers suggested that the problem of pro-ducing better metrics was not the technologies, but the lack of regulation 721INTERNATIONAl JOuRNAl Of AdVERTISING, 2010, 29(5)and agreement between stakeholders, especially the telecommunications operators.for advertising practitioners, the implications suggested by this paper are manifest. Although the rise of digital media has contributed toward audience fragmentation, all participants in this study seemed to agree that advertising campaigns could still increase audience reach and consumer involvement by combining traditional and new media. for example, tra-ditional mass media are still seen as more effective in building general awareness whereas new media are better at attracting smaller but more ‘reactive’ audiences with similar behaviour and interests. furthermore, advertisers should prioritise when arbitrating between media. As a rule of thumb, performance-based media should prevail over less traceable media in terms of metrics provided. Better metrics allow for an improved assess-ment of the potential ROI for each campaign.finally, this study found that interactivity has become essential in advertising on digital media. When using their digital devices, consumers expect advertisements to be interactive and likeable (entertaining or informative). One reason is that digital devices offer many advanced func-tions that are shaping consumer expectations on interactive and enter-taining contents, whether it be advertisements or syndicated contents. Therefore, static advertising campaigns will be less effective in capturing attention and involving audiences, if in fact they ever did the latter. future research may seek to investigate how industry stakehold-ers perceive and address consumer trends. Even though the literature strongly advocates permission-based and non-intrusive advertisements, it is not clear how these recommendations will affect stakeholders in their strategies. There is an opportunity to complement the consumer-based approach with a practitioner one. The limitations of our research concern the nature of the methodology. As with all exploratory qualitative research, care should be taken in generalising the findings beyond the research setting of france and the participants involved. However, because of the seniority of our respondents and the global nature of their companies’ operations, we expect that the themes and conclusions presented here will be relevant in other developed countries.722。