This post originally appeared on Media Post
Most of us are chameleons when it comes to online behavior. Like many of us, I play many roles; I am a parent, husband, friend, and an account strategist. My daily and hourly online behavior depends on the role I am in at that moment. This ever-changing behavior is why the approach an ad-tech company takes in these situations will determine what the future will look like when we talk about The Internet of Things.
We are at the beginning of a brave new digital world. A world where retailers take their first steps to apply ad technology to ultimately leverage their proprietary data. A world where they use real-time feedback to execute and optimize a marketing strategy, one that is individually developed for each (potential) customer. The biggest advantage we see is that IoT helps the customer make rational decisions, sometimes without the customer even noticing the decision is made.
The Four Roads to Engagement
The downside is that it is hard to tell what “role” the customer is in when being exposed to a message. Over time, ad-tech companies have developed a couple of methodologies to roughly estimate which role(s) the user is adopting when they are communicating the advertiser’s message to them:
The Multi-armed Bandit
The first method is to simply try different advertiser campaigns, to determine which advertiser category the user responds to with regards to engagement. This “multi-armed bandit” kind of optimization would work if customers did not behave in different roles on a daily basis. Results are often low engagement and a lot of wasted media investment.
Do not entirely throw away your Likes for this approach though. After all, multivariate testing like the multi-armed bandit algorithm works better than plain A/B testing. Therefore, it is a great method to test and optimize persuasion principles when the content the advertiser is serving is already determined to be the most suited to the role the customer is in.
A great way to determine the role of your customer is by understanding the context of the medium that the advertising message sits within. What is the context of the website he or she is looking at?
The downside is that when buying ad impressions purely based on the specific media, the impressions are relatively expensive and scarce. The ability to recognize the surroundings or context of all possible media inventory is quite expensive as the amount of data required is huge and extremely volatile at the same time.
Advertisers can help ad-technology companies by utilizing the data they already gather, and in turn, improve the performance of their own campaign. By opening up data silos like their customer relationship management system (CRM), loyalty management system (LMS), e-mail marketing system (EMS) or synchronizing behavior tracked within their mobile app or (mobile) website, ad-tech companies are able to create a real-time and holistic view of the role a customer is in.
The learnings that we have gathered over the years have an enormous impact on this process. When we determine high frequency but relatively short moments of interaction within a mobile app, what is the recency? Is the promotional e-mail that was opened on a mobile device leading to a volatile engagement within your app or (mobile) site? Or was it opened on a desktop, resulting in a long-term engagement with your website?
Combine and Conquer
A holistic approach must be taken when communicating with consumers. The best programmatic strategy combines a buying mechanism that constantly evaluates the potential value of the customer within the context he/she is in – while getting the most value out of the media investment. Equally important is a content delivery engine that is able to apply both a Cialdini persuasion principle and the best layout for the creative to blend with the context, while also being able to take the advertisers demand forecast into account.
We can imagine a future where your car would not only be able to select the best offer for regular maintenance, but schedule the appointment based on the user’s personal agenda. The moment this becomes a reality, the ad-tech company that is able to connect the dots and facilitate the necessary actions will become the true trailblazer. Not only will they know your customer and the role he/she is in, they will also know the device(s) that he/she owns, mastering the ability to connect the acute demand to the available supply of advertisers.