Last month, Facebook released its first quarter 2014 earnings statement, reporting $2.27 billion in revenue from advertising, which is an 82% increase (yes, 82%) from Q1 of last year. This not only exceeded Wall Street’s expectations, but blew away any rational investor’s dream of what a company of this size can accomplish so quickly. I’m not surprised at this growth. In fact, I believe it’s still early in the game; but not so early that there’s time to waste. Growth of this magnitude suggests a fleeting, but massive, opportunity and instills a sense of urgency for marketers to master the addressable audience platforms. Those who can leverage the scale of addressability that is available to us today will be the ones who take market share.
Part of what’s driving this explosion of ad-spend growth are audience sizing ratios, the likes of which we have never seen. At Merkle, we are finding that, on average, somewhere between 60% and 75% of customers and prospects on a brand’s database can be directly identified at the household level on the addressable platforms, like Facebook, Google, and Twitter. The idea that I can individually address and generate a social message or ad directly to 75% of my own customers and prospects — well, it’s mind boggling. And to think — a year ago this kind of direct matching wasn’t even available on many of these platforms!
But the challenge comes when it’s time to actually generate that content. What are the personalized/customized messages that will allow us to take advantage of this enormous opportunity? In theory, it’s nice to be able to only address the people I want to address. Targeting (or not targeting) at an individual, addressable level is an extraordinarily attractive capability. But in reality, most organizations are ill equipped to generate enough unique content to follow through with a distinct and personalized, experience across such a large number of customers and prospects.
The creation of addressable platforms is driving the age of the customer, where communications are centered not only around what customers need and want, but where they are and when they’re there. This ultimately needs to drive a new age of content creation – and many marketers are so focused on making sure they can deliver personalized content, they pass over the need to actually create that content that will be delivered.
Take for example a CMO with a very large TV spend, trying to push it into the addressable realm. Investments are made in cutting-edge technologies and infrastructure to execute on an addressable TV strategy. But the idea tends to stall with the thought of producing hundreds or thousands of separate versions of a TV commercials to speak uniquely to all of the company’s distinct segments. It’s daunting — from the perspectives of time, execution, expense — how is it going to work?
Our history tells us there is about a 20-to-1 variability in results, based on who you target – in other words, you’ll see performance vary up to 20x depending on how you choose your audience. We find that returns based on the creative itself are more like 2-3x. So, for good reason, a lot of resources are poured into deciding on the “who.” But then the key to extending it to the next level — to edging out competitors — lies within the offer and creative. Whoever is the first to get it all right will be the big winner.