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Transcript
Two speakers:
Vish Sastry Rachakonda (CEO, iQuanti)
Nikhil Lai (Principal Analyst, Forrester)
Sastry [00:00:04]: Hi, welcome to the webinar on “Rethinking 2024 Performance Marketing for CMOs. I have with me Nikhil Lai of Forrester. Nikhil, welcome.
Nikhil [00:00:17]: Thank you for having me.
Sastry [00:00:19]: Great. A bit of background about Nikhil: Nikhil is an expert in SEO/SEM, Social, it’s all performance marketing and he’s been a growth marketing coach for clients of Forrester and had previously headed performance marketing at GE. So it’ll be great to have this conversation with you as we talk about what CMOs should expect.
So let me do a few seconds about iQuanti. Not more than that.
We were founded in 2008, so we have more than 15 years in business now.
We’ve been growing fast. We’ve been on the Inc. 5000 list of fastest-growing companies 9 times. Around 500 plus employees around the globe, importantly in the New York area. And primarily we do digital sales and that covers 4 areas: Demand generation for companies, once you get the demand optimizing the experience, and then of course the back-end data science and analytics and then strategic consulting for companies to help them grow their digital sales.
So let’s talk briefly about 2023. I mean, obviously, I think it’s been a year with a lot of changes and it’s been an interesting year. And we were talking about how last year’s situation was when we thought, OK, there’s going to be a recession. And perhaps it’s not come, but it’s been a tough year nevertheless and a year of huge change.
Nikhil [00:02:00]: I agree. So, just to put some data behind that point. We survey about 150 CMOs every quarter – CPG, consumer electronics, food, drug masks, and financial services and we pulse them about how they feel about the economy, about consumer behavior, and about channels within their mix. There is a lot of caution that we’re picking up in the survey. We hoped to be picking up cautious optimism by this point, but we’re still picking up a lot of caution and we’re finding that, you know, the CMOs we speak to even anecdotally have regained confidence in their ability to weather macroeconomic uncertainty. That was the biggest problem at the end of last year. Now they sort of have confidence in their ability to weather that, but now the uncertainty is even more pervasive than just what’s going to happen with interest rates, for example.
It’s the election, it’s the rise of short-form video, it’s the explosion of generative AI and how to adapt to that. So the uncertainty is really pervasive across the mix and because of that, to get to the point on this slide, we’re seeing that budgets are going to be more likely cut then increased and even the increases that we’re seeing are so slight that they’re offset by the rising costs of marketing. So across the board, we’re seeing you know less plan to be spent on marketing next year which I think is symptomatic of the fact that there is there has always been I think misalignment between finance and marketing. There’s always been a misalignment between CMOs and CFOs about the yield of marketing. The revenue impact of marketing, is it a cost centre or is it a profit engine, right? That is a classic problem of marketing. It’s been a problem for 50-60 years. But that’s now being, I think, exacerbated by all these new channels that markets are diverting money to test into, as well as by the fickleness of consumers who are spreading their attention, their dwindling attention, across 5-6 different devices. Our latest data shows that on average, consumers use about 5 devices.
So I’m sure you’re seeing this in your in your client base as well.
Sastry [00:04:20]: Oh yeah, absolutely.
You’re absolutely right in terms of the cost pressures that CMOs are facing and we’ve seen the same thing with our clients. It’s interesting, that we’ve been still growing, but the growth has been coming from services which are more efficiency-led. So for example, our biggest areas of growth now are we we’re launching a landing page platform to convert as much of the conversion, you know media spend that is there. So while the media spend is flat, the investment is really on what can we do to convert more and more of it. And we are trying to figure out every intent and personalize it and really squeeze whatever we can from the same media dollars spent. So the spend has gone from, “hey, help me expand and help me figure out how to get more” to “figure out how to help me get more from the same amount of media spend.” I think that’s what this has been.
Nikhil [00:05:13]: Absolutely. Yeah. And this, this data supports that point – CMOs have sort of a paradoxical mandate to on one hand grow top-line revenue and on the other hand reduce acquisition costs and reduce the input cost of marketing. So how do you do more with less? And that’s exactly right about landing page optimization. Something else that we’re seeing is a lot more sensitivity to the impact of a dollar on one channel on another channel. So how do we get 1+1 SEM plus SEO to equal 3? You know, how do we get TV plus Search to be more than the sum of its parts? Because that’s a way to justify upper funnel spend as well as grow revenue while reducing cost.
Sastry [00:06:00]: Yeah, I mean great point! Actually a bunch of tests that we’ve done in the recent past have been around paid search – SEO stuff that we talked about. So you know, people spend a lot of money in generating demand and then of course you’re in paid search for your branded terms, which is almost in some ways double. But I mean the fear always is if you don’t, then you can get conquested or something. So really doing key structure tests around pausing it and figuring out which pockets you could still capture most of it in organic and saving money especially if you’re spending money at scale. That has been a big, big lift in terms of what we’ve seen. So I think even before I think we’ll talk about trends and all the cool things that we think are coming right now. But I think the basic thing with I would advise any CMO and I think and we still see opportunities is really getting very good at blocking and tackling in terms of how can you really generate demand very efficiently and how do you capture it like relentlessly across all your channels. And that I think, is certainly a big one.
Nikhil [00:07:10]: Yeah, but that’s pretty cool.
Just to add some color to that, we put out our predictions every year. And so my team of media and advertising analysts for 2024, we’re predicting that it’s really back to the basics for marketers, to your point about blocking and tackling. And so the Metaverse hype has died down. You know, there are all these new flavors of the month. And we could pontificate about, you know, what will or won’t happen to in-game advertising. But like, fundamentally, no matter what channel you’re buying, no matter how much you’re spending, to your point, it’s about efficiency and effectiveness.
Sastry [00:07:46]: Yeah, that’s absolutely critical. So I think there are 4 broader trends that we see and talk through each of them and let’s have around each one I think is hey, you know primarily acquisition used to be a lot of searches and you know, especially bottom funnels, but where customers are starting to search is changing. So that’s one. Second I think is, as it happens with anything, I think customer consumer expectations are just increasing in terms of the base level experience you need to deliver is high. Certainly with everything that we are seeing, with the data security breaches and everything, there is heightened awareness around privacy. And then of course, yeah, it has a huge impact. And we’ll talk about some of the mainstreaming of AI that’s been happening, but we get into like each one.
Fragmentation of Search. So I think this is an interesting one. Some data that we have that we’ve looked at – one is, what used to be primarily the starting of a journey would be Google. And I would be saying, hey, the first point where your brand gets seen is Google often, but that’s no longer true. And look at our own behaviors. I mean, anyone who’s done modelling recently, you know, most probably you start your search at Pinterest, right, buying your product, you search at Amazon, you don’t search in Google for the product or you know, you Search. So that’s one side where there are specialized platforms for specific searches that have emerged. And then there are broad social platforms like TikTok and YouTube where there’s a lot of searching that’s happening and especially with Gen Z. And I think that especially when you have Gen Z searching and TikTok and things like that and when I talk to some of the CMOs, the feedback is, do you think our customers are there? Do you think it’s just the younger people? It is the younger people today predominantly, but there are other people too. And the second thing is, you know, I will date myself here, but there was a time when Facebook was for younger people. So the thing with younger people is, oftentimes older people follow younger people. And so you have to keep an eye and be there, right? And that I think is what we are seeing.
So just in terms of social platforms like TikTok is oftentimes where people are starting product searches. And then when you look at people who are searching on TikTok, on Instagram rather than on Google on local searches, like 40% of the younger people, 25% of the US adults under 30 now get the news from TikTok. If you had told me like a few years back saying people will be searching for financial news on Tiktok, we worked with a lot of banks and financial services, I’d be like come on, like no way! And now like 1.1 billion views on like investing, 10 million plus video views and banking tips. So clearly if you want to influence people, you have to be there and you have to then think about what to do there.
Nikhil [00:10:56]: Yeah, absolutely. And just to add some more perspective to that, You know, I’ve been spending a lot of time with Google’s product managers as I do research at Forrester, about how search is going to change now that it starts on different marketplaces and different social platforms and even Bing as well. And because of this, I think that search becomes a bit more social, you know, So there’s this new tab that they’re going to roll out called Perspectives, which is all short-form video from creators reviewing different restaurants in Jersey City, for example. And so that’s your search result, right, instead of instead of links. And so it’s more visual, it’s multimodal, there’s more rich media and it’s more social in a way.
The other thing I would say is that I think that this is an opportunity for the reinvigoration of voice search. So voice search didn’t work a few years ago, despite all its promise, because people weren’t making commercially valuable searches using Cortana or Siri or Alexa. But now that I think consumers are willing to change the ways in which they search and have conversations with options and with peers and with voice assistance, I think that voice search will become a lot more commercially valuable in the next 18 to 24 months.
Sastry [00:12:14]: Yeah, I can absolutely see that. Especially with the AI-generated experiences that we’ll talk about. I think the other thing is the Google and Meta share. It’s interesting, for the almost 10 years, for I would say an entire decade was just Google and Meta and optimizing for them and that was pretty much what it is. And suddenly you come to this year and the big changes have been pretty dramatic. Their share for Google Meta has fallen to 45% even and other platforms have come up to speed. Even when you look at like, for example, when people are looking to do comparison shopping, right? And people are like enough looking at like, you know stuff apart from things that are on this page, Reddit has started to emerge because people get unfiltered view of opinions of products and they know that. And earlier it used to be Google and then I’ll go to Reddit. But Reddit has also been aggressive about pushing their app, in which case you gradually have an adoption of Reddit as an app and people start looking at that and place in terms of where they sit and they are building up their advertising tools as well. So that’s happening where platforms are getting savvier about monetizing their traffic and figuring out how to help advertisers. Yeah, but I think, yeah, like TikTok is most probably the 5th largest digital ad publisher. Like by next year they’ll end up being big, you know, 107 million reach, which is like huge. It’s almost like a third, right. And Amazon share has been increasing as well.
Nikhil [00:13:44]: So a few things I would add to that. So one thing you know, we had that slide a few slides ago about the share of the ad mark, you know, the dominance and weakening of Google and Meta. And it speaks to this paradox of marketers that I’m working with daily. Because on one hand all of them talk about their desire to diversify beyond the duopoly to Pinterest, to Reddit, to TikTok, to other channels across the open Internet that aren’t as closed. So on one hand there’s this desire for diversification, but on the other hand, they cannot live without a Google strategy, right? That is the only ecosystem in which from product discovery down to purchase, you have the strongest possible signal and same and same too for Amazon with the streaming, the browsing, the shopping signals that they’re not bringing to bear on their DSP and on their media planning tool. So you know, that’s the paradox. I want to diversify, but I cannot do my job without a Google, a Meta and Amazon strategy, right?
Sastry [00:14:53]: Absolutely right. Yeah. And so that’s as you pointed out, between YouTube which has got a huge number of views like on mid-funnel and top of the funnel and then like search where you eventually are converting. So I think, yeah, and there’s an interesting search in terms of like what do you as a CMO do and how does it change? And that’s it. You’re looking at customer journeys, right? You’ll have to look at journeys much more extensively and figure out at every stage of the journey you have to create assets differently. Like a lot of assets for example are oh, let’s create web pages, but web pages and apps may not cut it. I mean short-form videos is what people are consuming and I think will talk about that. But eventually like your initial consideration most probably driven by like TikTok and YouTube and Meta and then in terms of where you are getting like mid-funnel and comparing stuff is mostly ready of course, hopefully going through a bunch of websites and comparison, comparison websites will remain important. And then of course eventually your property becomes important where you convert whatever people do, eventually they come to you and convert. And then I think the other thing that people have been talking about is increasingly in-app sales, when someone is a customer in-app sales have been rising. So a lot of like essentially more sophistication of targeting existing customers to deepen relationships and that’s been what do you do in-app, what do you do in social. And so I think what used to be primarily a literally “optimize for Google, if you didn’t do that well, you can really do well in acquisition” has now suddenly become much more complex in terms of everything that’s going on.
Nikhil [00:16:26]: Yeah, yeah, I agree. And just two more things to add on that point when, you know, we’ve been talking about Reddit a bit. Reddit has now become part of SEO strategy. So some of our clients, the search marketers I’m talking to, they’re going into Reddit threads to see what are the keywords, what are the concepts that our potential customers have in mind when they’re vulnerably searching for solutions to problems, right? So now Reddit has become or that broader form of social listening has become part and parcel of SEO. The other thing I would say and not enough people are talking about this, these social platforms, let’s say Snap, Pinterest, Reddit, there are not that many more people for them to acquire. Like there’s not many more customers out of them to acquire. Now to sustain the economics that they’ve been growing with the need to more effectively monetize their installed base rather than be focusing you know, as much on new customer acquisition. And so, you know, as this, as this shows, all of a sudden, you know, different social platforms open up more social commerce opportunities to increase that average revenue per user in a way that they really haven’t had to before.
Sastry [00:17:37]: Yeah, no, absolutely. And I think still remains a big opportunity because I feel people are still fairly early in the stages in terms of how they’re monetizing their apps and what they’re doing there.
And then I think the other piece where I see people is, consumers have moved much farther ahead in how they consume information through form rules, largely short-form. If you look at short for short-form video production in terms of what’s done, it’s largely like individual-led and creator-led and are still struggling to keep pace. I mean like how many people are producing multiple short-form videos a day, right? I mean because just the way between production values and how videos are produced traditionally and the and the, you know and the level of I guess in some cases if you’re a regulated industry, compliance and things you’d have to go through to put anything out, they struggle with like velocity of doing something like this and the cost structure of doing a video is would have to be built. But then there is technology now that I think you just look at this channel differently to figure out how you create assets and that’s what is more video based.
Nikhil [00:18:44]: Yeah, yeah, absolutely. And there’s a company that I was briefed by a couple of weeks ago called adcreative.AI and they said that they enable and they do enable clients to generate hundreds of thousands of short-form videos, static images per day. And so that solves one challenge, which is resource constraints, you know, and having enough creatives to actually test. But then it also creates another challenge. All right, if I’m sitting here as MasterCard, for example, and all of a sudden I have, you know, 100 X the volume of short-form videos that I had a few months ago, how do I organize all of this content into a library? You know, how do I know how much to spend on tests between different variables within the videos? It actually ends up creating problems as much as it is solving them. So that’s the flip side of this, I think.
Sastry [00:19:45]: Absolutely. But the consumption and how people consume information is essentially, increasingly.
Nikhil [00:19:50]: And yeah, actually there’s one more thing to add on that point. You know, when I’ve been doing research on connected TV advertising, for example, I’m speaking to marketers and they and they plan for linear TV in a silo. They plan for CTV in a silo OLV in a silo. Then I speak to consumers and I’m like, you know, when do you watch linear, when do you watch online video? And like to me, it’s all just premium video advertising. They’re not distinguishing between different types of TV. And so I think because of this rise in consumption, which you’re rightly pointing out, we’re going to see a dissolution of silos between different kinds of TV and it’s all going to become video advertising across channels that you have to plan for.
Sastry [00:20:39]: Absolutely, I think so. So that of course changes, you know one of course changes where consumers are and the forms of things that consume they’re consuming. I think the second piece is just in terms of expectations of companies in terms of what they deliver, right? So I think you could get away with perhaps you know a lot less earlier, but increasingly consumers expect a certain degree of personalized experiences. Hey, I came yesterday, I saw this, I come back and then you’re treating me like new, what’s going on here? So that’s been a bit of a challenge and even across channels. So there is some expectation that people will have as customers and I think that is an important aspect and it stretches across various channels and various stages of the funnel as well. So you might have someone earlier in the journey that has visited, the website has come back and people expect, I saw this. Why would you completely treat me like a new customer all over again? And I don’t know if you are seeing something like that.
Nikhil [00:21:45]: So we’re seeing in our data that the prevalence of ad blockers is increasing. We’re seeing that consumers are clearing their browsing histories and their cookie caches more frequently. That to me is consumers expressing their dissatisfaction with what you exactly just said, you know, the inability of brands to sustain a dialogue with a potential buyer across channels, across their journey down the funnel. And that challenge is exacerbated by third-party signals dimming across the Internet, right? So 2024 we haven’t talk about this yet, but by the end of Q3 of 2024, we expect most third-party cookies in Chrome to be disabled, you know and the cookies are already disabled in in, in other browsers. So as that happens, you know, how do you know your customer without cookies? How do you personalize communications across the funnel, across channels without cookies? How do you have strong enough signals without just putting all your money into Google or Amazon? How do you have strong enough signals when you’re advertising on cnn.com, Spotify, New York Times, Wall Street Journal? How do you figure out what people, you know, how people want to be addressed across the open Internet without their pretty cooking? So that’s a big question I’m getting to.
Sastry [00:23:06]: So I think, I think the challenges as your slide shows, I think there’s a big challenge. I mean that’s what the challenges marketers are seeing. At the same time, execution is getting much, much tougher, right? And clearly data deprecation which you’re talking about isn’t top of mind like what do you do here?
Nikhil [00:23:24]: And so just to put some more context behind this slide, so in July of last year and then over the course of the rest of last year, we were you know pulsing that same panel of CMOs. What are your top five priorities for 2023 outweighing the ability to innovate, outweighing the ability to prove the value of marketing to my board, is this – how do I get more first-party data? What sort of mic, and what sort of micro experiences should I run on my site to collect the pool of authenticated audiences that I can then address, right? Because that pool is shrinking quickly and then when I have that first-party data, how do I then create segments from that valuable data to say, all right, I’m going to focus just on high lifetime value, low cancellation rate customers now that I actually have an understanding of who those people are and how they want to be addressed, what creative they want to see. So we haven’t gotten the data definitively yet from this survey for 2024. Early results indicate that this is still the top priority especially now that you know we’ve been talking about the death of their pretty cookies for years and years. It’s actually going to happen next year and people are aware of that fact. And so they’re planning for it.
Sastry [00:24:43]: It is, yeah, absolutely. So I think I think that leads you to absolutely a challenge in terms of what do you do, what are the expectations, how do you meet the expectations? And I think the expectations are two-fold. One is across stages of the journey, how do you connect the dots? You know, traditionally how marketing oftentimes is organized is like brand marketing, performance marketing team is sitting somewhere else doing like upper-funnel, there’s performance marketing doing down funnel sometimes with completely different agencies for good reason because competencies are different and therefore different agencies. But then you take it to the next level because the agencies work with different platforms. So the data is on different platforms. And now suddenly how would you connect things across different platforms?
I think at least marketers would have to think more holistically about how do I connect this across various channels, and various stages in the funnel. And even if it is different agencies because of reasons of competence or whatever, how do you ensure they’re all on the same platform, at least make sure that happens so that people can use the data. So I think that’s important. And then across channels we talked about paid in organic search. But similarly across multiple things, especially where people are on different sides. I mean, some of it, some of the solutions of course is like data clean rooms that people are setting up still very early, but at least trying to get everything together into place and ensuring that you deliver an experience which is cohesive.
Nikhil [00:26:20]: Yeah, yeah. Two things I would add to back up that. One is that the funnel is collapsing pretty much on every channel. So if we think about search, for example, again, thinking back to my conversations with Google, you’re going to be able to check out directly from google.com without ever having to click through to nike.com, right? So if you are simultaneously getting a brand impression from a Nike shoe and buying the shoe seconds after that brand impression, that funnel is very, very short, you know, so this idea of, you know, let’s focus on the top here, the middle there, the bottom there. And that’s not how consumers go through their journey. The funnel can be instantaneous in some cases in or in other cases it can take months or years. So that’s one thing is that I think more than focusing on the funnel you have to focus on identity resolution and having a clear perspective of who your customers are and then you can say all right, what is the typical journey?
The second thing I would say to back up your point, we ask marketers again every quarter, what are your biggest challenges with TV, with retail media, with Search, we have all these channel-specific surveys. The biggest challenge across channels is always rationalizing this channel with the rest of my mix, right? So it’s one thing to measure the hell out of Instagram ads and say, all right, I have a $44 cost per acquisition on Instagram. That’s great. OK, fine. But you know, as a marketer you have one more dollar. Do you spend it on Instagram because of what the Instagram UI says? Do you spend it on Spotify? Do you spend it on programmatic display? That’s the question, not how much is Instagram returning from me. So to your point the connectivity across channels is and sort of holistic omni channel measurement is so much more important I think than channel-centric optimization.
Sastry [00:28:08]: Yeah. I mean, I think as and I’ve talked to like several marketers and everyone not vigorously when I say this, which is only a third of digital marketing is truly marketing. A third perhaps is analytics because of all the data and everything. And then maybe another third is technology because that’s how experiences get delivered and that’s how you deliver a seamless experience. So a lot of it is platforms, data and then figuring out how to make it work for marketing.
But I think the other piece that you mentioned which is on one side people want great seamless experiences and on the other side people are not willing to give you information about it right now. People don’t want to be tracked. That is certainly heightened awareness of being tracked and being don’t want to you know and I think I think Apple data is great in terms of 96% opting out the first month of tracking.
Nikhil [00:28:53]: Yeah. Just to put a finer point on that. So I think that and I’m hearing from clients that they’re responding to this data by focusing a lot more on two things – creatives and context. So there are the two things, those are the two levers of performance that they have now. In absence of strong third-party signals, you know, because pre iOS 14 market has effectively had the equivalent of your last five credit card purchases. All right, so this is what these are the last five purchases that have to be made. I can reasonably predict what he’s going to buy him next. I know what he’s in the market for now. They don’t have that visibility. They have no idea what you’re going to buy next. And so their creative needs to be more persuasive to bring you into the market for their products and services. And then the ads have to be contextually relevant. You know, they have to rely on contextual signals in a way that they haven’t had before just to put some any little evidence behind this data.
Sastry [00:30:17]: Absolutely. And for example, I mean just to drive from the point, we had a client who’s, you know, I mean even as simple as when you have a paid search ad ensuring that your landing experience reflects what’s on the paid search ad – for multiple reasons, cost compliance depending on which industry people are like, OK, let me manage one page. But there are clients who spend millions of dollars on like essentially on millions of ads on very different Internet all landing on a similar page. And that’s perhaps the only information you have at that point to do something with that information and you really need to be able to leverage it.
The other piece of information which is very interesting is this, this piece of data which you saw which is around 43% of the consumer saying that they would switch to a second choice if they feel the privacy experience is better. And that is like you know and so really for marketers it’s a very fine balance of delivering a level of personalization at the same time being very cognizant of the boundaries of what the consumer has. So that’s a very tricky balance.
Nikhil [00:31:45]: So we have this framework and I mean the headline here is treat your customers like you would want to be treated as a customer, right. So like obviously no one wants, you know, non-consensual marketing, no one, no one wants to be creeped out. So that’s the headline is the sort of golden rule. But then when you break it down and all right, who are my customers, we categorize them in these five different ways. So we have at the top, we have folks who are willing to trade their personal information, some more recklessly than others in exchange for a more personalized experience. So think about the experiences on sephora.com, for example, They have a great experience where they’re actually picking up data on the frizziness of your hair, the oiliness of your skin, and really sensitive, embarrassing data that you wouldn’t even share with friends. But you’re willing to trade it with Sephora because in exchange you’re getting a much more personalized shopping experience. So that’s one strata. The other is those who are a lot more guarded. You know, they’re a bit more savvy with their data. They may be using privacy-safe browsers, for example. They’re clearing their cookie caches more frequently than the reckless rebels. And then at the very bottom, you have these people who are sceptical, who are very protective of the data. But in this world, you also have light buyers of your product medium, buyers of your product, and heavy buyers of your product. You know, the heavy buyers could be, could be sceptical protectionists or they could be reckless rebels. You don’t know until you begin the conversation with the customer, right? And so I think two things, one is the golden rule, treat your customers like you, like you want to be treated as a customer, but also be sensitive to the variety of privacy attitudes that customers have. So that’s the that’s the point there.
Sastry [00:33:40]: And like anything, I think almost start a little more conservatively and then you can you get through the journey, you can get better and better. So just because you, I mean several times and have conversations with clients, I think it’s just because you can personalize don’t. It’s good to understand the boundaries. I mean, how many of us have felt spooked? My experience saying, Oh my God, I did not know, I don’t know how they got this piece of data about me, right? I mean, like this experience is just a little weird that you just somewhat violated, in spite of us being in the industry, I mean, you know, we do this living and nevertheless, we go through this experience where you’re like, how did this happen? So I think certainly you have to balance between the need for driving great experiences, but then also understand where consumers are in the relationship and the journey with you and understand boundaries in terms of, you know, where do you want to deliver a personalized experience and where do you want to just lay back just because of the data, you don’t want to do it every time.
Nikhil [00:34:47]: And speaking of not spooking users, we also surveyed consumers. We asked them about their opinions of different professions. And advertising professionals are right above car salespeople in terms of credibility of those professionals, in terms of the nobility of what they do. with all of us on the webinar today are advertising professionals. And so I think, I think the point here is that iOS 14, the death of third-party cookies, a federal privacy bill, if that were to happen, those are blessings in disguise. You know, those are, those are forcing functions for advertising professionals to rethink how they address audiences, to develop richer relationships with consumers, to actually have a relevant conversation, a relevant dialogue with buyers down the funnel instead of just harvesting data and being lazy with retargeting, you know, that’s no longer an option. So now I think it really is, in a way, like a blessing in disguise.
Sastry [00:35:54]: And I think as we go into our like next you know, next trend in terms of mainstreaming of AI, which everyone’s talking about. I think look, clearly I mean the sheer number of users shared GPT hasn’t like you know, we were talking about it last year and the fastest million and now it’s like 180 million, it’s like huge, again and customers building that they can, it can have a hugely positive impact and we’re seeing a lot of functions, everyone looking at the things that they’re doing and figuring out like hey, where is an impact of AI, what are some of the things that you’re doing, Has that been your experience as well?
Nikhil [00:36:31]: Absolutely. So my whole year was upended by this technology. At the end of last year, I had this very nice research plan. Here’s what I’m what I’m going to cover. Here’s what’s top of mind for marketers. And then I came back to the office at the beginning of this year and my whole year was upended. And in a good way. In a good way, because I’ve gone relatively deep on this topic. I just spent time a couple of weeks ago with 66 of our of our biggest clients talking about this exact topic of how are you exploring the use of generative AI? What are your concerns about using it? All of the clients we spoke to have their own language models that they’re customizing for their brand, training on their intellectual property and they’re using for three things mostly. One is content generation. So they’re ghostwriting their executives emails, they’re developing paid search copy, they’re generating schema markups. That’s you know, low-hanging fruit. Then a little bit more sophisticated, they’re using it to summarize insights. So when this, when this bot is trained on, you know Home Depot’s data for example, they can say all right, you know bot detect anomalies in the last three weeks of my paid search campaigns and the bot is so much faster at anomaly detection than I would be frankly. And the third thing they’re using it for is customer service. So training a bot, whether it’s Cox Communications or some other folks, I was speaking to, Home Depot again came up in this case of just interacting with customers conversationally using the bot that’s trained on your brand’s IP.
So as this, as this graph shows, we put this out at the beginning of this year. We’re still in the emerging stage of this story. The difference here is that this technology, because of its consumerization and because of all the money and all the press affecting it, is evolving a lot faster than mobile did and the Internet did, than other technologies have. But it’s still emerging and you know, we’re going to get to the stage of maturity in which language translation, personalization, DCO, search engines, code generation, everything that we’re doing as marketers can be impacted and will be impacted by this technology. But we also have to realize the risks we run by using technology that tends to hallucinate. That’s a very real risk I think, here.
Sastry [00:39:08]: Yeah, absolutely. So I think there is certainly, especially if you’re in a regulated industry, you need to be like super careful about what you do. But we get calls from marketers, I mean, CMOs all the time saying okay. So what do you do? And you give several good examples of what can be done. But I think as a CMO, I would look at things in like 3 buckets. And I would say at this point, given where the technology is, I would almost say most probably a lot of stuff that you do is in driving efficiencies. There’s a lot of stuff that you’re doing that can be done much faster whether it is creating a first draft of like e-mail copies or like web pages. So there are things that can be done right. Content briefs can be automated. Even external tools that can be created, right? For example, Google has rolled out like you know it essentially uses a lot of AI, but primarily how do you use first-party data to drag get more valuable customers for the same amount of money, right? I mean essentially it’s just paid media efficiencies. So use it for that because I feel that’s where most probably you can make leaps and see immediate savings, especially in a year like this.
The next bucket I think is driving effectiveness and I think you gave a few examples which is it’s not just about doing it faster, it’s doing better. An anomaly detection is a great example. SEO for example is 1000 variables. And when you say hey, traffic is dropped and then you need to figure out where did it dropped, what happened and it can go in and say hey for this family you seem to have dropped because someone has launched a competitive page or whatever. You can go much deeper. And I think there is an example where you can really help drive more effectiveness and so deeper insights and certainly helps. I think the last one in most probably initial, but really think about like what is, I mean eventually, it could transform your business and it will. And so what are some of the things that we look, in your specific business, which can be transformative? Some of it, for example, you talked about is, hey, with customers as I design websites or design experiences, are people going from screen to screen and clicking on links anymore or are they now gradually getting to a generative experience where they’re just asking questions and interacting and you just have to make sure that your model is pulling in only from data on your site. So you need to make sure that the close data is clear. But I mean we’ve, for example, built some of the stuff where you can obviously firewall it off and make sure that it only works off stuff on your site or a few trusted sites. And then I’m sure like, hey, it will not be the primary experience eventually. And if it is, will you be ready for it? And what is it that you can do it, right?
Nikhil [00:42:04]: Absolutely. And a few things I would add to that. So I think a lot about this moment like a gold rush sort of and it’s been surprising to me to see how easy it is, seemingly easy and quick it is to build better picks and shovels for insights mining, right? So now there are so many picks and shovels out there between Jasper and Firefly, etcetera, etcetera, etcetera. And those took up like a few, a few months to build on top of the decades of AI that Adobe has, that Google has, that Microsoft has, all right. So there’s tons of picks and shovels and if you really want to make money in the gold rush, it’s not about getting the best pick, it’s about knowing where to mine, right? And so I feel like a lot of the clients I spoke to were focused on whether should I be using Jasper for this, should I be using Firefly, should I be using Imogen? I’m like that’s not the point. The point is, should you be an automating image creation at all? And if so, what is that going to do to ROAS? What is that going to do to Net Promoter Score? You know, that I think is a question to ask.
The other thing I would say, as you as you touched on, we’re moving to a world, I think a maximal automation. So bid management is no longer a skill, really copywriting becomes less important of a skill. Now it’s about editing instead of writing. All right, so if writing, managing bids, generating schema markups, if those tasks are automated and what does a marker have left? Focus on the quality of the inputs into the machines. The machines are going to get smarter no matter what. And eventually you’re just going to be dependent on the quality of the inputs you’re providing the machines. So I think data quality, data structure, and data cleanliness become paramount in this world.
Sastry [00:43:50]: Yes. And I think look lot of work at the end of the day today as a marketer even ease some level of grant work. It’s like whether it’s like copied, it’s just making sure it’s accurate, it reflects things that I mean, so there’s a lot of that work, a lot of that will get automated, right? Even as a copywriter, for example, you get a topic, you see, hey, what are the search terms for this or like who’s ranking for these things or who’s written about this stuff, all that can get automated and you can get automated briefs for example. I think then the true value is to be able to spend time on how can I actually write a unique point of view about this topic which is truly different and is value-adding. And in some ways, it’s a blessing because it gives you time to add value truly. But then all of us, when they’re doing a lot of busy work, feel very useful and that goes away. And therefore, it’s a little like threatening. And it’ll perhaps push standards higher, but it will also essentially push people who are not able to raise standards out. Because a lot of things that you could just get by with grunt work you no longer need because those things machines can do. But it’s very, yeah, I’m very fortunate to have lived through, like I started my career very early in the digital revolution, like, right. And we followed this. I remember being in like, let’s say digital marketing at American Express and saying as Internet started, hey, let’s use this technology so that people can enter data, so that we don’t have to enter data and we save a ton of time. And that, you know, all the data just gets captured and gets like an application credit card application, there’s efficiencies. And then realize that you can reach a lot more people through this whole channel and therefore driving effectiveness and distribution. Eventually people like PayPal came and they built transformative experiences in this whole payment space. And so you saw all that happen in course, of 25 years. It’s just that, like, you know, I’m very fortunate to see a second revolution in course of my lifetime. And you can see most probably it will follow the same path, but much faster for like, you know, quickly.
So I think broadly, I mean as we look at like what do what, what are the key takeaways as we , you know, look at it 2024, I think what we’ve talked about I think is one is be where consumers are, right. I mean essentially consumers are no longer just to Google this. So you think about it more expansively both in terms of media or assets that you produce as well as channels that you’re presented. Second is of course use convergence efficiencies, right. You have silos at this point, figure out how to bring it together to deliver seamless experience to customers because that’s what you need to deliver. But while you are delivering a seamless experience, be mindful about privacy and ensure that you’re not, you know, crossing the boundaries there.
And then of course, as the AI devolution hits, be ready and think about, I would say think about like, hey, what are your initiation, the efficiency bucket in the effectiveness bucket in the transformative bucket. And there may be obviously fewer in the transformative than in the efficiency bucket. That’s fine.
Really think about how you can transform marketing.
Nikhil [00:47:06]: Just, just, yeah, just a few things I would add here in terms of meeting consumers where they are. As I said I, I, you know I think that the trends we’re talking about are very challenging to reckon with, but they’re really a call to action for marketers to better understand their audiences right and to better understand them within the privacy guidelines and the sort of expressions of consent that they’re getting from audiences.
And you know on the second point of convergence efficiency one of the most common questions I get is about cross-channel measurement. I think that we’re going to see a lot more media-mix modeling in 2024. We’re going to see more frequent media-mix modeling rather than just annually or biannually or quarterly. I think that MTA is effectively dead and we’re going to a world of MMM, but it’s not just MMM, it’s like unified media measurement. It’s not just it’s you know and so I think that that’s the world we’re going towards in which you can say, alright you know a dollar that I spend on programmatic display, how is it impacting my customers when they go in store, what’s happening to my point-of-sale velocity in store. You know you have to answer those questions to be able to prove the value of marketing to your board and to your CFO. And then yeah, I echo these last two points here.
Sastry [00:48:33]: Cool, Let’s see if we have any questions. I think of a few that are here. Here’s one, which is you talk about conversational search and generative A&A of course, but the search as we know it is changing fast. What would it mean for search as a channel? Should I change my 2024 strategy?
Nikhil [00:49:00]: OK, yeah, it’s a yeah, it’s a it’s a great question. It’s one of the most common questions I’m asked. So a few things are happening. Organic traffic rankings, average position, those KPIs are becoming obsolete in a world in which everybody is having conversations with engines, no one is clicking through, the top of the funnel gets a lot wider. The tail, of course, gets a lot longer. The middle of the funnel gets accelerated because you know, as we talked about, you can check out directly on the SERP, so you can go from awareness to purchase in a millisecond. And so number one is that you need new KPIs. You need to focus more on your brand’s visibility on the SERP and how to maximize that. You need to focus on the quality of your content, because showing up in the AI-generated snippet on top of the SERP depends on the quality of your content, right? And so content deficiency, scroll-down, bounce rate, those sorts of metrics become important again. And then third, I think is that the SERP is becoming increasingly visual, right? So image optimization, video optimization, entity-rich content optimization, and listening to Reddit to figure out what people are searching for, becomes about searching outside the box. It’s no longer a matter of just optimizing for keywords, but what are you seeing today, Sastry?
Sastry [00:50:30]: No, absolutely. So as Google is rolling out like SGE, we’re keeping a very close eye on it because backs like the work we do in search. And what we figured is that you know ranking is still important because, I mean obviously you know the sites that are ranking are somewhat relevant. So the Search Generative Experience and the answers that it is picking up is mostly from the top few sites, but that we’ve seen has expanded and perhaps to the top you know more than the top few sites, most probably the top ten sites. So I think organic search and ranking is important in terms of being staying relevant and you want to be relevant because eventually whatever Search Generative Experience picks it will be from a relevant set of like content that you need to be. So I think that becomes important. So you need to monitor it and then I think which is what we’re trying to do for our clients. The other thing is how do you measure? Because to your point, if my mid-funnel when people used to research my stuff and when I’m creating mid-funnel content is no longer going to be a series of searches but essentially a generative experience, how do I know I’m there? And so you have to create a completely new measurement framework. Because eventually I might have a complex question and I might figure out saying instead of doing 5 queries and looking at different sites and figuring out an answer, I ask a question straight and get like a generative answer and then I might search for a brand. And so we as marketers, need to make sure that we as a brand are present in the search generative experience that is there. So you that you have to really figure out houses that you create relevant enough content that you’re there and then of course it should, it should manifest itself in more branded searches to your website.
But today when you measure, a lot of times many of our clients rightly so measure mid funnel traffic to your site, there will be no traffic to your site because people are getting it on the SGE. So the measurement framework will have to change and we have to evolve to a new reality. I mean it’s still a small percentage of traffic, but it will climb rapidly I expect.
Nikhil [00:52:37]: Yeah, but I think we’ll so yes, I think I think we’re going to see declining click through rates but higher conversion rates because the traffic that does end up on the site is going to be is going to be higher intent. I think at the at the bottom of the phone, having gone through that conversation with the engine.
Sastry [00:52:55]: Yeah, absolutely. Let me read another question. What roles are you seeing brand marketing teams currently owning versus performance marketing? How do you anticipate integration between the teams progressing?
Nikhil [00:53:09]: Yeah, that’s it that that’s a great question. I would say that the brand teams are owning channels that are associated with awareness generating exposures and the performance teams are owning channels like search until recently that are associated with demand harvesting. And so it’s been right so. So it’s been a sort of channel-centric rather than customer-centric. Artificial false choice between brand and performance. So the integration I think comes from realizing that any one of these channels can impact any part of these non-linear buyers journeys that we’re all trying to better understand. And so I think that the integration comes you know you mentioned brand and brand and performance agencies at different entities. Our advice to agencies is not to not to pigeon on yourself as one or the other because it’s illogical for you know a brand to be using iQuanti for one thing and someone else for, you know for something else. I think that full-funnel marketing is here to stay.
Sastry [00:54:25]: Yeah. Especially I think when you talk about like some unified platforms in scene that we like brand team for example would own YouTube and the performance team would own paid search, right, which is which is fast. Now as you look at things like Performance Max, which is trying to integrate Resolve 3, so then you’re suddenly looking at it saying how does this work. So I think the roles are certainly integrating. But I mean I think look, I mean industry lags customers as always. I think I haven’t seen like huge collapse of all structures to seeing what is going on. But I think eventually what we are seeing is platforms certainly integrate. I mean eventually look at how things come together and they are coming together and in terms of anticipating how integration will go on. I think a holistic framework of both brand today like it’s almost like brand lot of brand teams are measuring themselves on impressions and you know consideration and then how much teams are accounts and cost-per-accounts. And I think that that really comes together as people as channels integrate. I think that’s something that we’re seeing.
I have one more question, just one last one. Appreciate thought around driving better economics overall with limited media budgets. Any thoughts on how to bring brand and performance marketing together?
Nikhil [00:55:57]: It’s a popular topic. So yeah, the best way to do it, I think is to measure the Halo effects of one channel on the other. So if you’re running YouTube campaigns, you should, yes, be focusing on what Google’s telling you about YouTube’s performance. But more importantly, what are YouTube ad exposures doing to your branded search activity? Are they persuading people who would have searched for generic keywords to instead after that YouTube ad exposure search for branded keywords? If so, they’re taking you from a generic auction to a branded auction, a much more profitable branded auction and they’re improving your blended ROAS overall, right?
And so I think that’s the way to connect these two.
Sastry [00:56:43]: Yeah, no, I would agree. And then I think even within like mid-funnel and bottom-funnel as we talked about like how does organic and paid work together, how do you drive like holistic search in terms of making organic and paid work together. And a lot of our clients have been working on that as well. So I think efficiencies today are there is certainly a lot of overlap across channels. If you’re saying how do I do more efficient marketing, I would say a few things are to ensure that you collect the demand from your existing channels much better than you are, because I mean, at this day and age, we still find a lot of opportunity. I mean almost any company we go to easily find like 10, you know 20% opportunity. So that opportunity almost seems to be there. The second thing I think we see is again overlap between channels and overlap across stages of the funnel and how you can integrate both. I think that has a lot of opportunities to be unlocked and I think both those should help companies.
So I think we are at time. This was great. Nick is always great speaking to you.
And then of course like a plug from my marketing team which is if you want a detail like walk-through, please reach out to marketing@iQuanti.com. Have a nice day everyone.
Goodbye.