Analytics Expert Nico Neumann: ‘More Technological Disruptions Coming Soon’
CMO.com caught up with Nico Neumann, a senior research analyst at the University of South Australia, to discuss the “madtech” era and why he thinks abandoning data-science solutions is not the way forward for CMOs today.
Murky metrics and fraudulent calls have put adtech under fire, especially from Procter & Gamble’s chief brand officer, Marc Pritchard. His speech at the 2017 Interactive Advertising Bureau’s Annual Leadership Meeting in January highlighted the flaws of programmatic advertising and had some calling for the death of adtech.
Nico Neumann, senior research analyst for programmatic strategy and analytics at the University of South Australia, agrees with Pritchard’s critique of current media-buying practices, but he does not believe that programmatic advertising will disappear. During the recent Ad:Tech conference in Sydney, Neumann shared the latest developments in the field, including insights into new marketplaces powered by computer science and algorithmic buying.
CMO.com caught up with Neumann to discuss the “madtech” era and why he thinks abandoning data-science solutions is not the way forward for CMOs today.
CMO.com: Marketers and analysts across the world are proclaiming a new wave of data-science solutions and the emergence of adtech 2.0. How has this come about?
For media, specifically, I think we will see more and more automation revolving around creative dynamic optimisations, merging creative, targeting, and data-science applications. The idea is to algorithmically inform the individual elements of each ad, such as the image, text, or call to action. Optimising creatives in this way has shown to improve click-through rates and performance uplift.
CMO.com: P&G’s Marc Pritchard recently slammed unreliable metrics and nontransparent media platforms. What are your thoughts?
Neumann: We know that adtech and programmatic face a lot of challenges in terms of transparency, business models, fraud, and viewability. But let’s not forget that the very basic concept of open marketplaces is to connect more buyers to more sellers and to increase efficiency and transparency. Also, programmatic is in its infancy. Technology and new industries need time to develop and live up to its potential.
Still, even today there have been some real achievements worth highlighting, such as the scale and speed of enabling transactions between buyers and sellers. If we think about big programmatic exchanges, they would actually handle about 40 billion impressions every day. Comparing this to the Nasdaq, at about 10 million trades per day, it’s a very different task with regard to required computing power, lending to adtech’s popularity. Some may say that we have had martech or CRM platforms already for several decades, so automating customer communication may not be new. However, it’s one thing to send an email or text message to a few million customers a day, but a very different technological task of enabling billions of daily impressions online.
CMO.com: How is adtech disrupting the market today?
Neumann: We had some great adtech achievements, but there are still a lot of manual processes for marketers and campaign managers to perform, such as ad-quality parameter checks or sending JavaScript back and forth. Fortunately, we have new streamlining tools to traffic campaigns today, and the rise of direct server integrations should further reduce the workload of ad operation teams.
For media buying, in general, I expect to see more technological disruptions soon. I think it’s fair to say that many of our present adtech practices have made the buying process rather complex and expensive. Technology should make everyone’s life easier, not more difficult. But we have created very long supply chains with lots of companies who try to cash in on the adtech trend. This needs to change. And I am sure it will. Some of the latest adtech solutions I have seen have recognised this opportunity. They market themselves as a replacement for existing media agencies or middlemen instead of adding another layer to the media-planning supply chain. This is, of course, a threat to the traditional media-agency model, but, in the long run, replacing the middleman with technology is exactly what needs to happen in most industries to drive performance or reduce costs. The growth of technology-fueled tools is inevitable.
Take the travel industry, for instance. Travel agents have been reduced by two-thirds since platforms like HotelsCombined and Expedia emerged. That said, travel agents haven’t disappeared completely because there will always be complicated solutions where a consultant or an expert is required.
CMO.com: Why are adtech and martech converging, and how do you get both ad buyers and sellers to adopt these platforms?
Neumann: The merger of adtech and martech makes sense. Email, text messages, display advertising, search, out-of-home advertising, and [television commercial] production—you want everything in one interface so you can log in, buy, and create. All customer touch points should be tracked and all information placed in one marketing intelligence source. That’s critical to monitor and design the customer experience.
Getting buyers and sellers to adopt a new platform is tricky, especially in a highly competitive market. It’s important to make the transition and adoption process as easy as possible, for example, by offering a quick integration into legacy systems and by providing sufficient customer service. In the long run, the most challenging part is to attract the critical mass and create incentives that all parties actually use the platform and obtain high value.
CMO.com: In a column you wrote for APAC industry trade publication AdNews last year, you said: “Martech competition + sales target pressure = overpromise, underdeliver.” Can you expand on what you meant by this?
Neumann: The martech landscape covers thousands of offers from different vendors, creating a very, very competitive market. Because of the huge future potential, lots of big players are still entering adtech. There are some solid vendors out there, but also many mediocre solutions with little differentiation. When some vendors cannot provide real value, they may just pretend to do so or be tempted to bite off more than they can chew.
What makes things worse is that many big organisations—in particular, holding groups—provide unrealistic sales targets to their media businesses. As a result, many adtech sales guys promise too much to get a client’s signature. Of course, this only works because of information asymmetry. In other words, clients have a hard time understanding what is feasible and may believe the sales guys’ stretched promises. When things don’t work out, this leads to disappointment and potentially even mistrust in adtech, in general.
CMO.com: How do you get people to trust in adtech and data-science solutions?
Neumann: Trust is a foundation for all business relationships. It’s very difficult to regain trust once it’s lost. And I am afraid that the problem of bad actors overpromising what their data-science solutions can do will not go away. To tackle this, we need to provide more education to help clients better assess technology so that they don’t fall for murky vendors. It’s essential to have quality journalism, quality experts, and independent sources where you can go for advice. Likewise, I believe that media owners and agencies need to stop grading their own homework and that clients should use independent tests and tools to verify promises.
Specifically in Australia, we need stricter regulations and industry bodies. Self-regulation just doesn’t work and allows too much damage to be done before something changes. Let’s not forget that the bad behavior of some people will always put everyone in the same industry in a bad light, too. Therefore, it’s high time to be tougher on those who misbehave and suspend ad spending. If you don’t allow independent measurement and don’t follow stringent reporting standards, you shouldn’t get any cent of my ad money.
“Madtech” and more will be discussed during the “Brand and Direct Response Advertising” track at Adobe Sydney Symposium 2017:
