The Eclipse of Online Ads

The Eclipse of
Online Ads
By Rebecca Lieb
Includes input from 17 industry leaders.
Why marketers must optimize their efforts
by prioritizing content within the digital mix.
Prepared for

With advertising effectiveness on the decline, practitioners are turning to other forms of
marketing to better engage customers during their digital journey. Content marketing,
and its underlying content strategy, has emerged as the savior in the new marketing
hierarchy as leaders seek alternatives to paid media cohorts that no longer produce
tangible business results.
Changing customer attitudes toward advertising, combined with data privacy concerns
and increased use of new mobile technologies, are also contributing to advertising’s
steady decline. When marketers focus instead on the content needs and expectations
at each stage of the customer journey, they’re rewarded with new opportunities for
engagement, sales, and retention. These opportunities are also easier to measure,
offering another incentive for marketers to focus on content in lieu of incumbent
advertising strategies.
In this report, we explore why marketers should build customer-centric marketing
strategies that rely more on valuable content and less on media buys. By creating a
solid content strategy foundation, investing across the customer journey, realigning the
marketing mix accordingly, and building the right team, digital marketers can achieve
results that span far beyond click-through rates and brand awareness.
Executive Summary

Organizations Increasingly Favor Content Over Advertising
Consumer Attitudes, Data Privacy, and New Digital Channels Drive Change
Focusing on the Customer Journey Yields Engagement Opportunities
Recommendations: Build a Customer-Centric Marketing Strategy
Appendix
Industry Research Methodology
Acknowledgements
About the Authors
Permissions
Endnotes
Table of Contents
2
4
6
8
11

Organizations Increasingly Favor Content
Over Advertising
The rise of digital, mobile, and social technologies has transformed traditional
advertising into a commodity, floating in a sea of media buy options and more
relevant marketing investments. Its former position as the “boss” of marketing
channels and tactics is a memory, as brands respond to new customer
expectations or relevant content at every stage of their purchase decision
journey. Savvy marketers are exploring other marketing avenues that offer
greater control, while advertising remains an expensive dinosaur with
diminished returns.
Today’s consumer is both banner-blind and blocking online ads altogether.
Click-through rates on standard banner ads plummeted to 0.12% in 2014,1
as
customers demand more engaging and timely brand experiences.
This development has forced marketer attention to content as the fuel for owned
and shared marketing channels that are rising in the investment hierarchy.
Brands and their agency partners are reconsidering the marketing mix in order
to address the entirety of the customer journey and maintain an “always-on”
marketing mindset.
Advertising isn’t going away, but its dominance will further decline to make way
for real-time, owned, and shared media in the marketing budget.
2005 2007 2009 2011 2013 2015
“Ad Blocker” on Google Trends
Declining Ad Effectiveness Causes a Shift in Media Spend
The battle for consumer attention has never been fiercer, or more difficult for
marketers. With the increased utilization of browser plug-ins that block ads from
loading online, it’s estimated that 12% of display ads are never seen by humans,2
translating into $18.5 billion in ad spend waste in 2015 alone.3
Separate from ad
blocker usage, consumers are subconsciously ignoring digital advertising, with
60% suffering “banner blindness,” effectively unable to recall any online banner
ads they’re exposed to.4
Add to these facts that 94% of online video viewers skip pre-roll ads before five
seconds has passed,5
and 25% of the few video ad views are fraudulent,6
and
marketers can no longer ignore the need to shift their marketing spend away
from traditional tactics toward more engaging content deployments.
Digital consumers aren’t the only ones to blame for declining advertising
effectiveness. The ever-increasing level of automation in programmatic digital
advertising combined with an increase in programmatic spend7
(even as rate
card prices plummet) has further depleted effectiveness in favor of a “set it and
forget it” mentality among many practitioners.
1
http://www.emarketer.com/Article/Consumers-Engaged-with-Rich-Media/1011282
2
http://appleinsider.com/articles/15/04/22/apples-safari-claims-55-of-us-mobile-browser-usage-105-desktop-share
3
http://adage.com/article/digital/ad-fraud-eating-digital-advertising-revenue/301017/
4
http://www.mediapost.com/publications/article/196071/banner-blindness-60-cant-remember-the-last-disp.html
5
https://contently.com/strategist/2015/03/12/3-ways-youtube-pre-roll-is-forcing-marketers-to-rethink-video-advertising/
6
http://www.adweek.com/news/technology/7-things-you-need-know-about-bots-are-threatening-ad-industry-161849
7
http://site.adform.com/resources/collateral/whitepapers/)
Marketers can no longer ignore the need to shift
their marketing spend away from traditional tactics.
2

Agencies Experience Increased Scrutiny
Additionally, a lack of transparency from agencies regarding online advertising
spending and effectiveness has eroded relations between some of them and the
brands they represent. In October 2015, the Association of National Advertisers
went as far as to engage former FBI agents to investigate suspect agency
practices.8
Major advertiser Kraft Foods has also publicly declared its rejection
of up to 85% of all impressions offered by real-time ad marketplaces.9
The media chief of a CPG company, one of the world’s top-five advertisers, is
also questioning the effectiveness of advertising in digital channels. “Ads on the
internet are not fit for purpose and never have been.”
Jeremiah Glodoveza, formerly of Avaya, a technology solutions provider for team
engagement, agrees that brands have joined the fray in blotting out ads. He adds,
“We’ve seen failed expectations with traditional advertising. At Avaya was we spent
a lot on traditional advertising - outdoor, sponsorships, online, print - and we saw
no correlation between this increase in spend and any quantifiable marketing
metric. At least when we shifted to native and digital we were able to see impact -
positive and negative.”
Though digital media is the focus of our research, this trend is hardly limited to
online channels. GE CMO Linda Boff recently announced that the company is
pulling back from television advertising, excepting live events, due to fragmented
consumer attention and a lack of engagement. Meanwhile, the company has
doubled down on content marketing initiatives, particularly in digital channels.10
More Evidence of Shifting Budget Priorities
GE isn’t alone in its marketing budget reallocation choices. According to a 2015
IBM/CMO Club study, content won the majority of the budget at 13%, trailed by
digital advertising at 11%; traditional advertising at 11%; and analog, physical
activities at 11%.11
When advertising budgets are increased, it’s most often in support of social
media or mobile marketing, as is the case with Johnson & Johnson. VP of
Worldwide Digital Strategy Gail Horwood reports that J&J is doubling social
ad spending this year, but not allocating more to traditional online display
advertising. Native advertising and other forms of converged media are also
seeing a larger share of brand budgets, though it’s impossible to assess how
much from available survey data on types of media spend.
Content budgets are on the rise and are predicted to continue increasing in 2016.
Fifty-one percent of B2B marketers and 50% of B2C marketers plan to increase
content marketing spending over the next year, according to the Content
Marketing Institute’s 2016 benchmark report.12
The same study also shows that
marketers rank banner ads as the least effective form of paid promotion.
11
http://thecmoclub.com/resource/marketing-is-a-buyer-journey-not-a-destination-a-cmo-solution-guide-via-the-cmo-club-in-
partnership-with-ibm/
12
http://contentmarketinginstitute.com/wp-content/uploads/2015/10/2016_B2C_Research_Final.pdf
13
http://www.pqmedia.com/execsummary/PQMediaGlobalContentMarketingForecast2015-19-EXECSUMM.pdf
“Ads on the internet are not fit for purpose and
never have been.”
8
http://adage.com/article/agencies/ana-taps-firms-investigate-rebate-allegations/300803/).
9
http://adage.com/article/datadriven-marketing/kraft-rejects-75-85-impressions-due-quality-issues/295635/).
10
http://www.businessinsider.com/ge-cmo-im-done-advertising-on-prime-time-tv-2015-12
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Source: PQ Media13
US$Billions
$400
$300
$200
$100
$0
%Growth
20%
15%
10%
5%
0%
$87.22
$144.81
$313.42
Content Marketing Spending Content Marketing Growth
3

Consumer Attitudes, Data Privacy, and New
Digital Channels Drive Change
Though advertising fraud and lack of online engagement contribute to the shift
from advertising to more content-based marketing, they aren’t the sole driving
forces. As digital evolves, so, too, do messaging platforms, as well as where,
when, and how those messages can be delivered. Marketers must shift their
focus to content, the “fuel” of the marketing ecosystem, and away from paid
channels. This creates a foundation for delivering right-time, relevant messaging
to customers, regardless of platform.
Additional factors spurring the shift from advertising to content include:
Attitudinal
Consumers dislike and mistrust online ads, with 30% reporting online
advertising is not effective, and 54% believe web banner ads don’t work.14
Adding adjectives to injury, more than half of consumers apply the terms
“annoying,” “distracting,” and “invasive” to desktop and mobile web ads,
according to the same Adobe study.
Privacy and Safety
TrustE reports that one in four consumers worry about the security or privacy of
the data collected on smart devices, and only 20% believe the benefits of smart
devices outweigh these concerns.15
They are also concerned about malware
attacks and location-specific surveillance.
Attitudinal
Privacy & Safety
Channel & Platform
Proliferation
Mobile
Omni-channel
More than half of consumers apply the terms
“annoying,” “distracting,” and “invasive” to
desktop and mobile web ads...
14
http://techcrunch.com/2012/10/24/online-ad-survey-most-u-s-consumers-annoyed-by-online-ads-prefer-tv-ads-to-online-want-
social-media-dislike-button-and-reckon-most-marketing-is-a-bunch-of-b-s/
15
https://www.truste.com/resources/privacy-research/us-internet-of-things-index-2015/
4

Channel and Platform Proliferation
New social platforms and converged media formats, like hybrid native advertising,
challenge marketers to create not only more content than ever before, but
also content that can be easily adapted. It’s more challenging (and, complex)
to manufacture content that fits paid, owned, earned, and converged media
channels than it is to focus solely on advertising.
Marketers today find it increasingly necessary to invest in multiple channels to
avoid risk, as efficacy typically waxes and wanes between channels and platforms.
Experimenting with new channels can pay off though, as Unilever found that buzz
derived from its social content was significantly driving sales. This resulted in the
company investing “tens of millions” more into its social presence.16
Mobile
As mobile overtakes not only desktop computing but also television in media
consumption hours spent,17
marketers are increasingly challenged by the
decrease of advertising “real estate” on devices’ smaller screens. Mobile’s
intrinsically personal nature also makes interruptive forms of advertising seem all
the more invasive. Additionally, there’s an escalating cost to consumers, as mobile
advertising becomes bandwidth intensive, eating into data plans more than opt-
in content counterparts.18
According to one research study, half of all clicks on
mobile ads are accidental.19
Omni-channel
There’s a growing realization among even those brands that remain satisfied
with digital advertising that the ability to buy, target, and optimize banners
is now “table stakes,” as Yext CMO Jeffrey Rohrs tells us, in an, “increasingly
complex landscape.” This complexity of multiple channels with complementary
content needs raises challenges for brands as they transition from a paid, push-
media mindset to creating a thriving content ecosystem. Retailers and CPG
brands are expanding content outward from phones and desktop computers
and into in-store kiosks and other retail experiences.
Intel has partnered with Turner and Mark Burnett to produce a reality show
spawning a cosmos of content, offline and off.20
“A consumer seeing 10
sequential pieces of content is more valuable to us than seeing the same banner
ad 10 times,” said Becky Brown, Intel’s vice president, global marketing and
communications and director, Digital Marketing and Media Group. Marriott’s
David Beebee also shared (at a recent conference) that the company has
repurposed content that resonates on its owned digital media channels for
out-of-home billboard executions, quipping, “a multi-tiered paid model for
digital content is as juicy an opportunity as a brand could hope for.”
Mobile’s intrinsically personal nature also makes interruptive
forms of advertising seem all the more invasive.
16
Unilever Finds Social Media Buzz Really Does Drive Sales - Ad Age Sept. 18, 2015
17
http://techcrunch.com/2014/08/21/majority-of-digital-media-consumption-now-takes-place-in-mobile-apps/
18
http://www.nytimes.com/2015/10/01/technology/personaltech/ad-blockers-mobile-iphone-browsers.html
19
http://www.businessinsider.com/error-rate-for-mobile-ad-fat-finger-clicks-2012-10
20
http://www.hollywoodreporter.com/live-feed/mark-burnett-turner-intel-partner-816036
5

Focusing on the Customer Journey Yields
Engagement Opportunities
With customers consuming more digital content than ever, their expectations
shift with each brand experience. They quickly realize which companies deliver
content at the right time, when they need it most, and which brands continue
to push the square peg of advertising into the round hole of new technology
experiences. Consumers expect contextual relevance in messaging that’s based
on their existing relationship with the company, their purchase history, and the
mode of communication—which is increasingly mobile in nature.
In order to deliver an effective content mix, companies must become intimately
aware of every stage of the digital customer journey, for multiple personas (if not
complete personalization). “Who, What, Where, When and Why” are critical factors
for consideration from awareness through advocacy, as attention is scarce and
fragile through every step. This trend toward hyper-personalized content during
“micro moments” of the brand experience is spurring a retreat from programmatic
advertising that automates the experience, as consumers grow skeptical of brands
that simply pretend to know their needs based on browsing data.
Brands that respond to this shift by simply producing more content are likely
to miss out on the opportunity content provides. For example, new research
from TrackMaven shows that increased social media posting is inversely
proportionate to engagement rates:21
Brand Messaging Must Mirror the “Always On” Consumer
As screens and devices proliferate, together with growth of in-store beacons
and near-field sensors, marketers are beginning to lean heavily on real-time
messaging in owned and earned channels. The ability to swiftly respond to
events and triggers is critical to capitalizing on sporadic consumer behaviors.
Visa’s Shiv Singh, SVP marketing, is leading efforts to be more “in the moment”
with consumers, explaining, “real-time messaging is about to be the primary
interface for everything we do.”
More screen use on the go also increases the difficulty of targeting consumers as
they channel hop to purchase. No longer does one message, meant for one paid
medium, suffice. Marketers are discovering that a robust content strategy is critical,
one that addresses the different behaviors, needs, and expectations at every step
of the digital decision journey. Successful strategies rely heavily on multiple data
sources and address different demographics, personas, and geo-segments, with
different journeys mapped for every relevant platform and channel.
As mobile traffic is expected to multiply tenfold by 2019,22
these trends will only
accelerate as the need for small-screen content outweighs the pressure of
securing traditional advertising budgets. Companies are expected to gravitate
toward mobile and social content marketing in coming years, as their high
effectiveness and low cost prove to increase consumer trust and improve the
customer experience.
21
http://trackmaven.com/resources/content-marketing-paradox-revisited/
22
http://www.cisco.com/c/en/us/solutions/collateral/service-provider/visual-networking-index-vni/white_paper_c11-520862.html
“Real-time messaging is about to be the
primary interface for everything we do.”
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV
90
67.5
45
22.5
0
3.6
2.7
1.8
0.9
0
Engagement Ratio
(Average Interactions per Post per 1,000 Followers)
Average Posts per Brand per Social Network
DEC
Output vs. Engagement with Branded Marketing Content by Month, 2015
6

Better Content Analytics Combat Advertising’s Foothold
Measuring advertising’s effectiveness is an age-old puzzle that has yet to be
fully resolved. Many advertisers claim click-through rates prove effectiveness of
digital banners, while other die-hards stick to “increased brand awareness” as
their mode of measurement. The analytical grey area of advertising is pushing
marketers toward content, as they can more easily measure their yields in
multiple channels using methods that tie directly to business results.
Content metrics can be intricately examined at each phase of the customer
journey, assuming the correct technologies are in place to track customer
behaviors (i.e. CRM, loyalty program, social sign-in, app profiles, etc.). Curata
provides a model for categorizing the plethora of content metrics available,
grouping them into two categories: performance and operations metrics.
Example performance metrics are centered on consumption, retention,
sharing, engagement, marketing pipeline impact, and sales pipeline impact,
while operations metrics are tied directly to production and cost.23
Including
measurement as part of an over-arching “content journey” strategy is necessary
to prove results and justify investments.
Promises of brand awareness or nebulous engagement metrics no longer cut
it when fighting for company resources. As one source, who prefers to remain
anonymous, elaborates “a lot of CMOs earned their seat at the table because
of their contributions to brand awareness, but when they started talking about
other metrics, everything got super fluffy.” The interviewee continues, “CEOs are
demanding more, requiring other data-driven metrics that can directly correlate
activities and align human and capital resources to business objectives.
Knowing the data side means more job security.”
23
http://www.curata.com/blog/the-comprehensive-guide-to-content-marketing-analytics-metrics/
Next: Recommendations
1
7

24
http://contentmarketinginstitute.com/2014/10/2015-b2b-content-marketing-research/
25
http://contentmarketinginstitute.com/wp-content/uploads/2015/10/2016_B2C_Research_Final.pdf
Recommendations: Build a Customer-Centric Marketing Strategy
Shifting the media mix away from advertising and into content marketing requires just as much cultural change as it does resource reallocation. We recommend marketers follow
three key recommendations to refocus their company around more engaging content that satisfies customer needs and business goals.
1 Create a foundational content strategy before pursuing
specific tactics.
Invest across the customer journey, realigning the
marketing mix accordingly.
Although 70% of B2B marketers are producing more content this year than last,
a corresponding amount of organizations are doing so without a documented
content strategy in place first.24
This results in inefficiencies and missed
opportunities, as well as an inability to measure success due to a lack of
concrete goals. For B2C marketers, lacking a documented strategy also
means being significantly less likely to be successful.25
Investing in content marketing requires an investment in a content strategy
that outlines plans for the development and management of content. It
should encompass persona development, content creation, repeatability,
delivery, governance, and the ability to achieve business goals by maximizing
the impact of content. Focus on outcomes, not volume, and how to there
operationally and organizationally.
A solid content strategy foundation also sets the stage for the adaptation
of appropriate technologies and platforms. When a content strategy is tied
directly to overarching company and departmental goals and processes,
brands are able to more efficiently respond to new media that may emerge.
“Future proof” your content strategy today to be prepared for the inevitable
content marketing needs of the Internet of Things, wearables, beacons,
sensors, and even smaller mobile devices.
Although traditional marketers may be more familiar with focusing advertising
tactics on the top of the funnel, content marketing thrives when it’s applied
differently to every phase of the entire digital customer journey. Content
marketers push to create an engaging brand experience during all phases of
decision-making, purchase, and post-purchase support.
Successful customer retention and advocacy strategies are dependent on
customizable (ideally, personalized) content that continues to serve consumers
and build favorable brand reputation far after any purchase is made.
Rather than strategizing around channel targeting, focus on the behaviors and
the needs your customers have during each phase of their journey. Advertising
focuses on where you can push your message for the greatest impact, whereas
content marketing considers how the message will be consumed, by whom,
when, under what circumstances, and to what end. Content marketing asks,
“When will the message deliver the most value?”
Make marketing commitments according to customer connection goals in order
to add that ultimate value. To do this, marketers must construct detailed
content plans that map out how modular content can be repurposed across
owned, earned, and paid channels, depending on where a customer turns
in his or her time of need. These plans should sync with internal editorial
calendars and process workflows to ensure efficient resource allocation.
...Lacking a documented strategy also means
being significantly less likely to be successful.
8

Build the right team with the right resources at its disposal.
Leaders looking to beef up their organizational content engine should examine
the skillsets of the employees and third-party partners (agencies and vendors) in
their marketing arsenal. It’s likely that existing teammates were hired for skillsets
that skew toward traditional advertising and media needs, with some marketing
crossover, or for a very specific channel-oriented purpose (social media
management, for example). Similarly, large agencies typically have evolved to
offer digital, social, or mobile services over time, with strong roots in advertising
and PR.
Conversely, experienced professionals that stand out and contribute to a well-
oiled content machine include journalists, bloggers, and—most recently spawned
—the content “storyteller.” Storytellers are well versed in understanding both
brand messaging goals of the traditional marketer and how to best convey
them to customers, depending on their lifestyle and purchase data. If existing
employees and partners don’t have these skills, leaders should consider offering
a continuing education program or hiring from the outside to fill the gaps.
Once the ideal team is built, it needs to be equipped with the tools to succeed,
too. Aim to integrate any existing measurement tools wherever possible,
focusing on those that measure specific ROI metrics and allow for efficient
customer data analysis and action. 26
https://moz.com/blog/the-inbound-marketing-economy
...focus on the behaviors and the needs your customers have
during each phase of their journey.
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
0.1
0.08
0.06
0.04
0.02
0
“Content Marketing” or “Content Strategy”
Source: Fractl/Moz Report26
Content Marketing Job Growth on Indeed.com
9

Methodology
This report includes input from marketing influencers who were formally
interviewed by the author during the course of this research in late 2015. Some
quotations are from informal discussions or were made at digital marketing
events. Not all interviewees are included in this list due to request for anonymity.
Input into this document does not represent an endorsement of the report by
the companies listed below.
Avaya – Jeremiah Glodoveza, former Global Communications Leader
Cofactor – Jeff Fagel, CMO
FleischmanHillard – Robert Winslow, Managing Director of Global Technology
Intel – Becky Brown, VP Global Marketing & Communications
Ion Technologies – Scott Brinker, CEO & CTO
Johnson & Johnson – Gail Horwood, VP Worldwide Digital Strategy
Marriott – David Beebee, VP Global Creative + Content Marketing
MasterCard – Adam Broitman, former VP Global Digital Marketing, now
managing partner at MEC
MRY – David Berkowitz, CMO
MXM – David Brown, former EVP now CEO, The Content Catalysts
Politico – Stephanie Losee, former Executive Director of Brand Content
PR Newswire – Ken Wincko, SVP Marketing
Save the Children – Susan Ridge, VP Marketing and Communications
Story Worldwide – Kirk Cheyfitz, Co-CEO
Visa – Shiv Singh, SVP Marketing
Yext – Jeffrey Rohrs, CMO
Acknowledgements
With thanks for support from Divesh Sisodraker, and research assistance from
Jaimy Szymanski.
About the Authors
Rebecca Lieb
Rebecca Lieb (@lieblink) is an analyst, strategic advisor, and
author covering digital advertising and media, encompassing
brands, publishers, agencies, and technology vendors. In
addition to her background as a marketing executive, she also
led some of the leading digital marketing trade publications
as editor-in-chief. She’s written two books on digital marketing: The Truth About
Search Engine Optimization (2009) and Content Marketing (2011). Rebecca blogs
at rebeccalieb.com/blog.
This research report was funded by ScribbleLive. This report is intended to
advance the industry at no cost. This report is intended for you to read, utilize,
and share with others. If you do so, please provide attribution to its author and
ScribbleLive.
Permissions
The Creative Commons License is Attribution-Noncommercial-Share Alike 3.0
United States at http://creativecommons.org/licenses/by-nc-sa/3.0.
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