In our previous column, we reviewed how the Google/Apple deprecation of identity will reduce marketing effectiveness and proposed that marketers consider tripling their digital ad research budget immediately and continue that investment through mid-2023. Today, we will go through how this calculation was developed, and what key objectives marketers must address.
Obviously, a simple 3X is not the answer for every brand. Further, we are talking about the part of the budget that is devoted to insights, not simple marketing measurement techniques. The CMO survey notes that 12-14% of marketing funds are devoted to two types of research:
It is the second of these where the temporary increase needs to happen -- the insight arena. Marketers need to take the next 18-24 months to prepare for the new reality in four (not sequential) ways:
We estimate that, on average, 20% of marketing funds should be invested now through mid-2023. Shifting ~13% of budget for a defined term will pay off exponentially by reducing lost profit and revenue in the near term and the long run.
Profit and revenue will be lost because the changes weaken the ability to deliver the right message to the right person at the right time at the right price. It will cost business dollars and cents, but it will cost time and heartache, too. How frustrating will it be to lose person-level insights?
The more you need new customers, the tougher the transition
Identity won’t disappear but will experience a massive disruption that shrinks the pool of identifiable consumers. The ability to connect with existing customers should remain intact. Retention and loyalty marketing should hold up adequately, and marketers should continue to invest in owned marketing activities and technologies.
The big hit comes to acquisition marketing. Every marketer needs new customers to thrive, but data deprecation will inhibit this enormously.
In sum, there is a lot of disruption, particularly to acquisition marketing at the person level, and the ability to measure advertising effectiveness. The typical tripling formula may need adjustments up or down based on each marketer's balance of current customer growth and acquisition.
The obscuring of identity is the largest change in digital marketing since there was digital marketing. It is a bigger deal than the arrival of smartphones. And because it diminishes rather than expands opportunity, it means falling behind rather than just gaining less. That makes it the most important time for preparation we have ever seen. Our next column will address how to approach a learning agenda and “find the money” to deliver a win in this unique moment in time.
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