Businesses need a contemporary understanding of core advertising principles, advertising’s strategic relationship with the broader field of marketing and the fundamental shifts that have redefined how brands connect with consumers. Advertising is about earning attention, holding it and converting it into measurable value.
This post will cover:
- What is advertising?
- What is programmatic advertising?
- Marketing vs. advertising
- Digital advertising vs. traditional advertising
- How can technology improve advertising strategies?
- What advertising strategies can a company employ?
- How does a company effectively advertise?
- What is the future of advertising?
What is advertising?
Advertising is the technique and practice brands use to bring products and services to the public’s notice, encouraging them to respond to what a brand has to offer, whether product, service, cause or idea.
Advertising helps sustain brands. It’s focused on getting a message out to a specific customer type or audience to get them to take a specific action. Types of advertising include video, display, paid search, paid social, print, email, radio, TV and outdoor.
Advertising helps brands inform, persuade and influence a target audience to take a specific, valuable action. Today, advertising is fundamentally about creating a value exchange with the consumer. The global advertising market's projected size is $1.3 trillion, highlighting the immense investment and reliance on sophisticated advertising strategies.
This modern practice is built upon four crucial pillars:
- Building Brand Awareness: Advertising serves to make a brand visible and memorable. The goal is to ensure a brand is instinctively recalled by consumers when a relevant need comes up. This involves a consistent and strategic presence across various media channels.
- Targeted Messaging: Advertisers can now deliver hyper-relevant messages to specific audience segments with precision. Leveraging large datasets that collect demographics, interests and online behaviours, advertising ensures that communications reach the most receptive individuals at the right time.
- Driving Action: Advertising campaigns are designed to elicit a specific, measurable response from the audience. This desired action can range from top-of-funnel engagement — such as clicking an ad or signing up for a newsletter — to bottom-of-funnel conversion, such as making a purchase.
- Creating Emotional Connections: Advertising can create an emotional bond with the audience. When consumers connect with a brand on a personal, emotional level, they are more likely to develop long-term loyalty, becoming advocates and repeat customers.
In the past, advertising success was often measured by reach and repetition — how many millions of people saw a television commercial, for instance. Digital platforms introduced interactivity and basic tracking, allowing for the measurement of clicks and website visits. The emphasis on emotional connections and driving action signifies that success is measured by the quality of engagement and its impact on business outcomes. This shift requires advertising to provide tangible value to the consumer — be it information, entertainment or utility — in exchange for their attention and data.
What is programmatic advertising?
Programmatic advertising is the automation of the advertising process: Artificial Intelligence (AI) software decides where and when ads are placed and automates the purchasing process. There are usually three types of stakeholders involved in programmatic advertising:
- The buyer, who places the ad
- The publisher, who sells space for ads
- The broker, who facilitates these relationships
Programmatic advertising automates the role of the broker. It helps people find where to place ads based on the criteria, they've established to reach the people they are targeting.
The programmatic advertising process can be understood by examining the key players and their interactions:
- The user and the publisher: The process begins when a user visits a website or opens an app. The owner of that digital property, known as the publisher, has ad space (inventory) that they want to sell. To do this efficiently, the publisher uses Supply-Side Platform (SSP) software that manages their ad inventory and makes it available to the programmatic marketplace.
- The advertiser and the DSP: On the other side of the transaction is the advertiser, who wants to purchase ad space to reach a specific target audience. The advertiser uses Demand-Side Platform (DSP) software that allows them to manage their ad campaigns, set targeting parameters, define a budget and automatically bid on relevant ad impressions.
- The Ad Exchange (the digital marketplace): The Supply-Side Platform sends the available ad impression to an Ad Exchange. The Ad Exchange acts as a digital marketplace that connects many SSPs with many DSPs. A real-time auction for an ad impression takes place in the Ad Exchange.
- Data and the DMP: To make intelligent bidding decisions, advertisers need data. DSPs often connect to Data Management Platforms (DMPs), which are large repositories of anonymised user data. A DMP can enrich the information about the user visiting the publisher's site, providing insight into demographics, interests and purchase intent. This allows the advertiser's DSP to decide whether this user is a valuable target and how much to bid for the impression.
- The winning bid and ad serving: The Ad Exchange conducts an auction among all the DSPs interested in the impression. The DSPs, acting on behalf of their advertisers, place bids in real-time. The highest bidder wins the auction. The Ad Exchange then instantly notifies the winning DSP, whose ad creative is retrieved and served to the user on the publisher's website.
Marketing vs. advertising.
While the terms marketing and advertising are often used interchangeably, they represent distinct business functions. Understanding their strategic differences is crucial for developing and executing an omnichannel strategy.
Marketing is the process of identifying, predicting and satisfying customer needs and wants. It is the foundational framework that guides how a company positions itself in the market. The scope of marketing is extensive and includes the following aspects:
- Product: Developing goods or services that meet a specific market need.
- Price: Setting a pricing strategy that reflects the product's value and the market's willingness to pay.
- Place: Determining the distribution channels through which customers can access the product.
- Promotion: Communicating the product's value to the target audience.
Advertising is the execution of a promotional strategy defined by the broader marketing plan. While market research might identify that a target audience is increasingly concerned with automated project management, it is the role of advertising to create and disseminate a campaign that communicates a brand's project management software.
Furthermore, their roles can be distinguished by the types of media they influence. A comprehensive marketing strategy will incorporate three forms of media:
- Owned Media: Channels that the company controls directly, such as its website, blog or social media profiles.
- Earned Media: Publicity and exposure gained organically through public relations, customer reviews, word-of-mouth or viral content.
- Paid Media: The domain where a company pays for its message to be placed on third-party channels. This is the primary territory of advertising.
Advertising is the paid, public and persuasive messaging that brings the marketing strategy to life. Marketing sets the stage by defining the audience, the message and the objectives. Advertising takes that message and broadcasts it through carefully selected channels to achieve those objectives.
Digital advertising vs. traditional advertising.
One of the benefits of digital advertising over traditional methods is that it provides an easier means to track a customer across their journey. Compared to traditional advertising, marketers gain deeper insights into customer behaviour and can build a better understanding of their preferences.
Traditional advertisers couldn’t track a customer’s interests and past purchases and then make accurate purchase predictions based on them. With digital advertising, you can understand customer behaviour in greater detail. And in turn, customers can develop a better understanding of your brand via digital advertising.
For example, say somebody finds your web page through a search and then goes onto your social media platforms, starts following you and sees your Instagram photos. If you want people to understand and further research your brand, digital advertising tends to be the favourite.
However, digital advertising can also be expensive, If you don’t know who your target audience is or how to reach them effectively, you could spend a lot of money and not get the return you expect if you aren’t tracking your audience.
Traditional advertising can still be relevant, depending on the brand or your specific goal.
Print advertising — that appears in newspapers or magazines — can help to capture the essence of what the brand is and what it stands for, projecting that concept to the audience. The problem with print advertising is that we can’t measure the audience reach.
You can make assumptions based on a publication’s brand, but you lack the actual data on its audience. But you still get the benefit of building brand awareness and associating your brand with a specific idea. For example, suppose you run an ad in a publication like Vogue. In that case, you’re connecting your brand with the lifestyle offered by Vogue, which is different from the lifestyle provided by, say, Harper’s or Cat Fancy.
Television advertising has generally adapted to the new market, as many people now watch TV online. Advertisers can now track and connect with those customers through either source.
Traditional TV advertising remains a valid option for marketing professionals, as it enables them to convey a story visually. It’s interactive, in a sense, because it's more than just a phrase or one static image. With both TV and podcasts, you get to tell a story about your product or service.
How can technology improve advertising strategies?
Technology can improve an advertising strategy by automating ad circulation, thereby targeting an interested audience from the start.
Using Generative AI and Large Language Models (LLMs) to analyse historical data is key. Doing so helps companies make decisions regarding how to pinpoint those moments when customers, who behave similarly, might potentially engage or convert. Technology that tailors ads to customers and sends them on a specific journey based on their past behaviour and needs allows companies to better understand, convert and retain customers.
Companies need to be careful not to over-automate, though. Advertisers still need to have a hand in some of these decisions, balancing automation with human oversight, as AI has its data interpretation limits. But AI and machine learning are helpful and effective in helping brands get the most out of their digital marketing budgets and run more efficient campaigns that deliver a better return on investment (ROI).
What advertising strategies can a company employ?
Encouraging customers to develop an emotional connection with a brand or product is key to conversion. Another strategy is making a specific claim about your brand. You need to establish a connection between the customer and the product. For example, you might imply that eating a particular food will make you feel healthier or happier or that a specific brand of body wash will help you to feel beautiful and luxurious.
You can also convince a customer to join the bandwagon. Show them how other people are enjoying the brand and ask why they haven’t engaged yet, since so many others have. To further convince them, you can offer promotional rewards. If the customer chooses to interact with your brand, they will receive a discount or other promotional benefits.
Repetition is also key in maintaining brand recognition. And here’s where AI comes in: by targeting an audience and with brand exposure, you can encourage conversion little by little over time.
Many companies run simultaneous ad campaigns across different channels. They may show the customer a display ad, then later show them a video ad describing a few additional benefits of the product. All the ad types play into each other to solidify the brand’s significance and reliability, as well as the product being offered.
How does a company effectively advertise?
To effectively advertise, a company must have a goal. They often view advertising as a non-tangible tool that showcases the brand's greatness. While that can be helpful to tie your brand to a specific product and reinforce your brand name, it’s essential to ensure there’s a clear goal you’re trying to achieve.
You can adjust the goal as you receive results, but it's crucial to analyse the data and use it to inform your next steps. Without this, you risk missing ROI targets and losing visibility into campaign effectiveness.
Furthermore, you must understand who your target audience is, how they’ll respond emotionally to an advertising campaign and what it takes to lead them to conversion. Advertising can falter when people struggle to associate their product with specific needs or patterns.
In a perfect world, you’re reaching your target audience in the right place, at the right time and with relevant content. To effectively advertise, you need to target the right audience at the right point in the sales cycle. Do you want your ad to reach a customer at the beginning of their journey, when they’re evaluating brands or those who have already chosen your brand and are now exploring options in-store?
Each ad is going to be different depending on your goal and what you want the customer to do, but it’s essential to understand where that customer is in the sales funnel in order to better tailor your advertising more effectively.
What is the future of advertising?
Advertising is growing increasingly specific, with a hyper-focus on first-party data. The trend involves identifying customers and their particular behaviours and then understanding how to target or retarget them.
The fastest-growing sectors in advertising are:
- Retail Media: Retail media spending is projected to reach $100 billion by 2028. This growth is driven by advertisers' desire to reach consumers at the digital point of sale, leveraging the rich first-party purchase data that retailers possess.
- Creator-Generated Content: Advertising revenue generated on platforms dominated by user-generated content has disrupted video entertainment. This reflects a shift in the types of media consumers engage with, providing content creators an ability to build large, engaged audiences.
- Connected TV (CTV): As audiences continue to migrate from traditional linear television to on-demand streaming services, advertising dollars are following. Advertising on CTV platforms is projected to grow dramatically, with revenues expected to reach $51 billion by 2029. This channel combines the high-impact, lean-back viewing experience of television with the advanced targeting and measurement capabilities of digital advertising.
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