Alex Song, CEO and Founder at Proxima talks about the latest digital advertising trends and the need for advertisers to be more stringent with online ad spends:
Welcome to this MarTech Series chat, Alex, tell us more about yourself and the story behind Proxima…
I started out at Goldman Sachs as an investment banker, and I’ve been a serial entrepreneur for more than 15 years. Having started my career in finance, I understand first-hand the competitive advantages that are unlocked from comprehensive analytics and data insights. Particularly since the recent iOS privacy change, advertisers have struggled to preserve consumer privacy while still optimizing ad performance. But with data science, it doesn’t have to be either/or; advertisers can achieve both.
I founded Proxima, a data intelligence solution that leverages a proprietary database of anonymized consumer personas, in order to help clients reach the right audiences across all major platforms. With our proprietary third-party database and AI capabilities, Proxima is helping digital advertisers better target desired audiences, leverage new marketing channels, and optimize customer acquisition.
We’d love to hear more about the modern-day digital advertising game and how that’s changing among shifting customer and brand trends?
I see three big shifts in the digital advertising space. First, consumers are engaged on new platforms, so digital advertisers need to go where the eyeballs are.
Companies should be experimenting with TikTok, Snapchat and Instagram to build their brands, while relying on familiar platforms like Google and Amazon for more steady and predictable ad returns.
Second, more than ever, consumers today are looking for brands that share their values. So digital advertisers are getting creative about forming partnerships with like-minded brands and leveraging the strengths of both companies to stand out from the crowd.
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How are you seeing digital ad trends shift the overall ad space?
Apple’s new iOS privacy rules changed everything for not only digital marketers, but for the industry as a whole. While incumbent players like Facebook may have been weakened, new players are coming on the scene, such as Uber or even Apple, that will likely spur a new wave of competition and innovation.
Contrary to the negative hype, I believe these changes opened up a world of opportunity for advertisers to experiment, innovate and learn. Now is a great time for taking calculated risks. New platforms are popping up all the time, and savvy advertisers are experimenting diligently and quickly. The relatively low cost of switching among platforms may be just what younger companies, in particular, need to stay nimble and relevant.
What’s more, the shakeup that occurred in 2022 will likely result in incentives and other opportunities for digital advertisers. Traditional platforms like Facebook and Google need to compete with newer platforms, so we may find these platforms willing to make concessions to keep advertisers in the fold. This could yield more cost-effective advertising for those who know how to play the digital game.
When it comes to digital advertising spends today, what are some of the prominent practices you’re seeing in B2B?
Now that so many of us live our lives online, we have elevated expectations. And marketers need to respond in kind. B2B marketing must look and feel more like B2C. It used to be that B2B marketers could get away with less than stellar graphics, copy and user interfaces. But now the stakes are higher. B2B marketing materials need to be sleeker, fresher, more inclusive and more differentiated, to match the daily experience of typical consumers, who are immersed in ubiquitous, sophisticated digital content all day, every day.
As marketing/ad channels and priorities change, what do you feel brands should be focusing on more to keep driving ad ROI and revenue?
In speaking with hundreds of brands, and in our own research, we found that in the near term, most advertisers are continuing to balance safety with experimentation. Given the economic environment, I think this is a reasonable approach. I’d advise brands to remain invested in tried-and-true standbys like Facebook and Google, but continue to build their brands on Instagram and take calculated risks with up-and-coming platforms like TikTok and SnapChat. But it’s equally important to keep an eye on new opportunities as they emerge, so brands can be primed to experiment on new platforms, build unique partnership arrangements with like-minded brands, and leverage new data science solutions.
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Some last thoughts on the future of adtech and B2B advertising?
Targeting consumers will continue to challenge advertisers going forward, as new privacy laws come into play in the U.S. and around the world. I think AI-enabled datasets can be a “best of both” solution. Advertisers can protect the privacy of users and take advantage of independent pools of aggregate third-party data to build high-performing audiences and build on their profiles of existing prospects and customers. Plus, data science solutions can give insightful perspectives on new, untapped segments. Because anonymized third-party databases create a wall between the advertiser and the data, the solution protects consumer privacy while still providing brands with the information they need to acquire the right customers.
This approach can help revitalize targeted marketing in a way that benefits both consumers and advertisers and as well as provide a perspective on the future of advertising.
Five predictions you have for the industry in 2023 and beyond?
- Marketers need to prepare for a real contraction next year. The reports of economic doom and gloom over the past 6 months are a warning of the economic contraction that is yet to come. While many of the major players in the ad space have already suffered missed earnings and stock price hits, the underlying fundamentals across other industries have been relatively stable. Only now are we seeing consumer spending starting to turn, with signs that consumers are beginning to hold back on discretionary purchases. Marketers need to prepare, not only for the potential revenue impact, but for performance across the advertising ecosystem to be more variable than they are used to.
- Expect marketing budgets to feel the impact first. While budget cuts are always painful, marketing is often one of the first line items on the chopping block. Cuts to marketing are seen as less damaging than cuts to production, which cut into the core of the business, or cuts to headcount, which can have a long term impact on the company’s momentum and employment brand. Marketing is also easier to bring back when things improve so be prepared to be flexible.
- Marketers will trade brand building for direct response. In an effort to do more with less, companies will begin to abandon spending on brand building, which has value, but is much harder to measure. For example, you will see fewer event sponsorships and a decline in spending on more brand-focused ad platforms like Snapchat. Facebook and Instagram advertising might take a slight hit, but won’t be as dramatic as their advertising tends to be better for direct response. Google and Amazon, with their superior tracking ability, will be hurt the least. Unless we see major regulatory changes, I expect TikTok to be the place where brands will experiment and explore, but with greater caution.
- Newly launched ad platforms will not make it. We saw a number of companies launch new ad platforms, like Roblox, Netflix and Uber. While the ambition to get a piece of the advertising pie makes sense, the timing may not work in their favor. As unproven channels, the market will likely not be as patient as they develop their value and capabilities. As these companies look to weather the storm, they may ultimately decide they are better off investing in and focusing on their core businesses.
- Expect friction within the ecosystem. During a strong and growing economy, Madison Avenue agencies and tech platforms tend to have a symbiotic relationship, moving in the same direction in support of advertisers and their growth goals. As the economy tightens, expect to see more friction between these major players as they compete to add value. Marketers might look to save money by going direct to ad platforms, but will struggle to maintain their role in the value chain as their capabilities are forced to lean out.
Alex Song is the Founder and CEO of Proxima, a data intelligence company that enables digital businesses to accelerate growth on major platforms like Facebook, Instagram, Pinterest, Snapchat and TikTok. After spending nine years working as both a private equity and public investor at Goldman Sachs and Pershing Square, a hedge fund led by Bill Ackman, he tapped into his natural penchant for entrepreneurship by founding Innovation Department, a New York venture studio that focuses on investing in and building category-disrupting startups. Alex graduated highest honors from the University of California, Berkeley with a BA in Business Administration.
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