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Everything from mass communication to love letters is possible in smartphone advertising

Up to now, advertising has been classified based on the mass media in which it appears: television, radio, newspapers, magazines, outdoor screens, or billboards. Now, however, advertising methods must be transformed to reflect the growing popularity of digital platforms and mobile devices, as well as the accompanying changes in consumer behavior.
We plan to look at how device-related changes are proceeding in a short series of articles titled “The Future of Ads Viewed Using Devices Is Coming Soon.” In the first installment, we examine how changes are resulting from use of the smartphone—the medium today most commonly used by the majority of consumers—and explore related issues and the outlook for advertising via smartphones.

Everything from mass communication to love letters is possible in smartphone advertising

from left: Kensuku Hara, Ryohei Takagi, Susumu Namikawa

In July 2016, Dentsu Inc. established Dentsu Digital Inc. to boost its growth strategies in the digital domain. Below, personnel involved in smartphone-related projects at Dentsu Digital discuss current issues and future initiatives.

Have the importance of emerging markets and the resultant reverse branding caused a dilemma?

Hara: 

This year marks a decade since the release of the iPhone. During that time, the environment surrounding advertising has changed dramatically, with smartphones playing a central role. We set up this round-table discussion against that backdrop, to consider—along with readers of Denstu-ho—our present position and how we should proceed. Mr. Takagi a “digital native,” has a substantial amount of practical advertising knowledge. Mr. Namikawa is a creator with extensive knowledge regarding projects carried out at the Advanced Creative Center*1, of which he is a representative. I would like to begin by asking you both about your thoughts on the current status of smartphone advertising.

Takagi: 

The goal of advertising essentially remains to directly attract customers, and on it are premised cost per install (CPI*2) and click-through rate (CTR*2) indicators, the compilation of which have caused reverse branding to emerge. With CPI and CTR measuring whether an approach to a targeted emerging market has been successful, the data is collected when there is interest, but tends to produce extreme results.

Hara: 

I understand your point, but that can easily lead to an endless dilemma. When we try to effectively narrow down a target, there is a tendency to compete for small differences in a closed sphere, so there are times when we could fall into that trap.

Namikawa: 

I believe we cannot see that unless we look back on what has been happening over the past 10 years or so. In the past, consumer behavior was examined according to the frameworks of AIDMA*3 and AISAS*3. Those models assume that advertisers can encourage consumers to search for and buy products after becoming aware of them via television. With the shift to digital platforms and the appearance of smartphones, however, the focus now is on the ability to quantify results if they are digital, and the trend is to channel the main thrust of smartphone advertising toward the search for and purchase of products, which are the latter stages of those models.
More recently, however, behavioral patterns of consumers have been changing, and there are an increasing number of cases in which smartphones play a greater role in the initial actions of consumers. In other words, it is not uncommon for people to find out about a product via a smartphone as well as to buy it using a smartphone. Unless that process is properly examined and the underlying factors are identified, advertising strategies will lose clarity and precision.

Everything from mass communication to love letters is possible in smartphone advertising

Takagi: 

Initially in digital advertising, “action,” the final stage of AIDMA, and “search,” the middle stage of AISAS, were applied. But the situation has changed.

Namikawa: 

If you start with the premise that consumers get information from smartphones, it is obvious that ads specifically created for people who click on ads—and who account for less than 1% of users—leave out the other 99% of people who merely look at ads. That results in reverse branding.

Takagi: 

I imagine that kind of fuzzy logic is being applied in all kinds of settings.

Hara: 

If I could add another example of reverse branding, the banners we so often see have also become content in social networking services such as Twitter. Since the original ads are also visible, it seems paradoxical that they have become part of such content. In fact, smartphones themselves are already a form of mass media and, nowadays, it is common for people to spend much more time looking at smartphones than other media.
Were that not so, the content on social networking sites would not exist. Thus, it seems strange to classify smartphones together with the four conventional mass media. For instance, in the case of AISAS, behaviors, such as “attention,” during the first half of the process have changed in connection with smartphones.

We need a new indicator that does not categorize smartphones with the four conventional forms of mass media.

Takagi: 

When you think about that, conventional indicators such as CPI are premised on, and important for, branding. There are several such indicators, but I would like to mention two that make this clear. The first are indicators that correctly assess reach, including for other media. In the case of television, there are clear indicators, such as viewer ratings and gross rating points (GRPs). By GRPs I mean the total viewer rating—namely, 1% of the total viewer rating per minute of a program—and one GRP when one TV commercial is broadcast.
In the case of digital platforms, however, the number of impressions indicated by an ad are weighed and defined differently, according to the media. Besides recognizing that ambiguity, people’s thoughts and emotions also must be taken into account.

Hara: 

Actually, we need something like a coefficient for the weight of impressions.

Takagi: 

I think the time has come to explore something like that.

Namikawa: 

Since digital impressions are similar to, but not the same as, viewer ratings, it may be possible to deal more fully with basic matters such as what causes smartphone ads to be viewed favorably. That issue is a new frontier.

Hara: 

That is because an ad will be viewed differently depending on the place, time, and an individual’s mood—even though the banner is the same.

Namikawa: 

Therefore, we cannot make a simple comparison with television; rather, we should try to grasp people’s feelings better. One attempt to do that is the view-through behavior conversion rate, which was recently proposed by Dentsu Digital. It focuses on changes in behavior brought about by interest and excitation after having seen an ad.

Takagi: 

Another is viewability, which expresses the ratio of ads measuring impressions that can actually be seen.

Namikawa: 

In such cases, improving the quality of smartphone advertisements is also an urgent task.

Hara: 

Conversely, fundamental matters, along with assumptions taken for granted in conventional advertising, have not been sorted out. There are many things that must be resolved.

Namikawa: 

If we discuss things systematically, one thing is the approach to AIDMA, AISAS, or other models, which is to say, how we look at the chain of behaviors from the point at which a person who was completely unaware of a product comes to know it, up to the point when the person makes a purchase. When we examine that chain of events, and consider not only quantity but also quality, we should be able to more closely understand the sentiments of smartphone users.
I also would like to point out one more thing: In the digital realm, we cannot determine whether events that could not be measured quantitatively actually occurred. In this respect, we can consider three scenarios. First, nothing happened, and, accordingly, nothing was indicated quantitatively. Second, something happened, but it was not indicated quantitatively. Third, something happened, and was also indicated quantitatively, making it necessary to classify and examine it.
Even in the second case, when nothing could be tracked quantitatively, if we expected a behavioral change, we should try to act on it. From there, digitalization with technology and methods for visually presenting the data should be pursued and created. That’s because we cannot begin anything unless we try to seize on the possibilities that could not be quantified from the outset. If, among people’s consumption behaviors, conversion (meaning the intention to accomplish or acquire something) is not presented quantitatively, we might decide that a funnel analysis*4 is not possible. Instead, when there is no quantitative data available, conventional hypothesis models can be used to assess consumer sentiments. For things that are unknown, making predictions and planning accordingly are regarded as totally acceptable.

Everything from mass communication to love letters is possible in smartphone advertising

Hara: 

Indeed, there are times when people do not act for want of data results.

Namikawa: 

This is a little off topic, but a very interesting talk on the implications of quantifying things that cannot be quantified was given the other day by Yutaka Matsuo, a well-known AI researcher at the University of Tokyo. He explained that the mass media may be lowering society’s communication costs by providing a certain amount of information. A vast amount of labor is needed to explain everything about which people want to know. When those things are explained through television commercials and other ads that raise awareness, people can learn about products and services even without going to a store to get all the details. For families, too, there are many instances of communication costs being lowered. For example, when a woman has bought a product seen in a TV commercial, her husband will probably recognize it as a product she purchased that way, even without asking her.

Takagi: 

That shows how mass communication is socially significant. Today, although the Internet and smartphones already exist on a mass scale, they are not used for mass communication in the sense of creating common knowledge, while the focus on localization remains half-hearted. That is not only a problem in terms of reach. With smartphones having become a form of mass communication, we have been forced to consider whether, one day, they might provide information that creates common knowledge, and what advertising can do to that end.



*1 Advanced Creative Center
The Advanced Creative Center was established within Dentsu Digital Inc. in April 2017. It comprises a group of specialists tasked with exploring questions of how advertising technologies, evolving artificial intelligence, and creative craftsmanship can be combined. At present, the center has 34 specialists, most of whom are creators.

*2 CPI/CTR
Cost per install (CPI) refers to the cost of downloading, installing, and activating a smartphone app. Click-through rate (CTR) refers to the ratio of smartphone users who click on an ad to the total number of smartphone users who only view the ad. It has been shown that, in the case of smartphone users, the ratio of clickers to viewers is very high because priority is given to increasing the number of clicks.

*3 AIDMA/AISAS
AIDMA is a model for analyzing the psychological process that follows the stages of attention, interest, desire, memory, and action. The model originated in the United States during the 1920s. In order to better apply the model to the Internet age, Dentsu updated it, creating AISAS, which stands for attention, interest, search, action, and share.

*4 Funnel analysis
Funnel analysis is a type of behavioral analysis that conceptualizes processes such as AIDMA and AISAS with a diagram of a funnel. For digital platforms, it is used for breaking down, in greater detail, which stage of a process a consumer has currently reached, such as considering purchasing options, making a purchase, and so on.

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