In this post, we interview David Rodnitzky, the CEO and founder of 3Q Digital, a San Francisco based digital advertising agency that counts LinkedIn, Walmart, Uniqlo and many other best in class companies as clients.
Before we dive into 2019, let’s take a look back at 2018. What were the most notable changes you saw affecting advertisers?
I think 2018 was the year that advertisers realized that their use of first party data was going to have to be reigned in a bit. GDPR in the EU obviously captured a lot of people’s attention and then the news coverage around Cambridge Analytica and first party data only served to amplify this further.
Going forward, while first party data is still going to be a huge part of how we advertise we’re going to have to be a bit more thoughtful about how we use it and how much choice we give to consumers around how we use it.
Amazon has been quietly building a large advertising platform. Who is Amazon right for and where do you think Amazon will go with it?
This is a complicated question. Let’s start with Amazon as a shopping platform first. On the one hand, if you are a retailer of commodity-type products (brand-name consumer products, staple goods, knock-offs from overseas) it’s hard to say no to a platform that will likely drive 40-50% of your overall sales online. On the other hand, Amazon actively monitors what 3rd party sellers are selling through them and will take those items in-house if they can and compete directly against you. So you might see an initial bump in sales with Amazon but over time you might be giving the keys to the kingdom away.
Second, we can see that extending this pattern to Amazon’s advertising platform can have the same outcome. At first, advertising will increase your sales and will increase the likelihood that you “win the buy box.” Over time, however, I see it as a tax on sellers. In other words, to sell in the future, you’ll have to advertise or else you won’t show up in consumer results, so it goes from driving more sales to basically just an additional cost to maintain your market share.
I think advertisers have to decide if they are with Amazon or against them, there is no in-between.
Looking at Google and adwords, it seems that the industry will similarly adjust to this balance of paid vs. organic results on Amazon. What do you think?
Yes, that is somewhat true. But keep in mind that less than 50% of Google’s queries have enough “commercial intent” for Google to serve ads against that query. So there’s a lot of good organic traffic on Google that literally has no ads competing with the organic results. On Amazon, 100% of the queries have commercial intent, which essentially means that all organic traffic is going to decline across the board.
For CEOs, CROs and CMOs out there, what growth recommendations do you have for 2019
I see three things being really important for future growth:
- Getting really good at creative, especially video
- Getting really good at data capture, normalization, and activation (see my point above about first party data) and
- Making sure you have a strategy for all parts of the funnel - from awareness to action.
Video is a great medium, however people don’t know where to best invest their time and money. If a company has to invest in video in 2019, where are they going to see the quickest ROI?
It’s a little bit of a trick question. In terms of immediate ROI, Facebook and Instagram are the best places to run video and drive immediate conversions. In terms of long-term brand-building and traffic, YouTube is still the king. YouTube is playing around with ad units that are designed for direct response (immediate ROI), and they’ve made good progress over the last year. So I could see YouTube playing a bigger role in direct response in the near future.
On your second point about data capture, Google decided to penalize intrusive pop ups and email capture products which many B2B Marketers relied on. Facebook limited the use of custom audiences. GDPR in Europe requires a higher degree of consent. Do you think customers will finally opt to pay for products that are more privacy focused vs. using their free counterparts?
No. People will go to great lengths to get something for free. The intrusion from ads (and use of their data) on Facebook and Google is still relatively limited compared to other mediums. On the average 30 minute TV show, you have to sit through eight minutes of commercials. And go to any free-to-play mobile app and you’ll get a similar experience.
From a data perspective, if you are getting something for free online, you are the product. People may not like it, but I bet that if Google and Facebook offered to stop collecting a consumers’ data if the consumer paid them $1 a month, the opt-in rate would be less than one percent.
Thank you for your time David. To close this out, given the work we do at chief.io, we’d love to find out what are the products and tools you rely on to make 3Q Digital run. And what do you feel is missing out there for you.
We have a pretty large tech stack at the moment. We use Lotame as our DMP, Trade Desk as our DSP, Marin and Search 360 for campaign management, Google Tag Manager, Kochava for mobile analytics, Google Analytics, Visual IQ for attribution, AppsFlyer for mobile attribution, LiveRamp for data onboarding, SearchMetrics for SEO analytics, and a few others.
In terms of what is missing, it is the stitchwork that puts all of this stuff together. I know that there’s an emerging software category called a Customer Data Platform (CDP) with a few companies building products to address that pain point. I hope they are successful because we’ll be the first to sign up!
Check out 3Q Digital's Advertising Stack on chief.io.