Social media and ad exchanges deliver clicks and conversions at the lowest cost of all channels, but networks and exchanges don't deliver high-quality, long-term customers, according to a new report from Aggregate Knowledge.
When a marketer's goal is to reach new consumers and be able to message them consistently, social media and portals delivery the best combination of quality and value, the report says.
Aggregate Knowledge's Global Media Intelligence Report, released today analyzed aggregated data for approximately 150 billion ad events managed by the company's Media Intelligence Platform. It looked at the largest digital marketing channels: exchanges, networks, portals, and social media, focusing on four key metrics: cost, reach efficiency, user quality, and funnel attribution. The data included 35 billion impressions and 780,000 conversions in Q4 2012.
It's important to look beyond reach efficiency when using such data, says Rob Gatto, president of Aggregate Knowledge. "The report helps marketers to look through a different prism as to how they should measure performance across different channels - and across the media buy," he says.
For example, looking at the cost metric, the Aggregate Knowledge report found that ad exchanges deliver clicks and conversions at the lowest cost. On the other hand, when viewed through the prisms of reach efficiency and user quality, social media performs more than 2.5 times better than the indexed average, while networks and exchanges perform 35 to 69 percent below the indexed average in reaching high-quality users that can consistently be marketed to. (To date, Facebook is by far the largest source of social media data in the database, although Gatto expects that to evolve over time.)
The analysis also showed that, when it comes to funnel attribution, social media and portals are undervalued. These channels offer the ability to reach consumers again and again, along with a high level of exclusivity.
Gatto says that approximately half of all cookies disappear after they're read for the first time - and exchanges and networks are where most of them disappear. Portals and social media have more consistent cookie bases, making their user bases of higher quality. "People log in, stay logged in, or come back again and again. You can understand their attributes, what they react to, and what they don't," he says.
Most analyses give extra credit for conversions to ad networks and exchanges, Gatto says, because of the sheer volume of ads reaching consumers at the bottom of the purchase funnel. However, if you look further back up the funnel, the influence of social media and portals grows.
"This raises some questions about the last-touch attribution model we've used for years and whether we're giving enough credit to channels in the upper part of the funnel model," Gatto says. "We think multi-touch attribution is something that every marketer should look at."
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Susan Kuchinskas has covered interactive advertising since its invention. The former staff writer for Adweek, Business 2.0, and M-Business covers technology, business and culture from Berkeley, CA.
March 19, 2014