According to the latest Global Media Intelligence Report released by eMarketer in September 2013, digital’s share of ad spend is expected to reach nearly a full quarter at 24.4 percent by the end of 2014. And it’s only expected to grow from there.
As brands continue to make huge investments in online advertising, agencies, publishers, and advertising technology companies have naturally followed suit by making big investments to automate the process of buying ads online – double-digit increases in U.S. advertisers’ spending on real-time bidding are estimated to continue through 2017.
As programmatic buying takes hold, marketing professionals must ask themselves, to what end?
Digital advertising is at a crucial juncture and the direction that the industry takes will depend largely on not only the variables that compose effective campaigns, but also how we measure to determine what those variables are in the first place – a process that is becoming increasingly difficult in such a data-drenched industry as marketing.
Industry leaders must ask themselves:
Are we going to build an ad optimization machine that focuses primarily on online purchase and e-commerce, one that targets cookies, not people, and rewards the last click, one that apportions credit for influence based on arbitrary formulas?
Or will we leverage the tools of statistics and the proven techniques of decades of database marketing to tie real consumer online activity to actual purchases, while protecting consumer privacy?
While online ad buys are evaluated based on their ability to get consumers to click and buy online, we need to consider the possibility that we may be missing a critical outcome simply because we’re not measuring for it.
This is where the value of data-driven marketing becomes especially apparent. The amount of data at a marketer’s fingertips is growing exponentially every day, but if these insights aren’t driving value then they’re effectively meaningless in producing effective digital advertising campaigns.
Consider the following:
We know that most purchases occur offline, in stores, or through call centers; consequently, we must adjust the paradigm by which we evaluate return on ad spend (ROAS) to examine how online advertising is truly driving offline sales.
Some have considered this idea. For example, a Nielsen Catalina research published in May 2012 found that “consumer packaged goods (CPG) brands can experience a return of almost three dollars in incremental sales for every dollar spent in online advertising that has been precisely delivered using purchase-based information.”
Similarly, in October 2012, Brad Smallwood, Facebook’s head of measurement and insights, revealed findings from a study started in 2011 using a new tool that connected ad exposure on Facebook with in-store purchases. In January 2013, other researchers validated that campaigns including Facebook ads drove 24 percent more new sales across channels.
Recently, we undertook a similar original study at Acxiom that yielded some very telling results; specifically, that online ads, when optimized for frequency and volume as detailed below, do indeed drive incremental in-store revenue – and lots of it. Findings indicated that the frequency of exposure should fall somewhere between the range of 10 and 100 impressions and the optimal length of a campaign should be between four to eight weeks in order for behavior to be influenced.
Ultimately, this need for multiple exposures over an extended period of time suggests that ads work incrementally to increase brand awareness. Rather than motivating an immediate response, they improve the odds that the person who saw them will, when the need or opportunity arises, choose the advertiser’s product.
While these results may change the way many of us look at banner ads – namely, the implication that many advertisers may be missing an opportunity to drive big dollars because they are still optimizing for classic online engagement measures that are not correlated with actual sales – it’s clear that measuring for the right data can have a huge impact on digital advertising campaigns.
While the factors driving the success of online ad campaigns will continue to evolve and change, it’s important that we continue to make sure we’re similarly evolving the means and methods by which we are measuring effectiveness, using proven methods.
And we shouldn’t stop at online ad campaigns. The marketing industry as a whole is becoming saturated with data, further underscoring the importance of continually evaluating how and what we’re measuring. Leveraging data and accurate measurement will only become more important as we judge the results of cross-channel marketing campaigns across social, mobile, television, and beyond.