When you work in advertising it’s not unusual to have friends and family who struggle to appreciate what it is we actually do at work. With the rise of new disciplines like performance marketing, you can understand how our loved ones struggle to keep up with an industry that is close to the forefront of technological change.
Occasionally an inquisitive person will ask me to elaborate a little on my role as a performance planner. My standard response is to say that most practitioners spend their day to day life looking at a lot of numbers. They are generally tasked with building media plans that deliver either a low cost per acquisition (CPA) or a high return on investment (ROI).
When the channels we use get discussed – typically search, programmatic and social advertising (across desktop and mobile) – most do not talk with much warmth or affection about the ads they see. While most would be too polite to say, I can tell that their summation of our conversation is along the lines of “he pushes bad advertising, but I suppose that stuff must work”.
That supposition of bad advertising ‘working’ is incredibly interesting to me as this is a huge assumption that I feel is negatively impacting both real world consumers as well as brand shareholders.
Billions of dollars are poured into bad digital advertising year after year. It shows no sign of losing pace. Most of us see it every day, but ever increasing numbers of people are demonstrating their dissatisfaction to opt out via ad blockers.
Even those people that do see the bad advertising barely notice it at all. Our brains are trained to filter out the ads we see, and we end up paying little to no attention to ads that surround the digital content we wish to consume. Eye-tracking studies back this up, where the vast majority of users pay a fraction of a second to each digital ad they ‘see’. As a result, very few of these ad interactions are memorable and even fewer will impact consumer behaviour in a way that the brand intended. There is simply not enough time or headspace to take on-board the marketing message.
So why is this happening at such scale? I think one of the main reasons lies in bad digital measurement. Bad ads look like they work – but they don’t.
The reason they look like they work is that the majority of brands calculate CPA and ROI in a digital silo. They use a digital attribution model that assigns credit to digital media touch-points that are observed prior to an online sale being made. Every other possible explanatory reason behind why a sale is made is ignored.
To be seen as ‘working’, digital media needs to be clicked or seen in the days leading up to a purchase being made.
Digital algorithms make it fairly easy to predict the behavioural signals users give off prior to making a sale. And users make it even easier by giving off fairly obvious signals – they search on Google, they browse review sites, they look for deals, they talk on social, they search for your brand and they visit your website.
So now we know who is likely to buy if we can target advertising at these users it means we can get some sales credit and begin to start ‘delivering’ sales from a campaign. But we also want to get a low cost per sale – and unfortunately, the most efficient way of lowering CPA is to reduce the cost of the ad in reaching the same user. In real terms, this results in smaller ad units or ads served outside of the user’s view. After all, ads with low viewability tend to be pretty cheap which helps reduce CPA. We still drop a cookie on the user and can therefore still claim a contribution towards the sale. This doesn’t affect the CPA calculation because virtually no brands can distinguish between viewable attributed sales vs. non-viewable ones.
Unfortunately, almost all low CPA performance marketing involves targeting users with a high organic propensity to purchase. Our advertising plays a much lower impact in driving these sales than we would like to realise. Rather than counting total sales, we should instead be examining the uplift that our advertising is creating as therein lies the true value of lower funnel marketing.
And CPA measurement also impedes good digital advertising that genuinely helps positively change consumer behaviour. Behaviour change comes over the long term and is cross device, and rarely happens instantly after being exposed to a single piece of branded communications. Attribution is essentially the quantification of the benefit of advertising. The benefit of good advertising is rarely a single direct sale – it is much longer term than that.
Performance planning success comes from identifying where media can make a positive influence in accelerating the customer journey from awareness to loyalty, using timely behavioural nudges - recognising that this is rarely a quick or linear journey. Performance marketing is well placed to deliver on these ambitions with the breadth of targeting options available and an ever increasingly addressable marketplace.
But to achieve this success we need to re-adjust our expectations of what performance marketing is and what the metrics we use are really telling us. If we understand that low CPAs are often not changing much consumer behaviour, and high CPAs should be expected where behaviour is more fundamentally changed, we will start to make better campaigns that gain stand out and resonate more with our customers.
Indeed, when used alone, applying CPA metrics to all digital channels actually harms delivery of your total CPA. You end up preaching to the converted to the neglect of your future customers.
We have never before had so much data to both target and measure the success of our efforts. Rather than spending so much time looking at our digital attribution numbers, perhaps we should spend more time talking to people that actually consume our ads before assessing if our campaigns are really working as we intended.