Advertising campaigns are generated with the ultimate goal of driving sales. Even if the expressed objectives are more for branding and awareness, every marketer wants to attract new customers, maintain their current base and increase revenue.
However, most digital campaigns are being measured by proxy media metrics, such as views, click-through and completion rates. These outputs may prove that consumers are engaging with ads, making marketers feel like their campaign is generating revenue, but proxy metrics can’t be relied on to show the actual sales impact.
Sales results speak louder than engagement metrics, meaning there’s a big difference between a consumer who looks at your site and one who makes a purchase–either online or in-store. For example, car aficionados may visit the Jaguar site more often than potential customers who could actually purchase one while real buyers are more likely to visit the dealership. Marketers could easily be tricked into thinking that their recent campaign has increased sales based on the influx of traffic to the site, but a single consumer could visit the same site multiple times a day without ever making a single purchase.
This is why outcome-based measurement tactics should be used to track direct sales from an ad campaign. Let’s take a look at the forces shaping the market toward more outcome-based measurement and away from proxy metrics.
Losing Sight of Sales
Marketers are concerned with revenue and market share, yet they’re settling for measuring proxy metrics like clicks and views. Currently, there is a fundamental disconnect with marketers and agencies; marketers know they need to prove bottom-line growth for their business, but agencies are stuck in the engagement metrics they have been using for years and are most comfortable with.
A great example of this disconnect between marketers and agencies is with the current transformation of digital video. In the past, digital video has been solely used as a branding tool to spark awareness and engagement with consumers, which is why impressions, views and completion rates are historically the most important factors.
Agencies aren’t wrong to focus on these media metrics, but as video has become a more integral part of the internet–Cisco predicts that it will be 82 percent of all internet traffic by 2021–marketers are starting to change the way they use video. A recent study from Sequent Partners found that 65 percent of marketers see video growing in importance for driving offline sales, which forces marketers to reconcile the fact that the metrics they’ve used to measure digital video success previously won’t measure their new intended outcome. As marketers begin to move the market, new technology is sprouting up to measure the impact of digital video campaigns, helping the medium to evolve to a more outcome-based tool–even if more traditional agencies aren’t ready for it.
Fraud & Miscalculations
When you settle for media metrics, your campaigns are more susceptible to fraud, errors and manipulation.
During the 2016 holiday season, a group of cyber forgers tricked media placement algorithms across the internet with an army of bots simulating user video views on as many as 300 million videos each day. This caused the brands and agencies running these campaigns to pay billions of dollars towards video ads that people weren’t actually watching; instead, these brands were unintentionally padding the pockets of criminals. Because these media algorithms were focused on views for their placement and not sales-centric KPIs, marketers mistakenly spent millions of dollars on irrelevant ads that weren’t shown to real people.
But it’s not always fraudulent schemes; media metrics are susceptible to many an error.
If a campaign is focused on sales-based metrics, there is little room for fraud. Humans buy products–bots don’t–and, ultimately, that’s what can’t be manipulated. The best way for marketers to keep track of their ad investment is to focus on concrete business outcomes.
What Actually Is a Concrete Outcome?
In January 2016, after the aforementioned cyber fraud scheme, P&G’s Marc Pritchard made a desperate demand for better measurement in media, saying, “We will no longer tolerate the ridiculous complexity of different viewability standards.” The company announced a new set of requirements that media agencies must follow if they want to work with the company, including fraud protection, standard viewability metrics and third-party verification.
Putting truth behind their words, P&G announced last week that the company had cut back over $100 million of spending on digital ads. It was reported that the large cut had little impact on the company’s sales, proving that P&G took action to move away from ads that weren’t driving direct outcomes.
There are several different metrics to pay attention to in order to see how much your company has grown in comparison to the resources it’s used:
A conversion is an online metric that shows the customer’s journey from a media output to a sales outcome. For example, a conversion rate would include a consumer’s activity from an email click to an online purchase. By calculating conversion rates, marketers are able to see how often media-based metrics, like CTR, lead to an actual sale.
2. Sales Lift
Measuring sales lift will look at how much a brand’s sales have changed from a specific marketing campaign. You can measure online and offline sales lift to see the direct impact a campaign has on driving revenue.
ROAS, or return on ad spend, calculates how many dollars have been earned compared to how many dollars have been spent relative to a specific campaign. For marketers, it’s another way to evaluate the performance of an ad. By determining each campaign’s effectiveness, marketers can cut the waste in their ad spend and focus only on the ads that are worth investing in.
4. In-Store Traffic
Foot traffic has been an issue for retailers as mobile consumption continues to rise. Measuring the foot traffic of your store is a way for marketers to grasp how well their ads are enticing consumers toward their products. Sparking awareness that your brand exists is more important for driving sales than simply engaging with customers. *In-store traffic metrics should always be paired with additional sales metrics, though it is a good indication of a campaign’s success.
Marketers who are focused on driving revenue should use conversions, sales lift or ROAS as core campaign metrics to ensure their ads are actually affecting sales with their target audience. Although media outputs remain an important way to track consumers’ interests and awareness, they don’t provide clear results and occasionally incorrect reporting. Measuring outcomes gives marketers the most clear-cut insights into the relationship between where they’re spending money and what tactics are actually producing sales.
Learn more about how outcome-based video marketing works.