The ebb and flow of the online privacy debate has been flowing for some time, and it doesn’t appear that it will let up any time soon. This is bad news for advertisers whose attribution schemes rely on the data gathered from third-party cookies for measuring ad value—something they were never meant to do. Because every time the issue of privacy is in the headlines, consumers become more educated on A) what information is being gathered and B) what they can do to stop it.
The following is the first in a series of interviews conducted with OptiMine CTO Rob Cooley. In this series we will dive deep into one of the biggest challenges facing advertisers today; measuring the cross-channel value of their digital ads. Each installment will focus on a different aspect of the issue and include Rob's insight and analysis. In our first interview, we layed the foundation through a discussion of the importance of measuring cross-channel value. Rob also offered two ways advertisers can think about the problem--indirect marketing & direct marketing--both of which are rooted in traditional, offline, advertising strategies. To be sure, online advertising is a different beast, with characterisitics that fit in both paradigms and Rob explores both in this segment.
Q: How does OptiMine define cross-channel value?
A: What we’re really after is cross-ad value.
Early funnel ads such as display, Facebook, and other social ads do not generate many direct conversions. On the rare occasions when there is a click that results in a conversion, measuring that value is very easy. What is more difficult to measure is the effect upper funnel ad impressions have on the conversion performance of lower funnel ads such as search and retargeting.
But the impact of one on another does not always happen across channels. In fact, intra-channel effects are not unheard of, so what we’re really measuring is cross-ad value.
Note: For the purposes of this post, the terms cross-platform and cross-channel are used interchangeably.
Welcome to the second in a series of posts based on eMarketer’s recent report, “Cross-Platform Attribution: A Status Report on Overcoming Select Attribution Challenges.” Post number 1, which you can read here, introduced eMarketer’s definition of attribution and explored its current state of adoption in the market. To sum it up, adoption isn’t good and there are a variety of reasons for the poor numbers. Chief among them, according to some industry experts, are cost and a lack of confidence in ROI—getting it and proving it.
The cost can be substantial, pushing beyond a million dollars and requiring hundreds of hours of implementation time, but the real kicker is the ROI. For reasons we’ll go into in a future post, attribution is a flawed way to measure ad value as a means of deciding how to allocate ad spend. And those goals—measuring value and allocating spend—are what the two types of attribution studied in the report are attempting to achieve. eMarketer identifies bottom-up (path analysis) and top-down (media mix) as the two ways marketers use attribution. In this post, we’ll look at media mix and path analysis, and the role each plays in measuring value and allocating spend.
As consumers increasingly adopt mobile search and advertisers optimize Product Listing Ads (PLAs) for delivery on mobile devices, it should surprise no one that the two are converging to drive more clicks (and more revenue) to Google. According to an article in eMarketer, tablets and smartphones grew from 7.8% of PLA clicks in Q1 2013 to 24.3% in Q4. The $1.58 CPC in Q4 was up from the Q1 CPC of $1.18. Although it was $0.06 less than Q3’s $1.64.
Nobody likes to be guilty—of anything—but in an open letter to advertisers OptiMine CTO Rob Cooley makes the case for why consumers are right to be suspicious of our activities (emphasis added):
It’s not the advertising industry’s fault that the NSA is spying on Internet activity, and yet, because of our current practices in “stalking” consumers across the Internet with third-party cookies and such, we’ve managed to get wrapped up and associated with the NSA data-mining disaster, further damaging our public image.
eMarketer just published a new chart showing the projected growth, by channel, of social network ad revenues through 2015. Justin Freid, VP of Emerging Media at CMI Media, wrote about it in Search Engine Watch.
The rate of growth within all channels—Facebook, Twitter, LinkedIn, Social Games, and the always available Other—has increased each year since 2012 and the same is expected this year. However, eMarketer is projecting growth in every channel will slow in 2015. What caught my eye is Justin’s reasoning behind the slowdown (emphasis mine):
So, you’re a digital advertiser and like all advertisers you want to know what your ads are really worth. Not just the someone-clicked-and-bought value, which anyone can calculate, but cross-channel value that can only be measured by finding the impact of an ad in one channel on conversions in another. That, my friends is a harder nut to crack, but it is crackable. Just not in the way most are trying to do it; attribution.
In an article published in The MakeGood, OptiMine CEO Jim Moar shows why attribution is an abject failure at measuring ad value and why the new schemes by Google (AdID), Facebook and Microsoft also can’t deliver. The core of the problem can be summed up in just a few words, “some of the people some of the time.” Regardless of how they’re tracking people across the Web—cookies or one of the new “cookie replacements”—advertisers will never be able to track everybody everywhere [emphasis added]:
If you happen to have an extra $4 million just sitting in your marketing budget—and who doesn’t? —you could drop it on a 30-second spot during TV advertising’s Holy Grail: the Super Bowl. Admit it, if you could, you would. But, most of us don’t have that kind of cash and, for the money we do have, the boss is adamant that we account for the return on any media investment we do make.
Last year Communicus set out to measure the value of ads aired during the 2013 Super Bowl. As we approach this year’s big game, I think it’s worth looking at the results and what’s missing from the equation.