There is a current school of thought within advertising that marketers over-value the contribution of online marketing in driving business outcomes, while the benefit of offline marketing and brand-building activities is not clearly visible to marketers and as such is being incorrectly attributed to short-term response-driving techniques.

There are many reasons why this is happening. The most obvious is that the average tenure of a CMO is now just four years, meaning the key decision maker often isn’t around to see the benefits of building their brand over the long term.

But I believe there is a bigger and more fundamental issue around measurement, specifically the number of businesses who rely on digital attribution models to measure value and ultimately inform future media planning.

The fallacy of data-driven attribution

A good snapshot of how marketing attribution technology is being used comes from AdRoll’s State of Marketing Attribution report. It shows that last click is still the dominant methodology being used by both brands and their agencies, with 48% of companies stating this was the primary attribution method. For agencies, the figure is an even higher 58%.

It has already been widely acknowledged how last click as a metric is flawed and overly simplistic.

These algorithmic and custom attribution models are often labelled as being ‘data driven’. The reality is that these models are data-driven, but only driven by specific types of digital data which are inherently biased towards digital media.

When you scratch the surface it becomes clear that, like last click, they too are overly simplistic and suffer from many of the same flaws in logic. Yet marketers have become hooked on the quick fix that these models provide.

Whilst the exact attribution weighting between channels is set by the attribution algorithm, sales credit is only ever given to digital media touchpoints that customers see or click on prior to a sale happening – as long as those interactions took place within the cookie window. Yet the real kicker is that all digital sales are credited to some form of digital interaction, regardless of whether media played an active role in converting the user.

To be deemed successful, media plans need to deliver against these new algorithmic measures of success. Media planning and optimisation becomes a form of cookie chasing. With the prevalence of data-led media buys, it is easier and lower cost to deliver ads to users that are already likely to buy than it is to create new buying behaviour.

Speaking to high propensity users is over-valued in these models, whereas speaking to low propensity users is undervalued. After all, you can count more total sales in a siloed channel when speaking with the high propensity audience, but this ignores that many of these users are part of the ‘baseline’ and are therefore not incremental to the business.

Propensity as an enabler of marketing attribution

In my view, the biggest flaw in digital attribution logic is that the models assume that there is a causal relationship between media exposure and sales, yet we know from econometric modelling that this is not the case.

For established brands, the largest driver of sales is invariably ‘baseline’ – those being any sale that was not directly caused by media – but you will almost never see baseline quoted in any digital attribution reports. Instead, sales are credited to a variety of paid and organic online media channels.

To truly understand media effectiveness, it is important to recognise that there are many different customers at different stages of the buying cycle. To know whether media has worked, it is vital to know what was likely to have happened had the user not been exposed to advertising – we need to draw a distinction between sales that were ‘tracked’ and those that were ‘caused’ by media.

In recent years, the most successful campaigns I have worked on have all used a basic version of this logic, with success measured on incremental sales rather than total tracked sales. With the prevalence of digital data, it is possible to gain a basic understanding of a consumer’s propensity to purchase based on their digital footprint. A simple approach might map propensity as follows:

High propensity users will exhibit strong buyer signals such as brand or product search, or be part of a retargeting pool – having previously visited the advertiser’s website.

A medium propensity user will demonstrate that they are ‘in market’ for a given product or service as determined by searching for generic keywords, competitor brands or from doing online research around the brand’s category or sector.

A low propensity user is everyone else, i.e. those that have not demonstrated any form of positive brand or category purchase intent.

Where a brand has customers with repeat purchase behaviours, this data can be used to further predict purchase behaviour, therefore enriching their view of purchase propensity.

In taking this approach it encourages marketers to think in terms of sales uplifts rather than the more basic measure of tracking sales. When advertising has a causal relationship with sales this can be recognised as results that are mitigated against the existing sales baseline. The result is that the business starts to think in terms of generating new and incremental consumer behaviour, which unlocks business growth.

Applications with AI & machine learning

Of course, this basic propensity approach can be further enhanced and improved. There has been a great debate in our industry about how artificial intelligence and machine learning will impact the future. The narrative has focused on the automation of media buying, but I believe there is an even larger opportunity to automate the quantification of propensity data at scale.

When combining consumer propensity data with a rich, data-driven attribution model there will be a measure of success that recognises a causal relationship between media spend and sales. It is only at this point that brands and their agencies should feel comfortable in relying on digital attribution data to determine media effectiveness.

The post Why Consumer Propensity Should be the Focus of Attribution appeared first on PerformanceIN.

Having agreed to write regularly for PerformanceIN, I find myself in the position of having to write that difficult second album article. I write sitting at home, waiting for a company to arrive to fit some blinds. We have all found ourselves in this state of limbo before, not able to leave the house, quietly assuming that the installer will surely arrive at the very end of our agreed time-slot.

Thankfully the wait coincided with a looming deadline for this article so gave me a valuable opportunity to sit and reflect on what I have learnt over the years about performance marketing. Being obsessed with effectiveness, my thinking tries to piece together a set of golden rules around ‘what works?’ and ‘what doesn’t work’? But the reality is that people, businesses and marketing are not as simple as that. Yes, there are golden rules, but for each rule-book example, there is also a counterexample.

I am lucky enough to work with some fantastic brands, many of whom have seen huge successes. But there is one thing that unites these brands and their campaigns. They offer a good customer experience at a price that their audience considers being of good value. Indeed, I would go so far as to say that customer experience is one of the key ingredients to a scaled performance marketing campaign – and this is growing in importance.

There is a fantastic TED talk by Seth Godin called ‘How Ideas Spread’ that I often quote. The crux of what Seth argues is that in the modern world, consumers have less time and more options than ever before. With this bombardment of choice, there is only one way our brains can cope – we start to ignore stuff around us that we deem to be irrelevant, boring or predictable. Unfortunately for the marketing community, that often includes our ads. Technology further empowers consumers in this trend, allowing people to block digital ads on at ever growing rates.

How brand perceptions are shaped and how brands are discovered is changing. Yes, the average consumer is still aware of many brands but this isn’t just a function of advertising, it is also due to personal experiences with brands or via word of mouth.

Branding is not a typical point you find discussed on PerformanceIN. In fact, a quick search of ‘branding’ on the site yielded only two results – the most recent around two years ago.

But brands and brand development are absolutely vital in driving performance. A strong brand will allow your performance marketing activity to work disproportionately hard. Strong brands typically have the following performance friendly characteristics:

• More direct traffic, brand and product searches – allowing you to drive traffic and conversions at low cost
• More positive conversations about your brand, both online and in real life – this drives both direct traffic and preference
• In performance marketing terms, preference means a better CTR (Click Through Rate) (and therefore quality score) and conversion rate. It is also worth noting that a strong brand helps you gain consumer attention. All things being equal, people notice ads from brands that they like far more often than from brands where there is no previous relationship
• Reduced price elasticity. Simply put, this is consumer willingness to pay a premium for your product, or at least greater willingness to buy your product over rival products that come with a lower cost. This point is vital as it’s a key building block in driving business profitability

In this age of attention deficit, brands are less able to rely on traditional advertising techniques to drive fame and differentiation. So how do you develop a brand when people are increasingly ignoring your ads? Customer experience is king, and it is likely to become more important through time.

You see, people remember when they have a memorable or emotional experience – for good or bad – and they tell other people. Social media and messaging apps have exploded in popularity and, empowered by connectivity, we learn from the experience of others at a greater rate. When conversations happen about brands, those conversations have a disproportionately large influence over our future purchase decisions.

Brand ads may struggle for consumer attention, but for most of us, friends and family still gain cut-through to our emotions. In the era of the internet, one especially good or bad experience can shape the brand perceptions of many thousands of others. This is the modern way that brands are built and become famous, fast.

We must, therefore, strive to create outstanding customer experience. Seth Godin’s solution is to build products and communications that are ‘remarkable’. He means that in the most literal sense: the customer experience relative to value should be so good that people feel compelled to tell others about it.

There are many new big brands that are flourishing in our modern age. I’d urge you to ask yourself; how did you first find out about Facebook, Uber, Ocado or Amazon? I would wager that for the majority of you it came as a form of peer endorsement or PR, rather than traditional advertising.

Is brand advertising dead? Of course not, but it does need to evolve as many of the tried and tested tactics of the previous century are being ignored by consumers at ever greater rates.

There is, of course, a dangerous flipside to being remarkable. Brands can be remarkably bad as well as remarkably good. In the world of social and review sites, we are far more vocal about bad experiences, meaning good customer service should be considered a vitally important hygiene factor.

Having penned most of the second article, there is an apt yet frustrating conclusion to this piece. Frustrating because my blinds have not been installed; the installer never arrived, with the delivery window been and gone. This also helps to prove my point – I have, of course, now written publicly about my annoying experience as well a poor review. Do feel free to get in contact if you would like to know which fitted blind company to avoid!

The post Why Customer Experience Still Underlines Performance Marketing Success appeared first on PerformanceIN.

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.

Questionable impact

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.

The post Aidan Mark: Low CPAs Are at the Root of Bad Advertising appeared first on PerformanceIN.