With advertising budgets being pared back, marketers, now more than ever, need better metrics than CPCs and CTRs to be sure their spending is having the desired effect, says Paul Rowlinson.
The current crisis has thrown long-held views of what is “normal” in life into stark relief for all of us – as individuals, families and businesses. It all came so suddenly, with an impact no one had predicted, and understandably the early days felt disorienting and unsettling. However, as we have started to come to terms with the changes in our lives and businesses, the last few weeks have been a time of focus on delivering in a “new present” while planning for a future that, we now feel more comfortable admitting, is very uncertain.
It’s no surprise that, more than ever, advertisers are demanding that every penny counts and are focusing on the present to deliver results now, while finding approaches that will bring success well after this current crisis has passed. This should mean a laser focus on advertising that delivers business outcomes for every advertiser, and the recognition that this focus will be just as relevant five years from now as it is in the next few weeks.
Time to focus and adapt
The COVID-19 outbreak sparked a fall in consumer demand in many sectors of the economy; at the same time there has been a rise in media consumption (with the obvious exceptions of OOH and cinema), which in the case of digital ad spend has been affected by coronavirus keyword blocking. This has contributed to a grim picture for the advertising business, with the latest report from WARC and the Advertising Association predicting UK ad expenditure in 2020 will fall by 17% to £21.13 billion – down £4.23 billion on 2019.
That said, there are many businesses in a position to advertise, and £21bn is still a huge sum of money, but it means that clients will be expecting to drive business outcomes with fewer resources – and to deliver this our approach must adapt. Digital media investments should be guided by an accurate understanding of what will work best for each client, aligned to specific outcomes, and that will require a greater shift towards custom-made measurement.
Ditch archaic metrics
Calls to reduce reliance on clicks were reaching a crescendo well before COVID-19 arrived, but the extreme nature this crisis created has accelerated the need to do something about what has become an archaic and increasingly ineffective approach. Now, the need to distribute budgets with even greater care has made moving away from misleading metrics essential because advertisers want assurance of positive impact and a clear causal relationship between advertising activity and business uplift.
As a result, we can no longer build performance evaluation around traditional cost-per-click (CPC) or click-through-rate (CTR) measures that assume key goals are met, such as taking clicks as proxies for definite sales. Advertising must identify desired outcomes and track performance for signs of achievement against focused, customised metrics.
Bespoke metrics are the future
Making the switch to outcome measurement needn’t be complicated. For example, an agency may measure brochure downloads to determine whether digital advertising efforts are fuelling brand awareness around, and interest in, specific products or services.
Recent technological advances also make it easier to apply custom measures efficiently. Data scientists and engineers with access to the latest developments in econometrics, attribution modelling, and artificial intelligence (AI), can create bespoke metrics and apply them to digital ad campaigns to monitor and maximise performance.
We’ve already seen this method in action for several major brands, including Ford. Mindshare and Xaxis collaborated on custom measurement to instigate an increase in test drives, while minimising media buying costs.
By creating a bespoke metric and smart algorithms for identifying ad placements with the highest chance of reaching responsive consumers at affordable rates — Purchase Intent (PI) — Xaxis was able to pinpoint the most effective placements. By the end of the pilot programme, costs were down by 25% and UK test drive bookings were 5X higher than the control test.
For now, the road ahead remains uncertain, but we can be sure that advertisers will continue to demand better results and more value from the budgets they have. Working with our clients to define custom metrics and deliver against them is key for achieving the best outcomes for their businesses right now, and will remain so long after this current crisis has passed.
