John Wanamaker, a department-store magnate in the late 19th century, famously quipped, “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”
Seth Godin took that one step further, saying it’s closer to 1% of advertising that works, at the most. “Your billboard reaches 100,000 people and if you’re lucky, it gets you a hundred customers,” he says.
Fortunately, with the move to digital, marketers finally started to understand which half (or 1%) of their ads were working, especially with online display — starting with simple metrics like click-through rate and lift in top-of-funnel metrics like direct traffic and branded search, reaching all the way down to captured leads and conversion metrics.
Then mobile arrived on the scene, and marketers got frustrated again. The proxies that they had become accustomed to, many of which were made possible by cookies that identified that user and could record their behavior, were no longer viable options. Tracking an individual user across multiple apps and browsers, on multiple devices, running on different networks was a huge challenge, and tensions arose within the industry around it.
But now there is an opportunity in mobile to connect digital habits and actions to the offline world; entire companies have been created around that mission. We know the data is there; it’s just a matter of finding how to collect it (in a privacy-compliant way) and make it meaningful and actionable.
We’ve already come a long way, but there is a whole road ahead. Mobile media has never been riper for a measurement revolution. Instead of focusing on clicks (or rather, taps) or views, let’s find out if we are really making a difference. Are they buying that toothpaste? Purchasing that movie ticket, buying that car?
Here are some of the big strides that have been taken so far this year in mobile measurement across four of mobile’s most important verticals.
Consumer Packaged Goods (CPG)
Since retailers do much of the actual selling of products, CPG brands have traditionally focused on branding campaigns, not direct response. Their KPI’s, by default, have been around “engagement,” such as:
- Expanding ad to read product details
- Watching a video
- Downloading a coupon
- Finding recipes
The impact of CPG campaigns is thus measured by interaction with ads, not purchase, or conversion, which is really what matters most. Fortunately, more CPG brands are taking advantage of new measurement services and are starting to gain visibility into purchase volume and lift among consumers exposed to their mobile ads, understanding the exact dollar value for their “return on ad spend,” or ROAS.
Because of this, we are hoping that mobile investment in this vertical will continue to grow, perhaps even faster than industry predictions. While CPG share of mobile is on the low end now — less than 8% of total mobile spending — mobile does account for more than a third of all digital advertising, and we think there is nowhere for it to go but up.
Automotive is an exciting vertical for mobile, mainly because there has been a very effective measurement system that has been the standard in online advertising for years that is set up well for mobile adaptation. Currently, advertisers can match data of exposed audiences to household-level data offered by certain vendors to understand if that household recently purchased a specific make and model of car. The vendor then compares that group to the national averages, or another group of unexposed households, to determine the effectiveness of that campaign. In this way, mobile advertisers can see if they have increased the “buy-through” rate of households and thus driven the purchase of their specific vehicle above general population norms.
Like CPG, the key component for mobile ad measurement in the retail industry is not in a store visit, but in the final step — at the register. Marketers can now get anonymized credit card data and tie it back to user IDs to discover the dollar amount of purchases at specific places, like a clothing retailer or quick-service restaurant. They can also see how often those customers are making purchases of their product.
And, similar to the CPG studies, they can compare the exposed group to the unexposed group to analyze the total impact and calculate the achieved “lift” as well as the dollar value of the campaign, or ROAS. While credit card data from one company obviously does not cover the entire population, it is still an enormous sample size across the U.S., typically in the tens-of-millions.
If there is one industry that has truly gone digital, it’s entertainment. In many ways, the connection between ads and media consumption should be easier and more direct, as consumers’ behavior is often linked on the same device. For instance, an ad for the new season of Orange is the New Black should be directly linked to them streaming it on Netflix. With the numerous ways that mobile devices are connecting people to their home entertainment systems, like set-top box integration, mobile marketers will soon be able to see if someone watched a particular show and if that was influenced by an ad campaign for it.
Even entertainment companies that operate mostly offline, such as movie theaters and telecommunications companies, can now track mobile actions to offline behaviors, through one of the other methods mentioned above, such as credit card data.
Ultimately, what marketers really want to know is, “Did my campaign cause an action?” That is, did the ad push the consumer to try something new, choose a particular type of entertainment or make a purchase? The shift to digital has already increased our desire and expectation of transparency and accountability, and the shift to mobile is the next step forward, not back.
We should not be settling for proxies for “prospect” or “purchase” any longer. Just as Plato described the shadows in the cave as not the reality, click-through rate and video views are not the only ways we should measure campaigns. Every campaign, and all marketers, should — and now can — shift to a model that directly shows the return on ad spend, not an estimation of impact based on mere reflections.