$137.8B U.S. ad spend for top 200 advertisers
Many have long suspected that the tools used to measure return on investment that hold sway over many marketing decisions give digital media short shrift. A new study by seven of the biggest packaged-goods companies, joined by Nielsen, Facebook and Google, appears to prove it.
The last two stand to benefit from the findings of the Digital Media Consortium study, which finds marketing-mix models underestimate ROI from Facebook ads by as much as 48% and from Google search ads by as much as 39%. Even though Google search ROI was underestimated, the study found credit for about 25% of sales attributed to paid search should be shared with TV, print or other digital media that led people to search in the first place.
The study backs findings of a prior ComScore study that clicks have little to do with offline sales of packaged-goods brands. Using impressions rather than clicks to measure digital campaigns was far more predictive of real-world results and increased the estimated ROI of Facebook advertising by as much as 75%, according to Ross Link, Nielsen's president of global marketing return on investment solutions.
CPG consortium members include Procter & Gamble Co., Unilever, Nestlé, Kraft Foods, Mondelez, Kimberly-Clark Corp. and Kellogg Co. While the study found in aggregate that marketing-mix models undervalued digital ads, "there was significant variation," said Jatinder (Ronny) Bindra, VP-global analytics and marketplace information Mondelez, and for some brands the models came very close to the mark.
The problem wasn't so much the models as the type and quality of data fed into them, said Mr. Link. Besides impressions proving much more predictive than clicks, impression data worked much better when it included more detail about publisher, geographic market, device and demographics, he said. Overall, the best models underestimated the ROI of Facebook and Google ads by only 4% and 11%, respectively.