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Digital advertising is booming. In 2013, for the first time, Internet ad revenues surpassed TV ad revenues, according to the Interactive Advertising Bureau and PricewaterhouseCoopers U.S. Once cautious about new media, the world's biggest marketers now are singing the praises of digital marketing's effectiveness.
But as agencies and advertisers race into digital media, they need to come to grips with a startling number: 26. That is the percentage of ad spending wasted, according to Neustar—dollars that can be reallocated to better-performing media.
To maximize results, advertisers need to manage their data effectively to eliminate overlap, identify the best-performing audiences and keep digital CPMs as efficient as possible.
Here are five ways marketers and agencies are wasting digital dollars:
- Allocating dollars to channels that don't reach the target consumer: First, a marketing plan needs to hone in on its target through proper demographic and behavioral segmentation, then allow the marketer to understand what specific channels are most effective for reaching that target. "It's essential to understand the particular behavioral trends by segment served so that the marketing effort supports the needs and wants of the customer, not legacy planning or budgeting needs," wrote Corinne Munchbach of Forrester Research in a March 2013 report titled "The Fragmented Path-to-purchase Demands Everywhere Marketing."
- Spending redundantly due to audience overlap: A successful plan needs to take into account the audience of each channel in order to maximize ad effectiveness. For instance, a company can explore exactly what percentage of the Facebook audience it has reached that it has not been able to get to on other platforms—especially important since it's likely paying a premium for a more exclusive, log-in-only audience such as Facebook's. Another example is the audience overlap between sites such as AOL and Yahoo. In this case, the company's systems and data partners need to identify unique consumers across channels in optimizing the media plan in real time.
- Wasting money by reaching targets beyond an optimal level: Is an ad reaching the consumer with the right frequency? How much is too much? When systems start tracking and retargeting consumers, one single publisher or ad network can serve a marketer's ads multiple times a day to the same consumer—served so many times that it's an obvious waste of budget and possibly even damaging to a company's brand as the consumer gets irritated by seeing the same ad again and again. Keeping frequency under control is a smarter way to extend budgets.
- Relying on last-touch attribution rather than actual attribution of sales or conversions: Although research shows that most consumers interact with a brand across many touch points, a number of marketers still credit media effectiveness using a last-touch attribution system, meaning that the last digital ad a consumer sees is too often given full credit for making the sale. A 2013 Ad Age/Neustar survey found that almost a third of digital marketers were still using first- or last-click attribution methods. Cookie bombers, for instance, are great at buying cheap inventory and following consumers everywhere they go. Maybe they have some impact, but should they get 100% of the credit for a sale?
- Failing to connect digital data to offline information: Is marketing closing the loop by connecting online sales to offline data, including point-of-purchase and third-party data? Did the display ad reach the right consumer and how did it affect that consumer's offline behavior? A multiplatform attribution model that ties in offline data will show which channels shine in terms of converting a prospect into a new customer and which channels should be considered for the next media buy.
As digital marketing grows in importance, the consumer's journey to a purchase is not as simple and direct as it used to be, and measuring channels such as social media is complicated. Marketers need to make sure their media intelligence is accurate, unbiased and updated in real time in order to spend their ad dollars as effectively as possible.
Next: Acting on media and customer insights to personalize your dialogue, May 29.
About the Sponsor:
Neustar Inc. is the first real-time provider of cloud-based information services and data analytics, enabling marketing professionals to promote their businesses most effectively. With a commitment to privacy and neutrality, Neustar operates complex data registries and uses its expertise to deliver actionable, data-driven insights to help clients make high-value business decisions in real time, one customer interaction at a time. More information is available at www.neustar.biz.