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Scale vs. performance: Which wins?

Dean Vegliante
Scale vs. performance: Which wins? Dean Vegliante

In a perfect world, everything would be harmonious. The sun would emerge on a cloudy day, cats would lie down with dogs, and oil and water would mix quite well together. I'd be able to have my cake and eat it, too. Best of all, I would never have to deal with what I call the scale vs. performance conundrum.

You know it well -- that dance that you do when planning your media campaigns. Your client says, "I want better performance from my online advertising campaigns. I want you to use multiple data streams and audience profiling and micro-targeting and remarketing and any other trick to find me 10,000 people who will click on my ad." To this you respond, "What you really need is to go big, cast a wide net, look for the 'nos' to find the 'yesses', get your brand out there -- then, and only then, will you find 10,000-plus people to click on your ad." So, which one of you is right and which is wrong? Unfortunately, the answer is neither and both. The irony is that you both have the same goals, but your perspectives and approaches are so different that it's sometimes difficult to see the common denominator -- greater efficiency.

On one hand, advertisers want clear and transparent -- key performance indicators -- and inventory control. They like micro-targeting, inventory consolidation, and optimization because it offers better performance and greater return on investment with less wasted ad spend. However, the more you slice and dice your segments, you increase the odds of lopping off chunks of potential buyers or entire audience segments. The more granular you get, the more difficult it is to focus on the bigger picture stuff, like attribution or mix media modeling.

On the other hand, with agencies, as the audience size decreases, the number of campaigns they have to plan and execute in order to hit their metrics increases. This increases overhead and other costs, which eats into profit margins. 

For advertisers, performance metrics are tangible, and the more they understand true performance, the more they crave it. Next to this, brand awareness metrics are soft and intangible, and don't look as sexy on the return on advertising spending scale. Still, it's dangerous to cannibalize brand awareness (scale) to increase click-throughs (performance), or to rely too heavily on the shotgun's punch and discount the accuracy of the rifle. After a certain point, though, there will be a limit to how much a campaign can scale, unless advertisers are more flexible on performance KPIs. 

I also think both sides need to take a closer look at their metrics and assess the true value of different tactics. Not all conversions are created equal, so you really have to look at the results: What did it take to get the conversion? How much did you pay? Was it worth it? Did it pay off in terms of more customer loyalty and spend?

For instance, wrapping remarketing around your contextual ads lets you hone in on people who are more likely to buy, and enables you to create a dialog, drive them to a page, and ultimately convert them into buyers. Simultaneously, you're still casting that wide net and generating brand awareness. This will enhance the performance of your audience targeting initiatives because you're starting from a more informed audience base.

So what's the solution? Is there a fix to the scale vs. performance conundrum? I don't think that the two sides are ever going to meet in the middle, but that doesn't mean that common ground cannot be found. Obviously we can't go back to the dark ages -- data driven display is here to stay, and while it's still small, it's becoming a larger and more important part of the marketing mix. It's up to agencies to come up with new strategies and tactics, and bring to the table a more well-rounded media plan for their clients. 

Equally important is for advertisers, agencies, and their technology partners to have a frank and direct conversation about priorities -- decide which is more important, performance or scale -- and set expectations for each individual campaign as to what has to be sacrificed in order to have more of one or the other.

Here are a few suggestions on how to improve performance for your targeted display campaigns:

  • Do more homework for extra credit. The more you know about your audience, the better your performance. If you know what users are interested in and how likely they are to convert, you can take them in and out of segments based on how aggressive or narrow you want to be in order to deliver against performance goals.

  • Personalize your creative for "sure thing" targets. Armed with the above information, you can map your creative to the people you are targeting. One visual does not fit all.  For instance, if an airline is running a summer sale and sees that a large portion of its population frequently travels to Las Vegas or San Diego or St. Louis, it should serve creative that speaks to past behavior -- and not just the stock creative served to the masses.

  • Be specific about what you mean by "performance." What are your immediate and long-term goals? Are you looking to increase CPA, revenue, or profitability? The more specific you are, the happier you'll be with your performance. For example, if a retailer is looking to sell its excess inventory of white sweaters, it should communicate this specific goal to its agency and create a sliding performance scale based on white sweaters vs. sweaters overall.

Targeted things you can do to increase scale within a campaign:

  • Look-alike targeting. As I mentioned before, when you drill down to find a specific audience segment or attribute, you often end up ignoring whole populations in exchange for increased performance. But often times these overlooked audiences that don't meet your ideal criteria might behave similarly as your primary target. By tweaking your campaign slightly and modeling new customer audiences off of existing audience data, you might be able to increase performance while increasing the audience size -- with little or no extra work on your part.

  • Expand your horizons. Always remain open for testing new partners. If you're using a technology partner to help with audience segmenting and are seeing performance improvements, it might be worth your while to partner with additional providers to get the benefit of their different approaches, different incremental inventory sources, optimization tactics, etc.

  • Adjust frequency to deliver more impressions to your predefined audience over a shorter period of time. Now that you have informed, high-performing data segments, it is OK to be a bit more aggressive and stay out in front of them with good creative messaging. Of course, think about the audience, be respectful, and watch your performance carefully to make sure you're serving enough -- but not too much -- for the benefit of both the advertiser and the consumer.

The scale vs. performance conundrum might never be fully resolved, but as long as advertisers, agencies, and solution providers agree on the goals and are willing to compromise on the process for achieving them, all parties will come closer to finding the right balance. It's not going to happen overnight -- a lot of testing will have to be done to ensure that they get the right mix and that the outcomes are consistent across multiple campaigns. And while the online display world will never be a utopia, the journey to achieving that balance is good enough for me.

Dean Vegliante is general manager of Netmining.

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