While cost-per-action (CPA) has become a popular way to avoid click fraud and determine marketing spends, the ultimate equation for online marketing success goes far beyond that straightforward metric. The missing variable in today's measurement, planning and optimization philosophy is the "sphere of influence" effect, the benefits associated with making contact with consumers across multiple websites and other media channels. The multiple-media touchpoint phenomenon has significant impact over consumers' behavior, and their ultimate purchasing decisions.
This sphere of influence scenario has become a hot topic in the digital marketing industry recently. Recently, aQuantive released a study titled "How Overlap Impacts Reach, Frequency and Conversions," which revealed that advertising activities on multiple sites have a major impact on consumer conversions, which is in stark contrast with current industry reporting standards that attribute 100 percent of online conversions to the last impression (or last click).
The study's findings proved that consumers are more likely to convert after viewing ads on multiple websites.
To fully understand how this works, we looked at two advertisers that made dramatic gains by implementing marketing efforts across multiple channels. The case study below describes how two Fortune 1000 companies set out to understand the sphere of influence across a variety of marketing touchpoints. Unlike the aQuantive study, these examples include the effects of both digital and offline channels.
This year, two major financial services players began cutting high CPA media inventory and allocating budgets to lower CPA opportunities. Some of the high CPA inventory included sites specific to financial verticals that discuss banking, money transfers and the like. Over time, these advertisers found that additional budgets allocated to the low CPA sites produced higher CPAs in the long run, and cutting higher CPA sites sometimes reduced the conversions on other sites. Ultimately, this left both advertisers unable to understand which levers to pull or push to optimize campaign performance.
What they found digging deeper into the sphere of influence
These companies realized they needed to dig into marketing touchpoint data across channels to give them a more accurate understanding of how various multi-channel activities would ultimately affect the final click (or conversion). By analyzing marketing campaign data (including cookie-level raw data) across all websites and other media channels, building a unified consumer data warehouse, and applying specific business-driven algorithms, they learned the following insights:
- Organizations must consider multiple channels. CPA (and sometimes CTR) doesn't provide accurate data for optimizing campaign spends. Given that CPA is calculated based on the last impression, they were not giving appropriate credit to other channels and the influence these channels have on consumer behavior. As a result, they were cutting back the other channels, campaigns, sites and TV ad campaigns that were actually supporting response lift to the search or online media campaigns. In reality, the complementary channels were not getting the spend they deserved. By looking at other channels, in context of the last click, advertisers attributed improved conversions by looking at touchpoints that converted users are exposed to before the last impression. Such an adjustment in attribution and media optimization based on the new data led to an increase of 12.5 percent ROI on media spend that would normally have gone unfunded.
- Assigning higher budgets for certain websites, based on historically low CPAs, without understanding the bandwidth of these sites can lead to wasted money and missed opportunities gained by spreading the spend to niche sites.
Based on varying bandwidth, some sites are not able to handle a large number of impressions. By understanding how each site works with varying impression loads and for different campaigns, organizations are able to find the optimal load for each site, placement and campaign. This forces media planners to find new niche sites for more conversions. Such a diversified and optimized mix produced 5-10 percent higher ROI on average for these two advertisers.
- Cookie data analysis is a much more effective to way to set frequency caps on media placements. Most advertisers set frequency caps on media placements based on the initial planning data they receive from third-party sources such as comScore or A.C. Nielsen. For these advertisers, both found cookie data analysis changed the optimal frequency for each campaign, site, placement and creative. Impressions were being wasted, and in some cases a few more impressions would have generated a substantially larger number of new conversions. By placing the correct frequency caps, they gained efficiencies of about 6-9 percent of media spend in the first few months.
Multiple media = better performance and improved ROI
The insights learned from studying these two global financial institutions show that they gained more control over CPA campaign media optimization and saved millions of dollars by generating better ROI on their media spend.
The advertisers learned that they achieved significant marketing campaign conversion improvement when taking into consideration the "sphere of influence" of multiple consumer touchpoints. Focusing on and measuring the final conversion click is simply not enough. In the coming months, look for more heavy CPA advertisers to take a very serious look at how they value the last click versus the previous ad impressions viewed on multiple websites and other offline consumer touchpoints.
Alan Osetek is the EVP of Connexion.a, a leading provider of ASP-based marketing optimization managed services for agencies and advertisers. .