Digital Ad Players Shift from Selling Eyeballs To Business Outcomes

Originally posted on The Wall Street Journal

In its infancy, the digital advertising industry promised marketers a lot. That everything was measurable. That fewer ad dollars would be wasted than with other media like TV.

Has it lived up to those expectations?

There have been some major advances. Digital advertising now enables marketers to target audiences more effectively than ever before. The use of data has allowed them to reach consumers on a one-to-one basis, and even to tailor ads to them based on their tastes and behaviors.

Yet according to some in the industry, a major challenge still remains: the ability for companies to understand the impact of digital advertising on important business metrics such as sales.

Online advertising is still, for the most part, measured and purchased using proxy metrics such as ad impressions, clicks, or other actions such as store visits. It’s left up to clients and their agencies to figure out what value those impressions and actions actually provide to their overall business.

With that in mind, ad sellers are increasingly making an effort to prove they can deliver more than just eyeballs and clicks, and that their offerings actually translate into revenue.

Facebook, for example, says it’s working to help advertisers understand exactly how their bottom lines are being impacted by ads placed across its service. Since January it’s offered advertisers conversion lift studies, which essentially track the behaviors of test and control groups of users in an attempt to determine how consumers’ behaviors are impacted by Facebook ads.

“We’re pushing the industry to actually think about business outcomes, and the causation marketing is driving as a success metric as opposed to proxy metrics that aren’t even particularly good to look at,” said Facebook’s vice president of marketing science, Brad Smallwood.

Mr. Smallwood said marketers should not have to “guess” what they’re getting for their money when they spend with Facebook. Instead, they should know that an investment of a specific dollar amount drove business results worth a specific dollar amount.

Other ad sellers are pitching marketers similar ideas, and not just for online advertising. Simulmedia, which is trying to bring Web-like targeting capabilities to TV, recently said it’s offering a “guarantee” that its ads perform. The company said it’s prepared to work with advertisers to track the number of in-store sales its ads drive, for example, using a similar method to Facebook.

Simulmedia said it can judge how much of a product consumers purchase after seeing an ad by matching up TV ad delivery information with credit card purchase data for over 60 million households in the U.S.

“We realized that the best and easiest way to shift the conversation with TV buyers and advertisers from [ratings and demographic buys] to business outcomes, was to guarantee the outcome,” Dave Morgan, Simulmedia’s chief executive, told CMO Today.

As marketers think more careful about the business outcomes their ad dollars actually produce, a host of data companies have emerged in an attempt to help them connect the dots. Datalogix, for example, says it helps marketers optimize their ad spending by tracking real-world sales data. Optimizing ad campaigns to drive sales is a more effective strategy than optimizing towards soft metrics such as “engagement,” the thinking goes.

Nielsen Catalina Solutions and comScore offer similar capabilities, designed to help marketers understand and optimize towards purchase behavior. All three companies are integrated with online publishers, ad vendors and ad tech companies.

According to some marketers, this type of data could help alleviate some of their concerns about the online ad world. The industry is currently figuring out how to identify and mitigate fraudulent traffic and non-viewable ads.

To an extent those problems are irrelevant if a marketer can simply measure business outcomes from their ad campaigns. If a marketer is confident that ads from vendor X will drive a significant lift in sales, for example, perhaps issues like fraud and viewability become secondary concerns.

That’s why some online ad vendors say they welcome the shift. Programmatic ad network Rocket Fuel, for example, said more of its clients are asking to use data from firms such as Nielsen to measure their campaigns beyond clicks and impressions.

“Greater emphasis around results is better for us,” said Rocket Fuel Chief Executive George John.

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