Guest post by Ted Kohnen, Chief Marketing Officer, Stein IAS
Many marketing pundits have cast digital display advertising as “dying” or already “dead.” In a performance marketing world, they say, it doesn’t deliver the metrics. In a brand marketing world, they say, it doesn’t deliver the impact or imprint.
But here’s the thing: the digital display naysayers have got it wrong.
To begin to understand this digital advertising wrongheadedness, think of the movie Moneyball, which chronicled Oakland Athletics’ GM (Billy Beane, as played by Brad Pitt) as he disruptively innovated Major League Baseball by implementing a data-driven approach to winning.
“People who run ball clubs, they think in terms of buying players. Your goal shouldn’t be to buy players, your goal should be to buy wins. And in order to buy wins, you need to buy runs….Baseball thinking is medieval. They are asking all the wrong questions.”
—Peter Brand (Jonah Hill)
So what’s a wrong question to ask about digital display advertising? That’s easy. It’s “what’s the CTR?”
What’s a better question? At Stein IAS, we ask, “How many conversions were generated by using digital display and advanced, data-driven targeting technologies as part of a multi-channel mix?”
The advancement in digital advertising techniques, creative formats and analytics platforms enables digital marketers to track a multitude of metrics. With all these metrics points, some marketers have taken their eye off the end goal.
Whether conversion is a download, visits into deeper levels of a website, a sales meeting scheduled, an actual purchase or a competitor unseated, digital display advertising’s role must be viewed with this ultimate metric in mind.
In Moneyball parlance, stop buying players and buy more runs. So what’s the formula that we can use for measuring display ad success? My answer is: C = Cr (Rr (D))
C = Conversions (lead, sale, etc.)
Cr = Conversion rate (i.e., landing page conversion or sales conversion)
Rr = Response rate (i.e., CTR)
D = Delivery (i.e. impressions)
With a focus on conversion, marketers create more “levers to pull” in order to impact the most important metric. This is not to say CTR or other metrics don’t have a role in the model, but it’s not what success can solely be based on.
This in turn means that digital display plays an essential role.
It further means that digital marketers should investigate account-based and other higher-order, data-driven targeting platforms to impact “Cr.” They also use ad sequencing and dynamic optimization techniques as standard operating procedure as well. They should leverage programmatic display platforms in order to impact “D.”
Most of all, it means that agreeing on a metric that truly reflects the goal we’re trying to reach.
In other words: buy wins, don’t buy players.
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