Improving Engagement and Performance in Digital Advertising

Improving Engagement and Performance in Digital Advertising

          
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Improving Engagement and Performance in Digital Advertising

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  • Realizing the Promise

    For advertisers and their agencies, better performance is within their grasp. It can be achieved through a powerful combination of data, talent, and technology—learning from the wealth of data that digital technology provides, making full use of the capabilities of digital talent (the new “math men” and “math women”) to optimize campaigns, removing complexity and conflicting incentives, and embracing advanced techniques.

    Tests conducted in North America and Europe with five large, diverse, and highly experienced digital advertisers in four industries—consumer products, auto, financial services, and information services—show that advertisers that use new techniques and start to tackle barriers to performance can score big gains. On average, the campaigns in our study that employed the test approach achieved a 32 percent improvement in cost per action (CPA)—the critical metric for most digital campaigns—compared with equivalent campaigns run by the same advertisers that did not use this approach. In some cases, advertisers improved CPA by more than 50 percent.

    Our tests included digital display campaigns that employed programmatic, or automated, buying of advertising placements. In addition to the five global advertisers, we worked closely with a number of experienced and sophisticated agencies to identify how to improve performance. The tests demonstrated that the use of advanced targeting techniques can drive increased performance across all major metrics, improving action rates for clicks and view-throughs, in addition to CPA, by as much as 200 percent, and reducing cost per click and cost per view by as much as 70 percent. The advanced techniques employed included search and video remarketing and behavioral analytics, all of which are enabled by programmatic buying. (For definitions and descriptions of digital-advertising metrics and other terms, see the Appendix.)

    To achieve these gains in large-scale campaigns, advertisers need to take advantage of the potential to experiment and learn online and make effective use of individuals—in-house or external—with advanced digital skills. Companies that do so will likely experience an even greater impact on performance over time. Additionally, advertisers that address the fragmentation of strategy and execution that occurs in almost every digital-advertising campaign can compound the efficiency and performance benefits.

    Digital channels play an increasingly influential and complex role along the entire consumer-purchasing journey. Brands need to be effective online if they want to enhance their influence and impact and build deep relationships with consumers, who have a clear preference for advertising that is relevant and timely—so long as it does not interrupt or pester. (See “The Consumer’s Point of View.”) Achieving a consistently high level of online relevance, by delivering pertinent messages at the right times, requires the use of programmatic buying with real-time bidding.

    Several major brand and direct advertisers in industries such as consumer packaged goods and financial services have recently signaled their intentions to greatly increase their commitment to programmatic buying. They have good reasons to move fast. Advertisers that are quick to implement more advanced programmatic- targeting techniques, address underperforming campaigns early, and use what they learn in the process to instill cycles of continuous improvement will gain significant competitive advantage over later arrivals to the programmatic party.

    The Consumer's Point of View

    Advertisers worry, appropriately so, that consumers will object to being targeted and resent being tailed around the Web. Marketers need to recognize privacy concerns and focus on building trust with consumers, offering them transparency and choice.

    Research shows that consumers, for their part, view digital ads in predominantly pragmatic terms, but they also see lines that should not be crossed. When the ads are relevant, timely, and not intrusive, they are welcomed and seen as useful sources of information. If an ad presents a concrete benefit, such as a discount or a new product or service that a consumer was unaware of, even better. As a German consumer put it, “I was looking for a leather rucksack. The ads led me to search on other sites that I would not have gone to.” A French user said, “If I’m looking for a flight for a holiday and it suggests a hotel that I didn’t know about, that’s useful. What’s useless is showing me stuff I’m not interested in.”

    The research found that consumers, in general, do not object to targeting; they appreciate receiving relevant content. They are highly sensitive to intrusions, however—ads that interrupt or get in their way—as well as bullying ads that are too pushy. Con- sumers also object to repetition. “There’s [an ad for] a t-shirt that’s got dogs’ faces that has been chasing me around the Internet for a very long time.... It makes me not want to buyanything from them,”a consumer said.

    At the end of the day, the key issue is trust. Consumers are willing to support new uses of personal data—but only if they trust the data user to steward data in ways that will not harm them. (See “In Twitter We Trust… Maybe,” BCG Commentary, January 2014.)

    “Advertising User Research, U.S. and Europe,” Google User Experience Research, June 2014.