Between 36% and 60% of companies' digital advertising revenue could be at risk for misdirected media buys. That's according to a ClearSaleing study released Monday. The company looked at the attribution model of 13 advertisers across retail, education and financial verticals, analyzing more than 1 billion advertising impressions, 81.5 million advertising clicks, and 3 million conversions.
The findings, which were intended to quantify the amount of revenue misallocated by the last-ad attribution model, were compared with the company's algorithms built into an application Morris Martin, director of product marketing and strategy, refers to as the "glass-box" -- the ability to see contributions from all channels.
Morris, a former senior analyst at the Microsoft Atlas Institute, has been working with attribution models for 6.5 years. He says the study attempts to identify the amount of revenue at risk for the 13 advertisers and give them the tools to move beyond the last ad method.
The platform, ClearSaleing Altitude, aims to do just that. If campaigns only get optimized under the last ad, or click, brands would ignore all the other steps contributing to the bottom line. The last ad can undervalue other steps in the sales funnel and mislead marketers to misallocate budgets, according to the study.
Brands will begin moving beyond the last ad when it comes to attribution, Martin said, suggesting that many will begin to see the value in display advertising as a contributing factor to finding consumers that might not know about the brand's product or service. He points to eMarketer predictions for better-than-expected ad spending this year for display ads. Brands will increase the amount spent this year by 20% to $31.3 billion in 2011, up from a previous forecast of $28.5 billion, eMarketer estimates.
ClearSaleing's statistical model examines the relationship between the exposure to media channels and consumer conversions and supports CS Altitude, which helps to determine allocation. The platform looks at all the impressions and clicks of a brand's campaign and analyzes the causal relationship between a person being exposed to a variety of media, such as affiliate, display, comparison shopping engine, natural search, social and their propensity to convert.
Paid-search promotes navigation. A retailer's most profitable keywords will likely include the brand's name. It becomes the last click before the conversion. Display, for example, does well when it's one of the first steps. The model not only measures conversions, but also the relationship of how a consumer interacts with a specific channel.
What should advertisers do? Martin suggests identifying the amount of revenue at risk for the last ad method. "In one case, an advertiser participating in the study had 60% of its revenue tied into multiple steps to conversion," Martin said. "So it didn't give this advertiser the full picture. In fact, most medium-to-large advertisers have customers that take multistep paths. So they need to move past the last ad."
It will lead brands to reopen their media plans and display ad channels. Advertisers do a great job creating marketing briefs, but when they optimize it against the last ad attribution model, the larger publishers are cut from the campaign because the premium display units underperform, based on key performance indicators.
Many consumers discover products and services in a display ad, then turn to search before making the purchase. Display ads can help brands reach consumers well before they're in the market to make a purchase. The consumer base doesn't grow by buying more branded keywords, Martin said.