But, as people often do, I got distracted, and subsequently clicked away from the website. My exit led to the electronics store bombarding me with display ads over the course of the next few days, even though I had already made up my mind to buy the camera. Finally, I visited the website again and purchased the product.
What was actually happening here? I was being hit by retargeting ads. So in this case, what ad should get credit for my conversion? Under a last-touch measurement methodology, only the last ad that I was exposed to would receive credit for my purchase. Yet in reality, it wasn't that ad that made me decide to purchase the camera. There were a number of factors that influenced my decision, including other research I did on DSLRs, input from my friends, and the initial ad I had seen.
This measurement scenario gets trickier when retargeting comes into play. While retargeting sounds like a winning strategy, there are certainly challenges associated with it.
If marketers rely on last-touch measurement, retargeted ads appear to perform much better than they really do, since these ads receive full credit simply for being the last ad presented to a converting user, regardless of the other touchpoints that may have led to the conversion.
So how can marketers determine true ad effectiveness? By looking at different types of interactions individually, marketers can truly understand the true impact of an ad (retargeted or not) on an eventual conversion. This multi-touch measurement methodology splits and assigns credit to all of the touchpoints that led a user to a conversion.
But even most multi-touch measurement solutions fail to measure the true effectiveness of retargeting ads if they cannot factor the diminishing returns of repeated impressions,. However, some advanced solutions are able to measure the diminishing returns, and hence the true effectiveness, of each touchpoint. This is done by performing billions of comparisons between both converters and non-converters and quantifying the impact that every channel, campaign and marketing tactic has on producing a conversion -- regardless of where it lies in the funnel. With this information, marketers can make informed decisions and allocate their spend more effectively.
Moreover, the most advanced multi-touch solutions also help to determine the point of diminishing returns on ad frequency and inform the establishment of frequency caps, which ensure you don’t oversaturate users with ads that aren’t driving any incremental conversions.
True understanding of ad effectiveness requires looking at the holistic universe of touchpoints, giving accurate conversion credit to each, and factoring in diminishing returns to maximize marketing ROI.