Does Digital Advertising Scale?

I'll admit it. I'm an unabashed admirer of behavior-based digital advertising. I'm thrilled to know I can now make recommendations to clients knowing that every dollar I'm recommending they spend — to launch a new CPG product, for instance — is now reaching only the known buyers of that category. No longer are we wasting precious launch dollars on mass media that will largely reach folks who will never buy the category. And, I love the fact that we can carve up and customize messaging for those known category buyers — buyers of my competition (heavy, medium and light), buyers of my own franchise, lapsed buyers of my franchise, triers of my new product (gotta build a pattern of usage).

So, yeah, I love digital advertising for its ability to hyper-target the right people and for the ability it provides us to customize message and offer.

But when you add on the fact that we can now measure the ROI on digital ad spend for CPG products sold at brick-and-mortar retail, I can't help but feel a little like Indiana Jones discovering the holy grail after decades of toil. It feels like the advertising industry is finally delivering on what clients have been long been seeking — every dollar spent reaching just the people willing to buy, and every dollar held accountable for being ROI positive.



However, my actual experience is often a lack of enthusiasm among CPG brand leaders, for more than token investments in digital media. When we share out the benefits outlined above, we often get some version of this question — "Yeah, but does it scale?"

We got this question from a CPG manufacturer recently whose category has 35% U.S. household penetration. I responded with the fact that I considered over 100 million addressable category buyers scale indeed. But I'm beginning to believe that there are less objective forces at work here, like:

  • If I don't see it, it must not be working. This is why we used to put campaign billboards on the commute route between the CEO's home and their downtown offices. The fact is a lot of the top folks approving media investments aren't engaged in the media we're recommending. And therefore, "it doesn't scale," meaning they're not seeing it.
  • We've cried, "wolf" once too often. That is, we've been singing the praises of digital advertising for a long time now and most of what clients got back was gibberish — impressions, likes, engagement, time spent viewing — a lot of stuff that gets a CMO thrown out of the CEO's office. Who cares about that crap? 

Now, we've got proof of every dollar invested reaching only those willing to buy, and the ability to "close the loop" and demonstrate the true ROI of that digital ad investment on retail sales. And we’re often getting the door shut in our faces. What's a digital-first marketer do?

Be patient. Acknowledge that skepticism from our clients is well earned. Look at behavior-targeted digital advertising as a baseline component of plans, and test overlays of traditional media for sales lift and ROI. Junk the intermediate metrics that only further the skepticism and cut to the only metrics that matter — ROI positive increases in net sales, share and HH Pen.

1 comment about "Does Digital Advertising Scale?".
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  1. Ed Papazian from Media Dynamics Inc, March 9, 2016 at 4:46 p.m.

    We get questions like these all the time and when we dig deeper---or ask those posing the question to dig deeper into their own experience-- we find, despite all of the theories, that their "targeted" digital campaigns are not only reaching those who are "in the market" or ready to buy"  but a fair proportion of other, much less likely buyers. In other words, the 100% targeting, "no waste" audience proposition doesn't always hold up.

    This does not mean that digital isn't potentially far superior to TV in terms of targeting selectivity---it is. But tonnage---or aggregated "audience impressions" is only one part of the trageting equation. Another is reach. Often, the reach attainment of digital campaigns is limited compared to TV no matter what target group is involved.. What's more, branding  advertisers are notoriously lacking in their ability to define waste. For example, let's say that you can isolate heavy shaving lotion users for every digital ad venue. You know exactly who they are so this becomes your target definition and only these heavy users get an opportunity to see your ad. That's great, but what about medium and light users, plus young folks just starting to use the product? Do you ignore them? Is that a wise marketing strategy---especially if there are 10 brands competing for share of market in this category, mostly on TV? Or is going with TV with its mass reach---covering all of the user segments, just described, a safer bet?Or do you assign all user groups a weight and allocate your ad "exposures" accordingly? If, so, what weights do you use---simply the amount of product they buy---or something else?

    Many branding advertisers are wrestling with questions like these---relative to media costs, of course. Many are coming to the conclusion---albeit tentative---that 100% targeting perfection may actually overload the targeted consumer with too many redundant ad "exposures" and generate early campaign wearout. Since such advertisers are not judging the impact of their campaigns by CTRs but, rather, by gaining ad awareness and message registration, which will eventually generate sales---but not instantly----this worries them. Sure, you may say that it's possible to control the number of times a digital ad is "exposed" to an identified prospect---but how do we determine what that frequency should be, using direct response indicators like CTRs, which may average one tenth of a percentage point per "pageview"? In short, ROI is not so easy a thing to define for your typical TV-type branding advertiser.

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