Commentary
Data Estimates 40% Of All Media Spend Is Wasted -- How One Company Is Plugging The Holes
- by Laurie Sullivan , Staff Writer @lauriesullivan, September 23, 2019
Commerce Signals estimates that 40% of all media spend is wasted — a number that comes from about 60 studies, said Tom Noyes, the company’s founder and CEO.
Some marketers think at least 26% of their budgets is wasted, the company says. The main reason for the waste is that marketers can’t get accurate insights from data to measure the impact on sales from advertising. Without the information, they can’t reallocate dollars away from inefficient audiences, advertising formats, creative pieces, and media channels.
U.S. digital ad spend reached $28.4 billion in the first quarter of 2019, up from $23.9 billion in the year-ago quarter. Retail accounts for nearly 22% of that spend, according to the Interactive Advertising Bureau (IAB).
Noyes, who has a background in software and banking, believes that media spend directly links to findings on the most accurate data, which requires trust and partnerships.
The company’s first product, Media Measurement, brings the largest set of payment information to the industry through trusted partnerships with Bank of America Merchant Services, and Worldpay. The two companies process all plastic payments from credit to debit and private label.
Noyes founded the company to “unlock” quality data and make deterministic data work in media. Through these partnerships Noyes’ company can deliver to brands actionable insights within 72 hours or less in near real-time, based on analytics that provide insights into 60% of all payment transactions.
Research by the company across more than 60 campaigns during the past two years has shown that digital advertising wastes about 47% of impressions. Commerce Signals gives brands the data they need to redirect inefficient spend toward more effective approaches.
While purchase payment data has been available for 40 years, legal and privacy issues have prevented its use.
Commerce Signals developed a patented analytics platform that connects consumers to purchases and media without exposing any of the data. The platform uses a federated data architecture that prevents data from ever leaving its source and measures the sales impact. An online dashboard provides performance data to determine which channels that are working or not.
Commerce Signals sits between all of these sources: purchase card processor, identity resolution service provider, or other data source. The company acts as an intermediator.
No individual transaction data leaves the secure environment of its partners, and only aggregate insights are delivered to the brands it serves, according to the company. Noyes believes this is the only way to protect the data and obtain a clear picture of media waste.
Laurie Sullivan is a writer and editor for MediaPost. You can reach Laurie at lauriesullivan@gmail.com.
I guess it all depends on what you mean by "waste". If you direct a digital ad to a 55-year-old smartphone whose user is 20% less likely than the norm to buy your brand while missing a 25-year-old smartphone whose user is 20% more likely to buy----in both cases assuming the ad even gets on the screen and stays there long enough to be "viewed"----is this really an example of "waste"?For all we know, the first smartphone user might respond to the ad's message and take positive action---perhaps not instantly, but later ---after giving the idea some thought and/or after seeing the ad again. Or are we talking about a more flagrant example of waste---like a men's shaving cream ad being directed to a little girl's smartphone---which is a real wasted effort.
Are technical details relating to the model and estimation methods underelying this service available? Will the report of the "60 studies" cited in this article as the the "waste" estmate be released?
Second the motion on seeing the methodology and data. What's the qualifying factor -- the buyer's opinions, or quantified stats? Not doubting, just wanting to see how data from these studies might be statistically significant to apply to all ad campaigns.
Ed, I am thinking along the same lines as you about "waste" with a slightly different twist. To often and especially digital, advertisers want instantaneous results. This is basic college 101 marketing but yet the sales steps and time that leads to making the decision to purchase is now in part, the "waste".
Personally and sure most people would agree, most don't make snap decisions on many purchases.
Yes, as Ed said, how do we define waste? If you're talking about fraud and non-viewable impressions then I would agree we need to address waste. I'm not sure off-target media is that significant of an issue.
I'd love to hear the pitch. Having worked at a major bank and credit card company and struggled through using advanced media targeting using our first-party data in a compliant manner, it's a real challenge. Similarly I have worked in healthcare trying to use vast amounts of first-party data and third-party data but no real solutions. Inserting yourself in the middle of that ecosystem and preventing breakage is not very realistic with privacy regulations.
But anyway, how much is wasted due to poor creative?