The next level of online advertising: the need for transparent ROI

Advertising remains a multi-billion pound business but as the market becomes ever more competitive and economic constraint continues, it’s becoming imperative that transparency about ROI should be placed firmly at the heart of effective campaign management. By Darren Hamer, Managing Director UK, Sticky.

There is a broad acceptance that around 99% of consumers will never click on a digital advert, yet many marketers continue to judge effectiveness by click-through rates (CTRs).

Yet CTR measurements have become more and more irrelevant as the rates continue to fall (from an average of 0.34% in 2002 to 0.07% in 2011) and they have never been a relevant metric for a brand based advertising campaign.

There is a growing trend among major brand owners towards a reassessment of how ROI is measured and understood. One of the drivers of this trend toward reappraisal of marketing ROI analysis is understood to be a need to understand the impact of digital and social media on sales trends.

Traditional marketing mix models can be helpful, but sometimes fail to match market analyses done by groups like Nielsen. There is a need to look beyond the marketing-mix models traditionally used, and to try to find a way to capture the impact of online media, including social and search, to help explain results that the traditional approaches can’t explain.

The digital community needs to focus on how to create methodologies that capture insight for brands. The digital world needs to adapt approaches that understand brand needs but use today’s technology to track and record the impact that digital advertising may have.

One way that this can be achieved is through eye-tracking. By using webcams to record consumer eye movements from digital page to digital page in order to get a clear picture of where advertising is effective, or at least seen, reports are showing significant campaign improvements of up to 25%.

Proctor & Gamble were recently highly commended for an IAB Research Award 2013 for their work with Sticky, where it was shown that the ability to be transparent about where the customer is looking on the page, alleviating the frustration of wasting money on unseen ad impressions, significantly reduced their overall branding campaign spends.

Obviously digital advertising spend will only account for a percentage of overall brand marketing spend but the question of how to measure ROI on digital ad spend alone is becoming increasingly thorny.

Judging effectiveness by CTR not only ignores the importance of the branding effect, but it fails to track whether or not potentially interested customers have even paid attention to the ad.

Research has shown that up to 50% of digital ads are never even seen, which leaves an enormous scope for unnecessary ad spend. It’s important that better targeting techniques and more effective web analytics are used to measure traffic and conversions. Isn’t it time to start creating new actionable insights to aid the ‘in the moment’ world in which we operate?

Only by benchmarking data on a grand scale can we provide advertisers with more relevant insight and opportunity than traditional metrics can offer – it’s clearly time for smart data that aides brand advertising as well as the obvious direct response activity.

Surely we have finally reached the stage where we can actually tell very precisely which part of the brand advertising spend works and which doesn’t. The Holy Grail has been found we just need to start drinking from the cup.