The evolution of measurement: How ad waste brought us to ROMI

Focusing on the cost and spend equation doesn’t tell the full story

If you look at the full history of advertising—from the Mad Men days to the first TV ad—digital marketing as a concept is relatively new to the scene. IBM launched the first personal computer just shy of 40 years ago in 1981, and the internet wasn’t accessible to the average person until the late 90s.

As digital marketing tactics and channels started to emerge, marketers were hooked. For the first time, they could see metrics like reach, frequency, impressions and clicks in near real-time, which was revolutionary.

As digital marketing evolved and grew more sophisticated, it started to become apparent that clicks are not equivalent to sales. Ad waste emerged as the primary problem to solve—and with that, better measurement.

But it’s still not perfect. Ad waste continues to be prevalent in the system, largely due to a lack of integration across channels and missing the full picture of the individual. By focusing on single streams and singular tactics, it’s hard to build a holistic attribution strategy that connects real people to channels, devices and actual purchases that show a true return on marketing investment—true ROMI.

Digital measurement evolution

This conversation starts with looking at how digital marketing channels and measurement evolved over the years:

Marketing started with no real measurement strategy; creativity and big, splashy ads were the best way to get attention. As digital marketing became the go-to tactic, simple metrics like CPC and CPA became the go-to measurement source in kind. To be fair, this measurement was revolutionary at the time. But the bottom line is that clicks are unreliable. They’re proxy metrics that largely only show brand affinity and a propensity to engage, not actual online and offline sales.

Measurement improved with return on ad spend (ROAS) as brands started to hold their marketing partners more accountable. This was a way to show return on a specific advertising spend, but it only gives a view of each campaign and spend, not the full omnichannel picture of performance or the overall impact to your business’ bottom line.

Ad waste fuels better measurement

Ad waste is a necessary part of this story and is a continuing issue in the industry. A 2018 survey of 1,000 marketers found that they waste an average of 26% of their budgets on ineffective strategies, and half of respondents said they misspend an additional 20%.

Marketing campaigns often focus on targeting people by segments, devices and siloed channels (social vs. digital vs. email, etc.). This treats everyone as if they’re the same instead of making the best decision based on the individual and creating a personalized, human experience unique to each person.

Let’s look at a few examples that show how a seemingly sophisticated marketing strategy can actually have quite a bit of waste.

• Delivering a message to the right person, but wrong message or device: Say a person goes to a national restaurant chain occasionally for a morning coffee and then one day receives an offer about their lunch options. Yes, this is the right person because they do frequent the business, but it’s the wrong offer, and they clearly aren’t a loyal customer that could expand to a new category. If that same person had received a message about a discount on coffee, they would have been much more likely to convert.
• Right person, right message, wrong offer: Many women’s clothing retailers offer different discounts based on the day of the week and where they are in the season, with steeper discounts as the weekend gets closer or as the season comes to an end. These brands’ loyal customers often know that better discounts are coming, so why would they convert when they see an ad for 30% off if they know that a 50% discount is in the pipeline?
• Opportunity waste—didn’t deliver, not viewable or fraudulent: This speaks for itself; you build the perfect list of people and the perfect message, but the message never goes through because of delivery issues, the ads aren’t actually viewable or the campaign hits fraudulent accounts that are bots instead of real people.
• Over-messaging a person: You probably have several vendors in your ad stack with differing identity capabilities. To make this issue more complicated, you probably also have numerous traffic partners across publishers, social, search, programmatic, etc., running campaigns at any given time. This creates a disjointed view of the individual you are trying to reach and significant overlap amongst partners, resulting in wasted ad spend through over-messaging at an individual level. That negative outcome is compounded for the person on the receiving end, who gets bombarded with repeat ads.

Knowing these kinds of issues exist—even in more sophisticated marketing campaigns—how can you achieve that full omnichannel picture of your campaigns and each customer?

The path to ROMI

ROMI is a performance-based concept that focuses on building an omnichannel view of performance, with an end goal of driving revenue. True return on marketing investment means being able to measure all branches of an integrated marketing strategy, not just the cost of a campaign on one end and the output on the other. ROMI helps you think more broadly about your marketing investment; it’s more than a cost and spend analysis.

How do you achieve peak performance?

• Accuracy: Does the system know real people?
• Completeness: Does the system take all factors, touchpoints and channels into account?
• Speed: How quickly does the system learn and deliver?
• Cost: Is it efficient? And what is the cost of continuing with wasteful advertising?

These are all necessary items to consider with any marketing strategy. In a tactical, campaign-driven environment, advertising can be done fast and cheap. But what is the waste and opportunity cost associated with cutting corners, focusing on individual channels and not building that holistic picture? I think we all know it’s immense.

Interested in reducing your ad waste and achieving better results? Learn more about our data-driven digital marketing solutions.