Return On Ad Spend, or ROAS, is a wonderful metric of digital media, but it is ultimately a measure of an acceptable cost of advertising.
The real goal for product manufacturers is volume – to actually see a rise in orders shipping out of the factory. When something really works at scale, you don’t need fancy metrics to know.
But most consumer product brands want to take baby steps into digital, or at least into new digital media opportunities.
Modest budgets can generate incremental sales, but it will probably be hard to actually “feel” the incremental sales among the larger ocean of sales. In this case, attributable sales and ROAS can serve as a reference point for success.
But there is an additional challenge with digital marketing and sales attribution. As I noted in “The New Shopper Marketing Paradigm, Part 2: Measuring Impact,” most marketing vehicles for brands provide no direct sales attribution and rely on predictive modeling based on reaching target audiences at desired volume.
The problem is that once sales attribution is attainable, many marketers are tempted to treat those metrics differently and take them literally. It’s something I like to call the “Digital Paradox of Performance” — when digital performance metrics are held to much higher standards than are traditional media, or even digital brand buys that don’t contain an attribution.
I’ve had numerous conversations with marketers who say they love seeing attribution and ROAS, but they have nothing to compare it to from their other media programs. The natural temptation is to run a profitability analysis on the attributable sales, despite other media providing no comparable data.
While this can be frustrating, all of us who touch marketing are guilty of it. Running a company, I intuitively support big investments in trade shows and events with soft metrics, but when I see the cost of leads generated from a LinkedIn ad program, I immediately dig into the economics.
The Halo Effect Of The First Moment Of Truth
So, is the answer to require an undeniably profitable 10,000% ROAS or a definitive rise in global market share from every digital media program?
Of course not. Besides working to improve algorithms and targeting to raise the volume and quality of traffic to product detail pages and attributable sales, we should also be working hard to measure and explain the many halo effects that result from this interaction with consumers.
In many ways, visits to product detail pages, or what we call “Share of Product Page Views,” is the best online equivalent of television’s Gross Rating Points (GRPs) for consumer product brands — a touchstone that a brand can lean on to have faith that its advertising is generating results.
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When a consumer picks up a product from the virtual shelf, the following events result. Some are directly measurable, others are more intuitive, easily explained by our own non-linear shopping behaviors (see Part 1: Centering On The Shopper).
• Direct Attribution: The consumers buy the product they clicked on from the stores they were visiting.
• Related Attribution: The consumer buys a different product or accessory from the same brand, which they discovered after being introduced to one of the brand’s products.
• Repeat Purchase: For consumable products, the consumer often begins a continuous relationship with the product that originated from the initial discovery and purchase, which is now worth the full lifetime value.
• Brand.com & Cross-Retailer Sales: Just because a consumer sees a product on a retailer’s site does not mean that the retailer is the consumer’s ultimate buying channel. Today’s shopper is more agnostic than ever to channel. In fact, discovering a product on a retailer site is one of the top ways that shoppers end up reaching a brand’s own online store.
While the pathway may not be a direct click, we at HookLogic are able to track users across sites, and cross-shopping indeed happens more often than you might think. Unfortunately, last-click attribution usually credits Google for this consumer behavior, because consumers use search engines to seek out alternative channels after selecting a brand’s product.
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• Cross-Device/Cross-Browser Sales: Online sales attribution has become more difficult with the proliferation of devices and shoppers’ behaviors across them. We are working to expand this view with cross-device tracking technologies, but a lot of the measurement inevitably does get lost.
• Offline Sales: It’s undeniable that many consumers research products online and then visit a physical retail store to buy — sometimes the retailer they visited online, and sometimes a different retailer. An oft-cited but still relevant Forrester study contends that for every online purchase, there are 5 Web-influenced offline purchases. More solutions are coming to market that connect online consumer profiles to in-store purchase, but this will take time, and will never fully capture the data, because it’s too easy for consumers to stay anonymous.
• Retailer SEO: When brands advertise and increase their product page traffic and sales volume on a retailer, their products begin to move up in organic search results on retailers. Site search engines like Oracle’s Endeca and the open source Apache Solr are programmed to reward this increased volume. Share of Product Page Views is amplified, fueling the funnel and all of these halo effects once again.
The Leap Of Faith
So, what does all this mean?
It’s time for consumer product brands to take a new leap of faith. Marketers have trusted Nielsen for years to tell them that they are connecting to the right audiences at the desired volumes. Marketers have accepted that having more consumers see their products on store shelves ultimately sells more products.
It’s time to take the leap of faith that the First Moment of Truth also occurs online — and that beyond incremental sales, the best measure of digital advertising effectiveness for manufacturers is the number of visits to product detail pages.
Sales attribution data is extremely valuable in proving that real sales are resulting and in providing a framework to understand relative performance and drive spend optimization, but don’t get caught in the Digital Paradox of Performance. Increase Share of Product Page Views, and you will sell more products.
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