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What Most “Optimized” Ad Campaigns are Still Missing

By Jennifer Pelino, Senior Vice President, Media Center of Excellence

 

Advertisers and their agencies are intensely focused on the return on ad spend (ROAS) of their campaigns, and rightly so. However, much of that focus has been on “return” and less on the “spend” part of the equation. That is changing. Marketers at consumer packaged goods (CPG) companies large and small are taking a new look at both ROAS variables, creating a significant opportunity to improve the performance of campaign activities. It begins with pre-campaign planning and targeting, continues with mid-campaign in-flight optimization and concludes with post-campaign measurement and optimization.

This analysis of past practices comes none too soon. A recent Forbes contributor notes that 47% of consumers are blocking ads, with shoppers citing too many ads (48% ), ads that are annoying or irrelevant (47% ) or ads that are too intrusive (44% ) as the salient reasons.

Marc Pritchard, Procter & Gamble’s (P&G) chief brand officer has famously called out return/viewability metrics and related practices within the media supply chain as “murky at best, fraudulent at worst.” Among his other strategies, Pritchard has also focused on eliminating wasteful media spending throughout P&G brands, and the company embarks on a “mass reach with one-to-one precision” strategy. The company has more than 1 billion consumer IDs in its arsenal to build audience segments and then execute “propensity marketing with people who have similar characteristics.”

Improved targeting is a lynchpin for improving campaign performance and one that is easily addressed by marketers. Many CPG campaigns continue to rely on less efficient targeting practices based on demographic (life-stage census) data, contextual (online data such as clicks and views collected by cookies) and/or behavioral data (purchase propensity data collected through activities such as surveys and search history).

Moving to purchase-based targeting continuously outperforms other target strategies by using household-level transaction data collected passively through loyalty cards. Analyzing hundreds of campaigns across multiple CPG manufacturers, IRI found that purchase-based targeting boosts campaign ROAS by up to 20%  and brings sales lift that is up to three to four times greater than other targeting methodologies, such as contextual and demographic targeting. The gap is significant!

Within purchase-based targeting groups, narrowing the audience focus can also increase results. Recent programmatic campaigns that were conducted with purchase-based target audiences by two of the largest U.S. CPG manufacturers showed that “switchers” and “high-propensity buyers” achieved a 25% lift each, while “loyalists” earned a 24% lift and “competitive buyers” contributed a lift of just over 20%. Ad blocking technology will cost advertisers as much as $40 billion by 2020, more precise targeting provides better sales lift and help ensure your campaign does not contribute to that total.

To maximize the ROAS of today’s campaigns, it’s critical that every pre-, mid- and post-campaign initiative include the highest quality strategy, data, analytics and creative. Multiple studies have demonstrated the superior performance of campaigns built on purchase-based target data. The availability of this data, along with the technology to leverage it, has the potential to earn brands both outsized returns while reducing ineffective media spending. IRI research has demonstrated that optimizing personalization strategies can increase ROAS as much as 70%.

Want to know more? Read IRI’s recent paper on in-flight optimization and learn more about our approach here. And don’t hesitate to reach out to me with your comments and questions.  

 

For more information on IRI’s audience solutions, contact your IRI representative or email us at IRIMedia@iriworldwide.com.



 



 

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