That’s a pretty bold headline. And we’re sure there will be those who disagree. But the fact of the matter is, at the very worst it’s absolutely true, while at the very best, most advertisers only have clues that waste might be minimal. The story we’re about to tell you comes from our discussions with many advertisers, and from our own personal experience having written thousands of media plans for hundreds of clients over more than 50 years. Our observation is this: Aside from direct marketers we don’t know of any advertiser that can tell us exactly the ROI for every advertising dollar they spent -- or even how incremental expenditures have produced a dollar-for-dollar return. With all of the new digital metrics and various attempts to accurately define attribution in cross-media integration campaigns, a lot of theories have emerged but little actionable evidence has been produced to determine precise revenue gains or profit increases. After the fact, yes. Beforehand, no.
How can an advertiser spend millions of dollars of their advertising investment without being precisely accountable to their corporate management or shareholders when making the investment? Yet, that’s what happens, even in an age of data deluge that cries for accountability.
We understand the formulas, algorithms and models being applied to project and estimate results. But we also know that they often don’t prove to accurately and specifically match expectations with results. We also know that typical behavioral analytics which utilize past actions and purchases by consumers are used as surrogates to project future behavior. They don’t always produce the desired result with specificity.
The digital ecosystem has added real-time reactions to maximize response time and benefit decision-making. Even learning on the spot how competitors are using media can be more productive in analyzing their investment decisions and media allocations. But what is necessary is an accurate measurement of what a major financial investment returns.
Would any company spend millions of dollars without knowing what it returns before the investment? (Many do!) Is there an answer to that question? We think we can get a closer look at it by doing what we’ve recommended in the past with good success. It’s really simple and requires very little cost and only a few weeks of analysis.
The answer is testing in the marketplace. Whether it’s the use of traditional media or digital media testing is the answer. Just devote a few weeks of time to get the result. Here’s how it works.
If you are testing for marketplace results with traditional or digital media campaigns you only need a few markets or areas. Simply select areas that match each other and run the status quo in one and a change of strategy in the other. Of course it’s better to have more than one matched pair for validation of test results. Any number of strategic changes can be tested – from no advertising to incremental ad dollars to double or even triple spending weight. You can also test the affects of different media mixes.
Of most importance, systems are now available to test in smaller areas like zip codes or cable zones, which saves enormous amounts of money as opposed to testing in major markets. It also yields quicker results.
So we say it’s time to test and stop wasting money.
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