The truth is in the Test: How to Definitively Prove the Incrementality of Your Programmatic Program

It’s been more than a century since merchant and advertising pioneer John Wanamaker famously said, “Half the money I spend on advertising is wasted; the trouble is, I don’t which half,” and when it comes to digital marketing attribution, the situation has sadly not improved. Marketers have long known that cost per click reporting and last click attribution models are broken, but with no alternative, they continue to be used to measure the effectiveness of programmatic - automated display advertising targeted to specific audiences based on artificial intelligence and real-time bidding.



The good news is that by following the advice of the Father of Advertising, David Ogilvy, “Never stop testing, and your advertising will never stop improving,” that model can be disrupted and replaced by a true, transparent view into the incremental revenue increases driven by programmatic ads.

Before we explore the test that allows us to do that, let’s take an honest look at the problems inherent in the current cost per click reporting and last click attribution models, specifically for a merchant spending on both programmatic and email marketing:

  • If you’re using different vendors for each channel, with both using a 30-day attribution window, they are often both taking credit for the same conversions, inflating the true return on your investment.
  • Thanks to the prevalence of click bots and fat finger clicks, a great number of reported clicks are not meaningful, but are driving up ad spend and setting false expectations for programmatic ad performance. 
  • Marketers have gotten so accustomed to justifying ad spend based on falsely inflated click counts that moving to a more transparent model showing true incrementality could reflect poorly upon them in the short-term even though it is the wisest thing to do in the long-term. 
  • Not all clicks are created equal. It is important to understand that when a shopper clicks through an email, she is an engaged subscriber showing intent to explore a product even if she gets interrupted before converting. When she later visits weather.com, for example, her true intent is to find out the temperature, however, she may be interrupted by an ad that reminds her to go back to your website and complete her purchase. But would she have anyway? 

To-date we have not had a model that reflects real-world consumer behavior and scientifically proves incrementality in a single channel. The only truly accurate way to quantify the incremental revenue lift provided by programmatic is to conduct a PSA (Public Service Ad) test.

In a PSA test, a number of recent site visitors - the test group - are targeted with a merchant’s branded ad, and an equal number - the control group - with a PSA, for example, from the Red Cross, that has nothing to do with the merchants’ brand. By doing this and comparing the number of conversions from each group for each type of campaign, it becomes immediately apparent how many of your retargeted visitors would have returned to your site and purchased even without seeing your branded display ad.

Example results may look like this:


From this example, we can conclude that of the 60 conversions vendors and marketers would typically attribute to programmatic efforts, half would have occurred anyway.

So why is this so important?

It is critical that marketers understand what digital marketing efforts are truly driving incremental revenue. The model above reflects the real world incremental lift attributable to programmatic. But what’s more, this type of testing is instrumental in optimizing programmatic efforts.

This particular test indicates that post purchase messages are the most effective, but that programmatic is seemingly ineffective in converting higher funnel prospects. Armed with this information, a retailer can do further tweaking and testing to maximize programmatic spend.

Looking for more information on display ads? Read our blog "Cross-Device Personalization Tactics for Display Ads" or contact us for more information.






Keith Brown
New Product Development




Matt Vollmer
Product Manager

Cross-Device Personalization Tactics for Display Ads

Programmatic marketing delivers on the promise of engaging site visitors on an individual level after they browse your site. This greatly expands your marketing reach as the messages don’t depend on email addresses or mobile numbers. With organizations having email addresses for 30% of their site visitors and list attrition rates remaining as high as 25-30% annually, on average, relying solely on your email or mobile channel to reach shoppers leaves a big audience you can’t reach via email.

The display ads are served on sites like CNN.com and Weather.com (and thousands of others) that shoppers routinely visit during their online sessions.

 


Programmatic marketing lets you reach site visitors – regardless of their email status - with dynamic display ads personalized to their site activity. This communication delivers efficient and relevant personal ads, reinforcing brand elements and aiding in purchase decisions to drive incremental revenue and ROAS.

It’s All about the Data
Every email marketer knows that relevant campaigns rely on the ability to segment their audience based on different data points. It’s the same for digital display ads. And while some of the data points are the same for both channels, there are a few differences as well.

Display ads let you use a combination of first, second and third party data:
  • First-party data: The most reliable and relevant data as it is based on someone’s interactions with your site and other marketing initiatives, including email, CRM data, preference center and behaviors. 
  • Second-party data: First-party data from an external source, such as a publisher. 
  • Third-party data: Aggregated through various external platforms or sites and compiled from many different anonymous sources through a data management platform (DMP). 

So what can you do with all of that data? Here are a few of the popular ad-targeting methods in the display ad environment:
  • Demographic: Allows you to serve ads to a specific audience segment based on gender, age, income or other specific demographics. 
  • Behavioral: Demographic focuses on what the audience looks like while behavioral targets the actions a person takes online, such as page visits, products viewed and conversions. 
  • Geotargeting: Similar to demographic but the audience is customized based on identify and behavioral profiles layered onto a specific geographic area, including ZIP code. It often also enables targeting by IP address. 
  • Contextual: Similar to the traditional ad buying method of showing ads based on editorial relevance, contextual targeting serves ads based on category or keywords someone searches across the web. 
  • Programmatic Retargeting: Highly relevant and effective as ads are automatically served to individuals who have already visited your site through behavioral cookie data. 
  • Cross-Device: The ability to serve Programmatic Retargeting ads to consumers across multiple digital devices. 
As you can see, the more targeted you can get, the more relevant your ads will be. The ability to reach consumers on an individual basis across all the devices they use takes your campaigns to the next level. 

The Importance of Cross-Device Data 
The importance of collecting data across multiple devices cannot be overstated. It is estimated that over 50% of all online transactions start on one device but are completed on another. And there is no denying the impact of mobile shopping; however, while more and more shoppers turn to their mobile devices to research products, mobile sales still only account for 30% of all digital sales. Organizations can’t view their audience data in silos or the view will be fragmented and incomplete.


Cookies are unable to track activity across devices as they recognize consumers as unique users per device/browser. But cross-device identification can be achieved through deterministic or probabilistic methods. Deterministic solutions recognize users through encoded email addresses or user IDs whereas probabilistic solutions use additional variables such as browser settings, location and other data sets to create statistical connections between a user and the device.

While this sounds (and is) complicated, it doesn’t have to be. Email can be used to tie users to devices – as consumers click-through messages to browse the site, organizations can capture that data and apply every interaction across every device to that single shopper’s account.

What this Means for Programmatic Ads
Cross-device identification provides a unified, holistic view of each individual consumer. Marketers that can harness data from every device have a clear advantage as they get to know and understand shoppers on a deeper level and in a truer fashion. This helps them build loyal and honest relationships. 

Imagine a shopper who needs a new TV. She starts by researching brands on her tablet and visits two websites of retailers to look up prices, delivery, installation and other details. While on those sites, she signs up to receive emails from those retailers.

The next day, one of the retailers sends her a browse abandonment email, which she opens on her work computer. She clicks through and browses the site and adds one of the TVs to her cart but still doesn’t purchase as she is still considering the purchase.

A few days later, she opens the cart abandonment email from that retailer on her phone and she clicks through and looks at different TVs. She’s still trying to decide which TV to buy.

Later, she returns to the site on her laptop but doesn’t purchase. She leaves the site to do more research but, while browsing other websites, she sees ads for the TVs she browsed on her laptop, phone, tablet and work computer. The retailer knows her and is assisting her in making a decision by presenting the most relevant information to her.

The other retailer, in the meantime, sends her daily emails announcing sales on video game consoles, smartwatches and cameras. It’s the same email they send to everyone on their list.

The first retailer clearly is offering a better shopping experience. It has done more to engage the shopper and provide assistance, and it is more likely to get the sale.


Putting it All Together
Programmatic advertising enhances your other marketing channels as it allows organizations to stay in front of shoppers regardless of their status on the brand’s email or mobile list. Whether or not the site visitor has subscribed to email, display ads can be served. If they currently receive emails or if they had previously unsubscribed, bounced or became inactive, ads can be served after a site visit. Programmatic ads greatly expand marketing reach while providing incremental revenue to your bottom line.

Ready to learn more? Let us know.


Megan Ouellet is Listrak’s Director of Content Marketing. With nearly a decade in the email marketing industry and a background in retail and technical marketing, Megan works closely with Listrak’s strategists and account managers to share the latest trends and best practices. Reach out and say hi to Megan on LinkedIn.

A Data-Driven Culture and Insights-Driven Marketing: Strategic Practices from Billion Dollar Brands

Understanding a few key cross-functional relationships can greatly impact your retail Acquisition, Conversion and Retention efforts. Valuable strategies and tactics come to light when information is shared among your key commerce-driven teams that should include, but not be limited to, Marketing, Merchandising, Buying, Planning, Operations and Design.

Your business is fueled by a number of factors, but let us focus on three:  Marketing, Product and Customers. While these core elements combine to ultimately drive sales, there are typically owned by separate teams with specific areas of focus, and frequently there are relationships that are not known, shared or capitalized on.

Traditionally, Merchandising, Buying, Planning and Design are focused on sales and margin and continually managing a brand’s product offering. Operations-oriented teams execute the setup and/or allocation of merchandise within stores and online. The Marketing team builds relationships with customers across various channels, environments and devices. CRM teams tend to focus on trends centered around various customer profiles, such as first-time buyers, repeat buyers, brand advocates and loyalists, social activity and conversion behavior, just to name a few.  

Let’s take a look at a few examples of how the relationships between these core teams can open up valuable new insights to help you grow your business.

Acquiring customers with increased lifetime value
Understanding the lifetime spend and projected lifetime spend of customers who are acquired and active across various social channels can help you better manage your budget allocation and presence within those environments. You may find new demographics and customer segments that are interested in your brand, but you have never thought of in the past. For example, by expanding your presence into Instagram, you may find you can begin engaging with a younger demographic and acquire customers who may ultimately have a higher lifetime value.  

Bringing new customers to your brand
Knowing the number of first-time buyers, along with sales and margin, changes the value of a product or category. We certainly think of Marketing efforts as an acquisition tactic, but many times the product or category itself is an acquisition driver because of its inherent attributes.
Your number one volume-driving item pays the bills now, but do you know if your mid-ranked volume-driving items have an above average rate of new customers purchasing them? If so, those products certainly have a different value, as they are driving sales and your customer base. The next question is how to exploit this in the appropriate manner online, in stores and across your marketing assets.  

For example, what if the introduction of a floral patterned dress into your typically solid and striped oriented assortment just meets your sales expectations but has a new customer purchase rate two times the average in the dress category? Now, you know floral patterned dresses not only have value in driving sales, but also of bringing new customers to your brand.

Protecting margins
Of your most active purchasers, do you know which tend to buy at full price and those that only shop when you offer an incentive? Of those who need an incentive, looking at groups of customers by certain AOV ranges can allow you to speak to them with different offers to maximize sales and preserve margin, rather than offering blanket promotions.

Optimizing channels
Do you know the last marketing tactic that triggered an individual to purchase? Do you know where she   is most active? You can establish a better customer relationship and streamline your marketing efforts if you know an individual’s preferred method of communication, whether it be SMS or email. Start where a customer is most active. If she comes to you via Facebook a majority of the time, why send her an email first?


By merging the attributes of Marketing, Product and Customers you can inspire better dialogue and collaboration across your cross functional teams. Enhanced strategy can be formulated with data, and trends can be capitalized on faster. In the end, a better customer experience will be realized. 

Andrew Rotteveel is the director of product strategy at Listrak. He began his career at QVC and went on to serve as director of merchandise planning and director of ecommerce operations for Urban Outfitters, as well as director of global planning at Gap.