The Future of ROAS Measurement

Looking back I feel that the report is so full of fascinating data methodological information and quotes that Iamp8217m not sure that the main message really came across the need to combine all ROAS methods Hence this column which drills down directly into this recommendation the whys and wherefores and the importance of not amp8220electing one method as truth and ignoring the other methodsamp8221The main reason to not accept MMM as the singular truth standard is that MMM in 99 of cases does not control for the creative frequency target segments context effects synergies competitive efforts and other immensely powerful variables The coincidence of sales going up or down in geographic areas with different media mixes promotions prices is the sole algorithm Often the media data are attributed to geographic areas based on noisy data Often the estimated geographic media weight by type is not that different for different media types in other words several types may have the same geographic pattern which makes it difficult to separate out their effects from each otherIgnoring some of the most powerful variables in advertising and imputing ROAS based only on geographic deviances in GRP or ad dollars per capita is an approach which is unquestionably oversimplified It is amazing that it works as well as it does However part of the appearance of working well is manufactured by the practice of Bayesian Priors ie smoothing trends to agree with past MMM findingsSinglesource data is not without its flaws the major flaw being that certain sell side players continue to get away with monadic designs in which only their own media are being correlated with sales so that only their own media can get credit for producing sales A booster effect to that trick is to target IDs known to be brand purchasers already so that predictable repeat sales can be made to seem like incremental sales produced by the media platform using these tricks Many people on the buy side who ought to know better continue to be taken in by these tricks and so the trickery continuesAt the tops of advertiser organizations CEOs and CFOs are falling back on oversimplified approaches to correcting these mistakes mainly by cutting media budgets However the budgets being cut tend to be for nondigital media The digital media continue to grow budget and this is not necessarily the result of scientific proof of higher ROAS it is apparently more reflective of the lower CPMs and faster data feedback which creates a comforting illusion of being a sophisticated appraiser of media The tenyear FOX BHC MMM study amp8211 perhaps the largest MMM ever conducted in the world amp8211 shows that during the great dollar pilgrimage from television and other traditional media to digital fewer than one in five national advertisers studied increased market share This ought to have been a wakeup call but it was not The rest of the C suite has not yet realized that marketing can be a science and perhaps is daunted by the need to bring a lot more science to bear in marketingTo demonstrate how strong are the variables being left out in MMM letamp8217s look at just one of them one of the subtlest context effects Imagine that there are two geographic markets adjacent to one another and quite similar in many ways Imagine that the sales go up in market A but stay flat in market B Through the MMM lens the spurt in sales in market A must be due to the fact that media type X was at a higher GRP level there than in market BBut what if you also had singlesource data for those markets You might see that the households in which sales increased were barely reached at all by media type X And you might see that by accident the psychological similarity between ads and contexts were higher in market A and that this was the real reason why the sales went up thereA Nielsen NCS study of RMTResearch Measurement Technologies showed that context effects can lift incremental sales effect by 36 The Wharton Neuroscience study presented at two ARF conferences recently by FOX and Bill Harvey Consulting shows the same thing using brainwaves the same ads have very different effects depending upon the content the audience members see just prior to the ad The following graphs would show all the lines superimposed over each other if there were very weak context effects there would seem to be only a single linecurve in each of the two graphs belowOr there could be more of a campaign audience skew to the moveable middle in market A than in market B that can also have strong effects TRA showed an average increase of 28 in ROAS when the buy was skewed to Heavy Swing Purchasers same thing as moveable middleOr there could be more of a campaign audience skew to people who have the same motivations as are subconsciously communicated in the ad in market A a Neustar study of RMT found that this increased incremental sales ROAS 95 and for new to brand 115These examples show that individually the variables which are left out of MMM can add huge amounts of variance to the data causing misattribution of the causes to media type effectsMMM should be combined with singlesource and RCT and branding measures The means of integrating them is to rely upon RCT as the thing closest to a truth standard and AI for the continuous deep learning of how much weight to give to each datum from each method The degree of fit to the granular empirical sales data is the key signal for training the forecasting model enabling optimization before during and after each flightDebunking the Hoax of Lost SignalThe walled gardens use privacy as the rationale for the walling of their gardens However they are ignoring the availability of cleanroom technology by doing so Yet the industry is not calling them on itThe real reason for maintaining walled gardens and extending their walls is for competitive advantage Thus we see the two biggest walled gardens talking the advertisers into the idea of virtual IDs even though the use of VIDs ignores the effect of campaign dispersion on reach reducing all reach predictions to GRP level Thus we see thirdparty cookie deprecation good for garnering brownie points for protecting privacy and maximizing advantage to the walled gardensIn the old days advertisers would blackball media unwilling to submit to thirdparty audience measurementNow there is street wisdom which says that loss of signal is coming and we must retreat to content targeting and MMM but this is actually not true for two reasonsFirst the signal we had before deprecation began was never as accurate as we thought Truthset shows that the average of 15 major ID graphs is about half accurate An audited accredited player Nielsen is creating its mega ID graph using 510 ID graph sources plus so far more than 20 spinetospine full integrations with major platforms to overcome the inaccuracy of individual sourcesSecond although thirdparty cookies are going away retail media networks and other giant players with very accurate firstparty identity data are ballooning the age of singlesource is not ending it is just beginning with better identity data than ever before on averageROAS when done right is the most powerful tool for maximizing marketing productivity in all time framesUsing oldfashioned methods is a guarantee of leaving money on the table for competitorsPosted at MediaVillage through the Thought Leadership selfpublishing platformClick the social buttons to share this story with colleagues and friendsThe opinions expressed here are the author39s views and do not necessarily represent the views of MediaVillageorgMyersBizNet

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Bill Harvey

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The Future of ROAS Measurement

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