Saturday, April 26, 2008

The case of "WASTED" impressions

In my earlier posts, I have talked about optimizing the media in various forms like - Frequency, Creative Optimizer. There are more ways to optimize - Geographically, day parting, week of the day etc.

But the big question is WHY OPTIMIZE? A media buyer would say - I was given a budget of $10 MM and I bought the most effective media. Well, the buyer bought the media which he/she thought would be most effective but what happened in reality?

If the media is reaching out the consumers at a frequency of 15 and optimal is 10, then 5 impressions per unique user are wasted. Now, in terms of $ if the average cost per 5 impressions is $.01 (assuming $2 CPM) then we are wasting $.01 per consumer. If the campaign is reaching 50 MM unique individuals, then the loss is $500,000.

Yes, $500,000 in wasted impressions - money used to reach out to consumers who have already seen your ad 10 times.

So, as per my previous posts there are many advertisers who if not paying attention to frequency are wasting impressions and increasing their cost per acquisition. Personally, I believe this was/is the case with Vonage, Netflix, Zecco, Sarah Marshall (the movie which is about to be released).

In the online world, cookies should be used to identify if this is an existing customer or not and then try to up-sell or cross-sell their products.

Similar math can be done to estimate the wasted impressions based on day parting (what time of the day does your market segment most active), day of the week, Geographically etc.

Another example is engagement, move impressions out of placements which have a lower consumer engagement (click-through for online, phone call rate for DRTV etc). Move the impression to places where there is higher engagement. Make the most out of your marketing $, it is money which could be used for a new product launch or your next big campaign like holiday campaign in Q4.

It is very important to do a mix-media modeling if you are using various channels (Out of home - Cabs, Billboards, buses, trains, Online, Search, TV) to find out the overlap of consumers within each of these channels. This could be hard but hitting the same consumer again and again from all channels - NOT A VERY GOOD IDEA :). In simple terms - all the media buyers for various channels should talk before planning, estimate reach and frequency, if possible research the day parts and then launch the campaign.


Ben Kunz said...

First, I really enjoy this blog. Keenly insightful.

Now, a long-winded question. Many advertisers, as you suggest in this post, incorrectly set up schedules that evaluate impressions by discrete channel, as if each medium were working in isolation. $2 CPM here, $5 CPM there; or on the back end, $50 cost per inquiry from media A, $150 from media B. Media optimization is often seen as shifting funds inside an investment portfolio, based on each "stock's" performance.

Ah, but here is the challenge. Not every impression counts as the same, because different types of media reach people at different stages in the awareness-intent lifecycle.

For example, a billboard about the Mini Cooper builds baseline desire in guys like me (paying too much to fill up our SUV). A print ad might put me into serious consideration mode. And a direct mail piece with an offer at the local dealer, if timed right after I pay $70 at the pump, might make me run in for a test drive.

So -- all these impressions work together, but each at a different stage of pulling me to a decision. How does one determine ideal frequency, when different media may have different roles in converting my interest? It isn't enough to predict that one guy gets 10 impressions from three forms of media and call that optimal. You might still be underspending on the awareness phase and overspending on the direct response call to action.

Interested in your thoughts on this.


Online Marketing Analyst said...

Ben - Thanks for your comment. Sorry it took me long to get back as we just had a baby.

I totally see your point of cross media, unfortunately the reality is that only the online channel is measurable.

I personally believe that about 10 impressions should be optimal to convert someone or make sure that the consumer is aware about the product.

One of the best ways to measure the optimal frequency by channel or across all channels would be doing a pre-post market research survey to understand the lift in awareness or conversion.

Media mix modeling is a complex problem which I don't think anyone is able to nail down completely.

We can use a few statistic modeling techniques like ARIMA etc but prediction is always tough.