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The impact of advertising must always be questioned

August 10, 2017

Sam Richardson

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Online advertising is no exception. As P&G Co wants every dollar to add value for their consumers or their stakeholders, they just cut more than $100 million in digital marketing spend in a quarter. They report seeing little impact on their business.

P&G’s move to cut its digital ad spend is a bold one, but it clearly shows that the company have focused on driving sales. This is the top objective for its advertising strategy.

Use the right data, in the right way

Advertisers of today are working in an incredibly data-rich environment. They have a vast range of measurements at their hands. Click-through rates, exposure, reach, engagement are only some of them. It can be easy to lose focus from the ultimate goal of the advertising, to drive sales.

However, this unprecedented access to data makes it possible to, more accurately than ever, measure return on marketing investment (ROMI). But this requires more than the sheer access to data. It demands a thorough analysis framework, taking into account media investments in all channels – digital as well as traditional above the line –  and sales data. Ideally, this analysis also incorporates slower-shifting brand effects, to avoid the pitfall of focussing only on short term and call to action marketing.

Granularity of online data allows for identifying return on investment for each specific online channel.

This is vital, since effectiveness varies dramatically between types of online marketing. It´s depending among other things on the product category, the creative content and the target audiences. P&G’s decision to cut 100 million in online spend is dramatic. If well grounded in analysis identifying specific online channel’s inefficiency, we welcome the boldness.

4 steps to measuring advertising effectiveness online and offline

Here is a Nepa best practice list for measuring advertising effectiveness:

  1. Keep your eyes on the ball. If incremental sales is your ultimate goal, this is your KPI, the goal variable your model aims at.
  2. Cross-channel analysis. We compare Digital and traditional media instead of measuring separately.
  3. Remember brand effects. A ROMI analysis is incomplete when it only takes into account sales that is generated within a week.
  4. Content matters. Nepa’s analyses repeatedly show how the return on media investments differ dramatically depending on the quality of the creative – quantified and incorporated in the model.

Please don’t hesitate to get in touch with me, if you’d like to learn more about how we at Nepa meet these challenges.

Kalle Backlund
Head of Analytics at Nepa UK