Déjà vu All Over Again: Retargeting

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Retargeting is a concept that can be confusing and one topic that we get more questions about than almost any other. Here is a clear explanation and examples of the benefits of both a targeting and retargeting campaign as described by Blair Jeffris of the blog Retargeter:

Your audience data is as good as gold (probably better) when it comes to the returns you can earn from it. We call it Return On Audience Data (ROAD). You’re probably familiar with Return On Ad Spend (ROAS), a key performance metric in advertising. ROAS and ROAD are related, so let’s start by clarifying the relationship between Ad Spend and Audience Data.

ROAS = Revenue ÷ Ad Spend (there are variations, but we’ll use this one)

How do you calculate Ad Spend?

A partially true statement:  Ad Spend = Cost of Media

A truer statement:  Ad Spend = Cost of Media + Audience Data

In fact, 2nd and 3rd party audience data is often more expensive than the cost of media for digital display advertising, sometimes much more expensive.

1st party audience data is the data you already own. It wasn’t necessarily free to acquire it, but now you own it. Your audience data includes the visitors to your website that you cookie, your email lists and CRM data, your app users, and more. When you use your own audience data for digital display advertising, we call it retargeting or remarketing. With retargeting you eliminate a major expense in your advertising, data, and you amplify your revenue. Retargeting is one example of how we build Return On Audience Data (ROAD).

MEASURING ROAS AND ROAD

To better understand the importance of ROAD and how it can drive ROAS, let’s look at examples of Audience Targeting and Retargeting campaigns and compare results.

Audience Targeting. Let’s say we run an ad campaign to reach a new audience using 3rd party audience data. We are buying data from other (3rd party) sources to reach this audience. It’s an audience we want to reach, but it’s not yet our audience data. We call this Audience Targeting:

Audience Targeting campaign assumptions:

Media CPM = $3.00 (inventory cost per 1,000 impressions served)

Data CPM = $3.00 (data cost per 1,000 impressions served; when you buy audience data to target a specific audience, you pay the data provider each time you serve an ad to this audience)

Impressions served = 1,000,000

Click-thru rate = .1%

Conversion rate = 1.5%

Average order value = $200

Using the assumptions above, we calculate ROAS:

Ad spend = ($3 + $3) * 1,000,000 ÷ 1,000 = $6,000

Revenue = .1% * 1,000,000 * 1.5% * $200 = $3,000

Audience Targeting ROAS = $3,000 ÷ $6000 = $.50

The upshot? For every dollar invested, we generated $.50 in revenue on this campaign. We actually have negative ROAS on this Audience Targeting campaign, but that’s okay with us because we acquired 15 new customers and each customer has a lifetime value (LTV) of $1,200, so we’ll generate a return on this campaign over the customer lifetime, especially when we combine this campaign with our Retargeting campaign.

Retargeting. Now let’s make some assumptions about a campaign we run using our 1st party audience data. This is our retargeting campaign. There are different types of retargeting including Site Retargeting, Facebook Retargeting (FBX,) CRM Retargeting and more. We’ve adjusted some of the assumptions, because this is an audience we’ve already engaged and they behave differently than an audience we’ve not engaged. Note that this audience includes users we acquired through our Audience Targeting campaign:

Retargeting campaign assumptions:

Media CPM = $3.00

Data CPM = $0

Impressions served = 1,000,000

Click-thru rate = .13%

Conversion rate = 3%

Average order value = $300

Using the assumptions above, we calculate ROAS:

Ad spend = ($3 + $0) * 1,000,000 ÷ 1,000 = $3,000

Revenue = .13% * 1,000,000 * 3% * $300 = $11,700

Retargeting ROAS = $11,700 ÷ $3000 = $3.90

The upshot? For every dollar invested, we generated nearly $4.00 in revenue on this campaign! By using our 1st party data, we didn’t incur a data cost and our ad spend was cut in half, which by itself effectively doubles our ROAS! Furthermore, the audience we reach using our 1st party data converts at a higher rate and spends more than the audience we reach using 3rd party data. Using our 1st party audience data v. 3rd party audience data, we generated an incremental return of nearly $3.50 for each dollar spent! That’s an example of how we build Return On Audience Data (ROAD).

 

About Jim Dolan: Jim is EVP Revenue Strategies for Enradius, a Baltimore based digital agency specializing in geo-targeting/geo-fencing and cross device matching. Jim can be reached at jim@enradius.com

 

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The Video Star is Alive and Thriving

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Video is the hot item right now in the digital ad world and it doesn’t appear that it will be cooling off any time soon. Big companies like Comcast, Verizon, Yahoo and Google are snatching up video content producers and video ad technology like Black Friday at Walmart.

The metrics seem to support the hype. In a just released report from ComScore and Opera Mediaworks, participants seeing native mobile video advertising delivered significantly higher metrics both at the top of the sales funnel and at the bottom of the sales funnel: indicators such as purchase intent, recall and likelihood to recommend.

Here are some statistics from Adelie Studios that show why video marketing is one of the best marketing opportunities in 2015 and the coming years:

  • 70% of marketing professionals report that video converts better than any other medium.
  •  The average internet user spends 88% more time on a website with video than without.
  • 64% of consumers are more likely to buy a product after watching a video about it.
  • Using videos on landing pages can increase conversions by 80%.
  • 59% of viewers will watch a video to completion that is less than 1 minute.
  • Despite all of this, only 24% of brands are using online video to market to consumers.

Clearly there is a huge opportunity to get in and stake out real estate in the world of digital video advertising channels. And if you have existing content, research shows that your repurposed content can deliver superior brand recall.

What about available video inventory?? It is a hot topic when it comes to video. Many in the business write off the shortage of inventory tales as a lot of hokum; supply side PR that only serves to drive up pricing; and that, aside from chokepoints that appear in swing or rural battleground states during election cycles, there is actually plenty of video inventory to go around. In some instances you should be to accept some skippable video inventory along with your non-skippable.   The pricing on average is around $16-$20 CPM, although more typical pricing is now based on a Cost Per View (CPV) model.

Says Kenny Day of BrightRoll: “Once you get beyond sites like YouTube or Hulu, inventory is widely available. In fact, it could be considered the prime real estate.”

“Sixty percent of the population never sees a YouTube video,” he says. “Smaller publishers with loyal followings — that’s where the action is.”

So, who are the top advertisers from Q2 ‘15 currently using video?:

  1. Apple Inc.
  2. VEVO LLC
  3. Geico
  4. Procter & Gamble
  5. T-Mobile
  6. State Farm
  7. Google
  8. Hotwire, Inc.
  9. Hulu
  10. Microsoft

Top Categories are:

  1. Food & Drink
  2. Financial Services
  3. Arts & Entertainment
  4. Auto
  5. Computers & Consumer Electronics

Here are the main takeaways about video advertising:

  • The power of video to brand and persuade is undisputed. Video can increase conversions on landing pages by 80%
  • Video pricing will only come down as video inventory increases….and there is plenty out there currently. Best practice is to plan as far ahead as is practicable to ensure availability and pricing.
  • Repurposed video contributes to elevated recall, so don’t be afraid to use an existing TV spot.
  • The field is wide open…only 24% of advertisers are using video.

 

About Jim Dolan: Jim is EVP Revenue Strategies for Enradius, a Baltimore based digital agency specializing in geo-targeting/geo-fencing and cross device matching. Jim can be reached at jim@enradius.com