Online ad metrics are, for the most part, relics of a bygone age.
Take last-touch attribution or when a passing glance at half an ad gets rubber-stamped as viewable. And don’t get me started about click-throughs.
Even the holiest of holies – ROAS itself – is suspect.
The ease with which buyers invest in whichever platforms or publishers seem to generate high ROAS is a “moral hazard” in advertising, said Stephen Howard-Sarin, Criteo’s managing director of retail media, at our Programmatic I/O show in Las Vegas last week.
ROAS is a double-edged sword.
Howard-Sarin notes that some advertisers commit entirely to reinvesting in platforms that report high ROAS. But ROAS is highest for campaigns that target known customers or customers at the very point of sale.
ROAS can also be a total mirage. Some grocery brands experience declining sales while a dozen or more retailer and social ad platforms report ROAS up and to the left.
So much for incrementality.
Change from within
Unfortunately, we seem stuck with our longtime standards, like the trusty old CPM and ROAS.
But for change to happen, it must come from within.
ROMO is “one metric I wish would catch on,” said Zach Darkow, Home Depot’s head of marketing measurement, during a presentation at Programmatic I/O.
“Return on marketing objectives” may sound like just another way to say “ROAS,” but according to Darkow, ROMO has important distinctions. Whereas ROAS incentivizes advertisers to focus on proving the direct returns on a concrete marketing budget, ROMO widens the scope to the business objectives an advertiser wants to achieve.
A brand may be more interested in increasing its category share among Home Depot shoppers, say, or increasing brand awareness among new homebuyers – a good, targetable demo for Home Depot. Measuring ROMO could involve running surveys to measure brand lift or using other non-programmatic tools in the mar tech toolkit to generate that metric. This takes time, modeling and often the need to use other data sets or vendors.
The problem is this: ROMO wouldn’t work with walled garden campaigns that self-attribute ROAS and use that data to optimize on the fly. There’s a heady confidence that comes with tracking ROAS. It feels good to get a campaign report within a day or two that claims to demonstrate a brand made massive returns in real dollar figures.
But that dollar figure is made up. Any truthful attribution would be far more vague.
Darkow mentioned that his former retailer employer, Target’s Roundel ad biz, had an internal metric called WISS (web-influenced store sales) that never caught on. Like ROMO, WISS captures the murky, modeled-out and partial influence generated by paid media.
Quality control
Programmatic vendors want advertisers to be more skeptical of ROAS claims.
For instance, also at Programmatic I/O last week, The Trade Desk’s GM of data partnerships, Ben Sylvan, let slip that the company is “introducing a new metric we’re calling the ‘Quality Reach Index.’” The metric uses retailer data to attribute incremental reach, he said, but with a caveat that it’s “relevant incremental reach.”
For many brands, lookalike audiences and targeting demos are extremely vague. When a major ad platform is delivering reach for a diaper brand, for example, it’s hitting the universe of people aged 25 to 40, Sylvan said. That’s a lot of potential new customers, which means high incremental reach.
But high incremental reach in that case doesn’t necessarily deliver what the brand is actually looking for – new parents. The Quality Reach Index might reduce the campaign’s total scope but more efficiently reach people actually in market for diapers.
“We’re trying to tell [advertisers] that there’s a big difference between ROAS and blindly reaching people,” Sylvan said. “And you should use retail data to make sure you’re reaching the right people.”
Are you incremental?
In other words, prioritize real incrementality.
Beginning in 2022, Google, Meta and Amazon began testing and launching metrics – extremely popular metrics, mind you – focused on new customer acquisition and incremental attribution. Incremental attribution moves away from user-level conversions. Instead, the platforms use geo-testing to prove incremental growth in one market where a campaign ran compared to a similar market where ads were withheld.
The thing is, these metrics are unknowable. Google or Meta might claim to produce a firehose of new customers. But they rather broadly define “new customers” as instances when there isn’t a direct match between their own identity graph and the brand’s CRM.
When advertisers buy a third-party audience segment of “new moms,” that segment includes women who are not moms at all or have adult children, plus a sizable portion who will be childless men. Google and Meta are delivering “new customers” the way third-party segments deliver “new moms,” although advertisers are paying a handsome premium for each ostensibly new customer.
But advertisers must also pay heavily to test and learn if they want to create metrics of their own rather than accept the platform-provided ROAS.
For all the major concerns about black-box self-attribution, walled gardens make ad targeting and ROAS reporting very easy for almost any advertiser. Yet advertisers that want to calculate incrementality on their own to judge the platforms, and open programmatic must have rigorous programs for geo-testing holdout campaigns, creative testing and much more on a constant loop.
Geo-testing a campaign in Nashville compared to, perhaps, Memphis might give you a sense of your ROMO or quality incremental reach in Nashville. But it’s only a snapshot of a place in time, said one grocery brand advertiser who told me they’re trimming the third-party testing and metrics vendors they’ve added since 2020.
Advertisers can’t test by campaign. It isn’t an upfront investment.
Testing metrics in earnest is a lot of work and usually involves adding vendors, committing more to media, hiring a data scientist or two and waiting longer spells to see how marketing results play out. In some cases, the CMO (not to mention the CFO) can lose their appetite for change, according to the same marketer.
“That platform ROAS is just sitting there like a feather bed,” they said.
