4 Things to Consider When Investing in Digital Advertising

digital advertisingDigital Advertising Tips
By: Jeremy Sneed

"Advertising's not going away. Really sh**ty advertising is going away, and I bid that farewell," said David Droga in opening Cannes Lions Festival of Creativity for 2018.

Ad platforms continue to unveil the latest and greatest ad practices, providing the biggest bang for your buck in digital ad spending. Each of these new platforms causes increased competition, creating a battle for optimal CPM (Cost per 1,000 impressions). This begs the question, where is it best to invest your money to ensure the most optimal return?

Advertising is just like any other investment, putting money into something with the desire for an end profit or return. When investing money, you want to know what is going to yield the highest return. It can be intimidating to see a higher price tag on some investment avenues. With a high price tag comes a tough question, is it worth the investment? Some ad networks are offering cheaper CPMs than others in the industry, creating a less expensive initial investment, but is the lower price able to produce as promising of a return?

There’s a frequent question we get at El Toro: why is your CPM higher than some other digital advertising competitors, is it worth it?

We quote Harvard Business Review in this case, which states, “Your impressions are getting cheaper? Who cares? The real question is whether they are becoming more effective.”

digital advertisingMost all online advertising we see is done either using social media, search engine marketing (SEM), or cookie-based tracking. All of these are in demand methods of digital advertising, but how do they compare in effectiveness against El Toro’s household IP Targeting?

First, it is important to note the flaws possible behind any ad methodology, then show the top ad fraud aspects of the industry and how each platform matches up to these.

El Toro provides an advertising technology completely of its own class, style and genre.

We take any possible flaw or fraud out of the question. Utilizing our technology may cost more than some other advertising methods, however, our definicienes are easy to list: non existent.

When you come to El Toro you are conducting advertising on a one to one marketing level. This means you aren’t just throwing up ads to hopeful real consumers or hopeful potential buyers. When you serve ads through El Toro you are serving to real people in real homes. We are able to do this by targeting consumers directly in their home, and across all devices within the home, all without the use of cookies, but rather, through household IP addresses.

As ad fraud continues to wreak havoc in the industry, it leaves most advertisers dumbfounded on how to tackle this growing issue. However, this hasn’t stopped the growth of digital ad spending. There are a few common reasons we see revealing the fraud in digital advertising that help pinpoint where an investment becomes wasteful. By breaking down all of the different aspects around digital ad fraud, we can then get a full grasp on the comparison between popular ad platforms. Ad buyers are due the assurity that their marketing dollars aren’t going to be spent fraudulently.

 

1. Digital Advertising Within Country

The web is international. With this comes the fact that (for most developed countries) there is little to no stipulation on where one can travel on the web. When serving advertisements based on web traffic, i.e. cookie-based advertising and search engine marketing, these are typically served to all online traffic. The problem with this is that a high volume of United States businesses only offer their services and/or products to United States consumers. This means that any international engagement received is a complete waste, as they are unable to convert.

International web traffic represents nearly 30% of all online traffic within the United States. This poses a major obstacle for any advertising methodology that relies on following web traffic or clicks to measure its performance. The problem of international traffic within the U.S. is a growing issue as well as both China and India continue to surpass the United States in the number of web-connected consumers.

 

digital advertising2. Correct Target

Arguably the most crucial aspect of advertising, both traditional and digital, is whether or not the advertisement is reaching the correct audience. Most online targeting is based on behavior, as tracked by cookies, or by making use of a consumer’s interests or likes as seen in social media advertising.

Correct Target & Social Media

An issue within social media advertising is that its targeting methods tend to be skewed. A number of social media platforms use people’s likes and interests to target them. With this, any pages, topics, or interests a consumer follows, whether when they first created their account or just yesterday, advertisers can target you based on that interest. For example, I am shown as having an interest in Gucci, Tom Ford and Lamborghini on Facebook because I enjoy following their products. However, could I afford to buy from these brands? Absolutely not! This is just one example of how social targeting can become distorted.

Social media also allows advertisers to target based on basic demographics, while this may seem ideal, it’s still too of a broad reach. This doesn’t help you reach consumers who you know have an interest in your brand or product, but rather, demographic pools of patrons you hope will have interest. Social platforms boast high numbers of consumers when targeting ads through their platform. While this can sound enticing, by increasing your bucket of leads with more hopeful targets, you’re merely increasing your ad spend on more hopeful targets rather than quality leads.

A number of social media platforms allow advertisers to upload CRM advertising lists as well. However, this targeting is typically dependent on email addresses and phone numbers. The problem with this is that a number of consumers either change or do not post this information on their social media accounts at all. This makes it difficult to find and target your intended audience.

 

digital advertising3. Fraudulent Traffic

Fraudulent traffic has been a topic of discussion within digital advertising for a number of years. Companies want to know that their ads are being shown to and seen by real humans. While this doesn’t seem like it should be too steep of a request, it’s proving to be quite a challenge for many advertising platforms.

Fraudulent Traffic & Cookie-Based Advertising

In 2018, cookie-based advertising is becoming a dying practice, though some still clutch onto hope for its success. First of all,in 2018, around 70% of mobile devices do not allow the use of cookies at all. This takes away a huge portion of the market given that in 2017 mobile-web usage surpassed desktop usage.

Cookies’ purposes are to track and target online consumers. The monumental problem with this is that online fraud traffic is estimated at around at least 30% across the web, though some sources estimate it to be as high as 45%. By advertising through cookies, this translates into 30% to 45% of the ad traffic as being unprofitable. Apply these metrics to an ad campaign and this equates to the misuse of at least 30% of the budget.

Also, cookies expire, normally lasting only 30-60 days total. This is without taking into account the number of people who clear their browsing history, which typically includes erasing any cookies tracking them altogether.

Fraudulent Traffic & Social Media Advertising

Let’s look at social media as well. Last year Facebook disclosed that over 270 million of its users were either fraudulent or duplicate accounts. Twitter falls right in line with this, with around 50 million fake accounts. This means that Facebook’s and Twitter’s fraud accounts each tally up to be nearly 15% of its overall users. With these facts at hand, this presents the point that when advertising through social media, you’re looking at an anywhere between 5% and 15% of your targets being fraudulent.

Fraudulent Traffic & Search Engine Marketing

There’s one sizeable issue with SEM, and really the only problem needed to make a case against it. Most SEM ad platforms charge advertisers on a cost per click (CPC) basis. This means no matter what, every single click on your ad listing through SEM costs you money.

SEM ad platforms try to stress the low costs of their platforms, however this typically only applies to the less in demand search terms. More popular search terms tend to result in CPCs as high as $60, which can burn through an advertising budget at a rapid pace. This is without even considering the CPC spend wasted on bots and fraudulent traffic, as well as manual clicks done to intentionally increase your advertising spent.

 

4. Optimal Frequency

A lot of ad buyers do not realize the importance of frequency. Too often ad platforms get caught up in impressions served, rather than taking into account how they were served. Frequency represents the number of impressions served per person.

What goes awry in a number of ad campaigns is the frequency across targets. In a great deal of campaigns, it isn’t abnormal to see more than 30% of the impressions being served to around 1% of the targets.

We see this a lot across digital ad campaigns as platforms try to target possible “better” leads at a higher frequency than others. The problem is that by doing this, not only are a large portion of targets being served an insufficient amount of impressions, but this also overserves to the rest of the targets. Not serving ads at the same frequency across the board also makes it less measurable whether a campaign is running successfully, as this creates more variables.

There is no definite answer on what the most optimal frequency is. While a large portion of advertisers push the ideology of ‘the more impressions the better’, this mentality merely exists to convince buyers to increase their spending budget. Advertisers iterate that the more that people see your ad, the more likely they are to convert. This has shown be true only for certain types of campaigns that are solely looking for awareness rather than conversions, such as political ad campaigns that want name recognition.

However, it is shown that increasing frequency eventually causes diminishing returns on conversions.

Research has shown that frequency operates most ideally on a bell curve methodology of implementation. Studies show that the ideal frequency should be between 4 and 7 to be optimized for conversions. This is typically seen on a per week measurement, so 4 to 7 impressions per target, per week.

 

Comparing Numbers For Digital Advertising

These are merely the most significant accuracy measures to take into account when investing in digital advertising. However, these four are all El Toro needs to prove the case that we offer the best digital advertising solution on the market.

El Toro’s technology targets people directly in their homes using the home IP address. With this in mind, the Within Country, Correct Target and Non-Fraudulent Clicks/Traffic aspects of ad fraud don’t even apply to El Toro’s digital advertising.

digital advertisingOur company knows the precise consumers being targeted. We are able to do this by utilizing only consumers’ physical addresses and the IP addresses correlated with them. This enables us to target consumers on a one to one basis. What we are able to do is take direct mail marketing and apply that digitally, serving direct households with online ads. Through this, El Toro is able to remove any possible fraud, ensuring targeting the correct consumers.

Inside Optimal Frequency is an aspect that El Toro takes seriously. We recommend to most of our clients the 4 to 7 frequency that research has proven to most help optimize conversions. Since we know our exact targets and number of those targets before executing an ad campaign, we are able to ensure ideal frequency throughout the campaign.

These metrics alone set El Toro aside from any other digital advertising competitor. This is especially the case as El Toro holds patents for our technology, and is solely able to execute digital advertising and Account Based Marketing with such precise accuracy.

El Toro takes pride in our CPM rates, we know for a fact that it’s worth the investment. We stand firm in that and have proven data to back up our statements of unparalleled assurance.

 

 

By: Jeremy Sneed

jeremy.sneed@eltoro.com