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How to Lose $100,000 in Five Minutes

infolinks, August 28, 2014

By the time you finish reading this article, $97,000 of digital display spend will have gone straight down the drain. If that seems like an exaggeration, let the math speak for itself: according to eMarketer, $10.2 billion will be spent in 2014 on digital display ads. That’s $97,000 every five minutes.

Then, consider that display ads currently operate at about 0.08 percent click-through rate, which means all that ad spending only elicits consumer engagement less than once for every thousand impressions. Only $77 of the $97,000 spent in the next five minutes actually generates a response. Something here isn’t adding up.

It seems, in the ad-tech world, we place a lot of emphasis on how to make money, but not nearly enough on how to save money. And when it comes to your bottom line, eliminating waste can sometimes make much more of a difference than creating new revenue streams, especially when the waste is this severe. Yet as an industry, we waste millions upon millions of dollars every year by failing to accept the fact that display is in decline and to adapt our practices to the way today’s users consume digital content.

The $97,000 question, though, is: why? Why are we willing to throw hundreds of thousands of dollars out the window rather than take a hard look at our practices and fix what isn’t working?

I don’t mean to imply that it’s a quick fix; the process will be complex and won’t be accomplished overnight. Perhaps that’s what keeps advertisers and publishers tied to banner ads and medium rectangle boxes. Perhaps they cannot fathom letting go of the way it has always been done, and/or they worry about the cost and time involved in investigating and testing new ad formats like native, in-text and outside frame ads, which have been shown to attract more attention and drive more engagement. It’s certainly true that implementing new ad formats does carry a cost, but it is nominal when compared to the millions being wasted.

In many instances, the culprit behind stagnation is simple risk aversion. With so much money at stake, many leaders at even the most stable, financially flush organizations would rather take a “wait and see approach” and stick with the “tried and true” until enough of their peers have begun to adopt a new technology or method. The problem with this approach is that it automatically puts your organization in the position of playing catch up rather than leading.

Not to mention, the “tried and true” ways are not exactly “true” anymore. Display has been declining for years, slowly suffocating under the weight of stale, ineffective and irrelevant banner ads. Eye tracking studies have proven that banner blindness is real and rampant, so your old standby ad formats and delivery platforms are not just old school, they’re actual money pits, sucking up your budget but barely turning around any results. At this point, there’s nowhere to go but up, so why not test out some of the new formats and techniques that actually are overcoming the banner blindness issue to gain customer attention and drive engagement?

Which actually brings us to another issue. Engagement-that’s what our end goal is, but how exactly do we measure it? Any smart marketer knows to assign KPIs and benchmarks at the onset of a campaign, but what exactly goes into the “engagement rate” metric? Click-through rates can be an indicator, but by no means tell the complete story of how a customer actually interacted with your brand. Purchases and revenue increases obviously indicate engagement, but again, do not tell the complete story. Channel fragmentation and multiscreen media consumption have compounded the age-old metrics issue in recent years, but also give us many more opportunities to interact with consumers.

Benjamin Disraeli said it and Mark Twain popularized the quote,”There are three kinds of lies: lies, damned lies and statistics,” meaning that numbers can often be spun to support pretty much any claim. Marketers have access to no end of data and, with so many numbers to choose from, a smart marketer can always find some data point to show success. What we need to establish is some kind of standard approach to measuring engagement; metrics that can be compared apples-to-apples across media channels to show where value is actually being created.

Change is never easy for a large industry. Especially when the change needed is as much philosophical as technological. Like the saying goes, one first must admit one has a problem before one can fix it. Despite countless studies supporting the fact that traditional display ads get ignored regularly, we continue to delude ourselves that more targeting or sexier creative will make it all better.

But the truth is, we’ve tried that already and it hasn’t worked. The industry must first admit it has a problem-and believe me, there are mountains of evidence to support that fact-but then we have to collectively realize that embracing the new isn’t risky. Marketing is all about giving consumers what they want, when and how they want it (and avoiding the messages and methods they don’t want.) Through their behaviors while browsing and eventually purchasing, they’ve told us what they want. We just have to listen and answer.

Dave Zinman is CEO of Infolinks.

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