Insight/ Analysis & Measurement

Can Marketing Ever Be Measured By Direct ROI?


by Gil Regev
Vice President Of Marketing

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Article Highlights:

  • Truth is, ROI on marketing is difficult to measure.
  • Google and now Facebook have become driving forces in mobile marketing.
  • There is no doubt that mass media, blogs, forums, and other digital medium have benefits.

Back in 2001, I was a junior media buyer purchasing massive amounts of Internet traffic on two small portals called MSN & AOL. Online dating was at its peak, and the company was dedicating substantial resources into online visibility.

The only issue was measurement.

At the time, the correlation between new subscribers, banner clicks, and specific placements was manually analyzed. We used data received from the publisher and actual income, compared with the company’s internal finances. Needless to say, accuracy was always a challenge.

This example represents how the same questions always echo for marketing executives leading promotions for companies big and small. How do you measure effectiveness? Is an article in The New York Times worth more than one on TechCrunch? What’s the value in banner campaigns? Are physical billboards worth more? How can we measure it all?

Truth is, ROI on marketing is difficult to measure. Media interest can yield immediate success, or it can drive actual business months later, if at all. And when results do come, many factors have to be considered–the forum, the message, the timing, and sometimes even the product gets some credit.

So how do we map out an organization’s marketing activities when the direct link between marketing initiatives and user response is often hard to determine? In many ways, mobile now reminds me of those early 2000 Internet days. Google and now Facebook have become driving forces in mobile marketing, owning close to 60 to 70 percent of total mobile traffic and turning the cost-per-click (CPC) into the reigning model of this industry.

Still marketers are struggling to answer that same old question: What is the benefit of investing in mobile compared to any other activity? After all, neither cost-per-1,000 impressions (CPM) or cost-per-click necessarily guarantees actual sales. For marketers looking to drive direct acquisitions from mobile campaigns, the ROI-driven solution is cost-per-action (CPA). This means paying only for actual conversions–sales, downloads, installations, and so on.

CPA has been growing in stature, becoming an industry standard for Web advertisers striving to drive actual sales (beyond brand awareness) via digital channels. Analytic tools have been developed, and Internet ad networks are starting to provide analytics-based activity tracking, freeing marketers to concentrate on campaign implementation and optimization. Mobile affiliate networks are focusing on the growing demand for this model, offering exclusive acquisition-driven campaigns.

However, one critical success hurdle remains: the ability to optimize the quality of users who do convert. For example, matching a personalized app to a specific user based on his past mobile behavior and purchase history, otherwise known as “real-time performance,” can be precisely the difference between a campaign’s success and failure. And, in this case, it goes beyond volumes. Mobile apps experience a usage drop of more than 70 percent after the first week, so user quality becomes a substantial factor.

But using data accurately in real time is not simple. It requires a direct connection to the traffic source–the mobile publishers. Affiliate networks cannot yet access this source.

Then there is the “value” chain reaction. From affiliate networks to the affiliates themselves, the ad networks and finally the publishers (at times there are other mediators along the way), the value chain not only creates an overbearing cost for advertisers, but it also compromises campaign efficacy. Each player in the chain holds a different interest in the process–one targets for conversions, the other clicks, and no one has true insight into who an ad is even served.

There’s now a new breed of campaign enablers, called “mobile performance platforms.” Offering exclusive CPA campaigns and connecting the value chain end-to-end, they manage direct relations with their advertisers, promoting their products directly with publishers (traffic sources) they are integrated with. The end result is an optimized campaign where everyone benefits: Advertisers get direct value for money, paying only for quality leads they receive, while publishers immediately improve their monetization bottom line and deliver their users more relevant offers.

As an example, by tracking user behavior throughout an app’s lifetime, performance platforms are able to offer a deeper targeting, within the app itself, such as in-app purchases, driving traffic directly to your point-of-sale. There is no doubt that mass media, blogs, forums and other digital medium have benefits, but for businesses looking to drive direct acquisition via a personalized experience, such as mobile phones, CPA is the only marketing method that ties mobile promotions directly to sales.

So the next time your CEO asks you where the advertising budget has gone, open your performance advertising spreadsheet to point precisely to the number and name of those users you’ve acquired via your mobile promotion. That’s what we call measurable marketing performance.