BrainTrust Query: How to Increase Marketing ROI in the Digital Age
Through a special arrangement, presented here for discussion is an excerpt from an article from the Joel Rubinson on Marketing Research blog.
Based on conclusive findings in the early 1990s that the first ad exposure has the greatest effect on sales, the concept of recency planning was created and has changed how media is placed. Prevailing wisdom is now that a marketer needs to stay on air consistently because, that way, it is more likely you will deliver an ad impression to someone who is about to buy, than by using heavy-up pulsed flights of advertising interspersed with periods of going dark (which was the prior thinking.)
If you could, you would drop impressions selectively for each consumer closer to the next purchase than the last one. Now, in the digital age, you can do exactly that.
The principle of recency implies that the sales response to ad spending (called ad elasticity in economics-speak) can be thought of as an average of no effect from the ad that is unfortunate enough to air right after a given consumer’s purchase, averaged in with twice the effect for an ad that is lucky enough to air right before the next purchase.
Why does this math matter? Because if you could find advertising vehicles that were "recency-tilted" by their nature, that is, more likely to deliver impressions closer to the purchase, you will get greater ad response — practically guaranteed.
So how do we reach the "readier" to purchase consumer? How do we recency-tilt? Digital activities that are self-directed — e.g., search or visiting a brand’s website or a site like coupons.com — are mostly done with shopping purpose in mind. In other words, such digital brand communications give you recency because the consumer is controlling the timing of the impression not the marketer.
Digital display advertising can also be recency-tilted if marketers change their prevailing approaches to display. Remarketing has been proven to provide greater lift and that is certainly recency-tilted. Advertising served by ShareThis has been shown to provide greater conversion and it is also recency-tilted because advertising is selectively served to people who share content that is relevant to them at the time, implying for many that they are about to make a purchase decision. Digital media’s ability to deliver recency will get magnified as smart mobility becomes a constant part of the shopping process.
But the way, media and marketers calculate reach should be adjusted also. If impressions unfortunate enough to be delivered right after the last purchase aren’t worth much, then their contribution to reach isn’t worth much either. Marketers should measure reach from those impressions delivered closer to the next purchase than those closer to the last purchase. Once you start calculating recency reach, you will find that the touchpoints that deliver this are different and it will help to guide marketers’ strategic media investment decisions in ways that will improve sales response.
With some straightforward experimentation, I believe the logical conclusions here will be confirmed. And then, the way we plan media will be profoundly affected.
Discussion Questions: Do you see digital activities as a way to target ads to consumers with greater recency, or closer to purchase? What do you think of the value of calculating recency reach? How may media planning be transformed with a growth in digital communications?