How Independent Measurement Can Rescue The Ailing Advertising Industry
By Madan Bharadwaj, CTO and Co-Founder at Measured.
Built upon an increasingly complex digital landscape with a history of fierce competition, the advertising ecosystem has long been plagued by a lack of transparency and wavering trust between the brands, platforms and vendors operating within the $600-plus billion global market. Events of the past few years have prompted a massive upheaval and sweeping changes across the industry, leading some close to the chaos to fear paid media’s fragile framework is on the brink of collapse.
Marketers must understand if and how their advertising is working to confidently determine where to spend money next. If measurement data can’t be trusted, the economic structure of the advertising industry collapses. It may be temporarily uncomfortable for those accustomed to the standard operating procedure, but the current shake-up is forcing a long-overdue correction to decades of unacceptable measurement practices — and it’s what we need to right the ship.
For years, led to believe that flawed measurement options were an unfortunate necessity, marketers have had to trust agencies and platforms reporting on their own performance and accept results calculated in secret by multi-touch attribution (MTA) vendors. Today, disruptions fueled by data-privacy concerns, big tech competitive posturing, and a dash of criminal intent have brought us to a boiling point — ineffective measurement systems are no longer a pill marketers can hold their noses and swallow.
Apple’s privacy measures continue to wreak havoc for just about everybody. Facebook, which historically tended to over-report conversions due to shortcomings of last-touch metrics, saw a 40-50% drop in platform-reported conversions since Apple introduced ad tracking transparency (ATT). Snap shares dropped 25% in Q3 due to missed revenue expectations — also attributed to Apple. They are not alone. Every online ad channel is grappling with the fallout from restrictions on user-level tracking and third-party data access.
Adding to the measurement issues caused by data limitations, digital ad fraud is also growing at an alarming rate. One report estimates that 88% of digital ad clicks are fake — cause for concern when marketers are literally paying per click. And, if that isn’t enough to make advertisers scrutinize the performance data they rely on, the world’s two largest ad platforms now face allegations of rigging the programmatic bidding process, among other things, to derive an advantage over competitors.
Feeling powerless, some advertisers will attempt to restore control by diverting ad spend from “struggling” platforms to channels perceived to be less risky. Facebook, Google, and Snap currently occupy the hot seat, but the same issues are impeding every online platform’s ability to target, track and measure advertising. Moving budget from one channel to another, without reliable insight into performance, will only create a false sense of security.
The only way to stabilize the industry is for brands to implement a reliable measurement and reporting that is independent of platform bias or blind spots. It never should have been acceptable for platforms to grade their own homework. Even if the data is accurate, discrepancies between platforms or results bloated by fraud cannot be identified and reconciled with platform reporting alone. Fraud can manufacture clicks, but it cannot buy products. For valuable insight that advertisers can act on, campaign performance must be reconciled with transaction data owned by the brand.
As access to third-party data disintegrates, cohort-based analytics and experiments using first-party data are the future-proof measurement options for marketers. Even without attributing user-level conversions (cookie-style), incrementality experiments can accurately determine how tweaks to a campaign or tactic impact business outcomes. Test and control experiments using geo-matched markets or split audiences built using data from a brand’s CRM file are the only ways to run statistically sound incrementality tests that are independent of platform reporting bias.
Geo experimentation can be applied to measure incrementality in almost any media environment and is especially useful for prospecting on platforms struggling to accurately attribute conversions. Geo testing, also known as matched-market testing, follows the scientific framework of controlled experimentation, but test and control groups are defined by geographic regions, or geos, that are selected to have similar demographics. Geo experiments can calculate the incremental contribution of media to any metric that can be observed at the geo level — no user data required.
By splitting in-house CRM files into customer segments, advertisers can test media combinations to identify the optimal contact strategy for each group. This approach, based on data that the brand owns and trusts, can be used to compare multichannel tactics, reduce unnecessary channel overlap and ultimately increase customer revenue contribution. Many brands don’t even realize the insight and growth potential that already exists within their CRM database.
By mapping geo and CRM test results to source-of-truth transaction data from e-commerce platforms like Shopify or Bigcommerce, advertisers can get a clean read on the true contribution of media at the channel, campaign or ad set level. Trusted insight into the incrementality of media prevents critical budget decisions from being influenced by compromised or inaccurate performance data.
For advertising to survive the stream of changes that are systematically dismantling how the industry has operated for 20+ years, we need to build a framework of transparency and trust amongst all parties involved. That requires independent and transparent measurement of the value buyers are getting from sellers.
Marketers evaluating potential partners for neutral incrementality measurement should inquire about these key criteria.
• Are experiments designed using proven test and control experimentation?
• Can they run independent experiments or do they rely on platform attribution reporting?
• Can they connect to your CRM system for first-party data use?
• Can they reconcile experiment data with transaction data from your e-commerce platform?
As one change is quickly followed by another, the ongoing turbulence has many marketers feeling uneasy and stuck in reactive mode. With an independent and transparent system of measurement, delivered by a neutral party, marketers can protect themselves from the whims of an unpredictable environment. When transparency and trust in advertising measurement are established, confident decision-making will result and stabilize an industry growing weary of balancing on the edge of collapse.