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Mystery lessens on the rupee spent in advertising

Enter the digital consumer
Digital advertising began in the mid-90s and has grown exponentially in the past two decades. Down the years, the spread of social media made it necessary for every company to use digital platforms for
communications as marketing goes, wherever the consumer goes. Today, and quite naturally, the companies are investing heavily in digital advertising. FMCG giants like P&G and Unilever that have
massive traditional advertising budgets are now allocating one-third of their advertising-spends to online advertising. Digital advertising’s gain is traditional advertising’s loss as we see TV tumbling, print
shrinking, radio cracking and outdoors being swayed by the winds of change! Let us reflect on crucial aspects of this transition in light of its implications for the buyer and the spender.
At the heart of the explosion of online advertising is the voraciousness of the online consumer 2.0, who takes delight in reading and watching unique and fresh content to make a decision to buy or not to buy. The consumer is also being targeted on content viewed behavior, industry segment, device along with the demographics giving advertising a personalized approach.

Half value of rupee to full value of money
There has always been a mystery involved in traditional advertising—advertiser never learnt the actual number of eyeballs of customers an ad earned. In other words, he was oblivious of the worth of money spent. Claude Hopkins, considered the father of modern advertising, in his book Scientific Advertisement called advertising, “a gamble.” Click To Tweet JohnWanamaker, the great departmental store magnate concluded in beginning of the twentieth century, “Half the money I spend on advertising is wasted; the trouble is, I don’t know which half.” Click To TweetThere are, however, some exceptions in sectors like real estate, where advertiser can calculate the effectiveness of the advertisement through the number of queries the client receives on the day ad is placed in the newspaper. But there still remains ambiguity about the total number of advertisement exposures a prospect required to actually impel him to place a query. Advertisers have also tried to calculate the effectiveness of traditional advertising by carrying out lucky winner contests among the readers and then guesstimate the number of people who saw ad from the number of entrants in the contest. But such exercises are cumbersome and require lot of time and patience. Despite all this, the time people spent on reading an ad or in other words their engagement with the advertisement is never known. Digital advertising has dispelled the skepticism around marketing spends and had Hopkins or Wanamaker been around today, they would have had to retract their words. Now the advertiser knows the worth of every single rupee—how many eyeballs it could gather, how much time a probable customer spent on an ad, how many leads were generated and how many conversions were made. The advertiser can also get to see the behavior of the buyer at different stages of the “buying cycle.”

Defining advertising
The American Marketing Association (AMA) defines advertising as any paid form of non-personal presentation and promotion of ideas, goods, or services by an identified sponsor. This definition
encompasses the definition of digital advertising also as, “any paid form” has come to mean scores of different social and digital channels, from which an advertiser can choose to tailor the media campaign.

The buyer journey
We can leverage the maximum results from our campaign by carrying out cross channel marketing opportunity that catches the customer on different levels of buyer journey. Now we will trace the
journey of typical online buyer. A journey begins with the customer A visiting a website. He surfs through your website and shows interest in product X. But he doesn’t make a purchase and gets cookied. A goes to another website and is shown the ad of product X. Later he does some activity on social profiles and sees the ad of X all over. As A gets interested and clicks the ad, and fills a form, he is led to the website (often a landing page) and makes a purchase. A uses the product and in case he is happy, he comes back for a repeat purchase. He fills up the survey form and gives his opinion of product and service.

The metrics that matter
Let us glance at some of the metrics that reveal the success of a digital advertising campaign. We have a clearer picture of the advertisement in the digital format. Impressions give us the figure of how many
times the advertisement was displayed. A click doesn’t matter here. Reach is the number of people who got exposed to the advertisement. At times reach is less than impressions. That’s because a person
gets exposed to an ad multiple times. Clicks is the number of times an ad gets clicked and is the key metric of success of an ad campaign. Click through rate (CTR) is an actual metric of the efficiency of an
ad. CTR is the percentage of clicks to impressions. CTR helps the advertiser to better understand the performance across multiple platforms each with different size. For example, the number of people on
Facebook is much higher than on Twitter. CTR can give an idea of where the ad performed better. If the ad had 1,00,000 impressions and 100 users clicked it then CTR is 100/100000=.01 or 1%. Engagement rate gives an idea of how engaging was the ad. Conversion is the metric of how many actions or acquisitions were made by an ad. It is an important metric in the campaigns that are made on cost per action or cost per download. Cost per lead (CPL) is also known as cost per target. Studied widely with all sales and marketing programs of the company, it can give a fair idea of how much money is required to be spent on new lead acquisition. Effective cost-per-thousand (eCPM) is calculated by dividing total earnings from the ad by total number of impressions in thousand. These metrics help us devise a budget strategy and a content strategy.

Digital marketing is an amalgam of consumer behavior, Big Data, psychology, state-of-the-art technology, and creativity. Therefore, the digital advertiser has to don many a cap where the advertising company is small. Large advertising companies can hire a specialist in every domain to work in tandem. A lot churning is happening in the advertising industry and it is opening a plethora of opportunities to young professionals.

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