Everybody knows mobile matters, but few understand how to determine with certainty whether it’s delivering a return on their investment.
In this fast-moving and quickly evolving category, there is no shortage of attribution approaches and metrics, along with companies claiming some new campaign measurement methodology, analytics or insight. Yet the metric that matters most in any advertising medium, including mobile, is often overlooked: sales lift.
Mobile minutes have grown from 3.7% of media consumption in 2010 to 23.3% in 2014. Despite this shift in consumer behavior, marketers have shifted just a fraction of their ad budgets to mobile. They are reluctant in the absence of hard facts about campaign results.
It’s time for a better approach to measurement.
What Makes Metrics Meaningful?
According to a 2014 Forrester Consulting study, most marketers would agree that sales lift and new accounts opened would be their top two ways of determining whether their ad budget was well spent.
Yet, instead they’re using more traditional digital metrics like impressions, taps and website hits, as well as downloads and mobile purchases. But clickers aren’t buyers. While mobile produces eight times as many clicks as desktop, a close examination of clicks versus actual sales lift shows no correlation whatsoever between those who click and those who buy.
So when marketers optimize mobile campaigns based on clicks, they could actually be steering away from buyers, and focusing impressions on the very small percentage of the audience who click—less than half of one percent.
That’s not to say clicks don’t count, because they can be a useful metric that can indicate customer engagement and may help you adjust campaign tactics. But they are not a measure of campaign success.
The same is true of store visits, another popular mobile measurement these days. In fact, many marketers count store visits as “conversions.” It’s easy for marketers to lose their compass when they break into the unfamiliar territory of mobile advertising, and it’s certainly easy to count store visits as conversions, but a sale is the only true conversion.
There’s also an inherent flaw in using mobile ad requests to determine that a consumer visited a store, because that customer must access an ad-supported app on their mobile phone in order to actually receive the ad (or signal their location). When was the last time you stopped to play “Candy Crush” while grocery shopping?
And, how do you know if a customer purchased your product when visiting a store? This is especially challenging for grocery stores, which can carry 30,000 different UPCs. The emphasis on store visits is prompting many marketers to invest in campaigns without being able to correlate them to sales results.
As a result of the disconnect between the data marketers need in order to justify their ad spend (sales lift), and what they’re actually using (clicks and store visits), many are unable to defend their mobile ad spend.
It’s worth noting that 86 percent of these marketers indicate that if they had the right metrics, they would actually increase their mobile advertising spend, with 11 percent saying it would double, and 28 percent indicating at least a 50 percent increase.
Naturally, the most meaningful metrics are the most challenging to obtain, and that can be true with measuring Return on Ad Spend based on sales lift. But there is, in fact, a way to connect mobile impressions with online and offline data, and see the corresponding sales lift.
The Formula for Using Sales Lift to Measure Return on Ad Spend
In order to calculate a Return on Ad Spend (ROAS) based on sales lift, marketers need to be able to tie mobile ad viewers to offline transaction data and attribute specific purchases to the people exposed to the ad campaign. Then you divide the sales lift amount by your mobile ad campaign costs, times 100, and that will give you your Return on Ad Spend. For example, a 257% ROAS means for every dollar you spent on media, you generated $2.57 in incremental sales lift.
The trick is how you determine your sales lift. Both people who saw the mobile ad and people who did not will make purchases. So you need to be able to compare the sales resulting from those who weren’t exposed to the mobile advertising with the sales of those who were exposed. That provides the true incremental sales lift resulting from the advertising.
The mobile marketplace continues changing, and it gives you countless opportunities to touch your customer along their path to purchase. What used to be a blind shot in the dark is now a carefully planned and fully measurable mobile ad campaign. With today’s technology, we can see at which point or points along the path to purchase we touched the customer. We can see what’s boosting sales, and we have access to data that helps ensure we’re sending a tailored message to the right customers at the right time.
By measuring what matters most, you can determine with certainty your return on mobile ad spend. And that will give you the confidence you need to fully invest in the fast-growing medium of mobile advertising.