Most companies are presented with the challenge of operating in a highly competitive marketplace for their goods or services. With many competitors vying for the same consumers attention, effective digital advertising has never been more important. However, measuring the effectiveness of an ad campaign has never been more difficult. John Wanamaker famously said that half of what he spent on advertising is wasted, the problem is he didn’t know which half. Today most companies would happily settle for only 50% waste in their ad budget.
In this case study we will examine how to properly measure campaigns using data science to model attribution. Most companies don’t conduct ad campaigns in a vacuum. As such, we needed to design a measurement framework that adjusts for these other omnichannel campaigns. Our preferred methodology is called a differential matchback analysis with a Return on Ad Spend (ROAS) calculation. Using this tool we break down the list of prospects into segments based on which campaign(s) they were targeted by. Then we divide the revenue attributable to the campaign by the amount spent on advertising to calculate ROAS. For example an ROAS of 1000% equates to $10 in sales for every $1 spent on advertising.
In the example below, the El Toro client (who is a national home furnishing company) was using our Digital New Movers tool to target new movers. Our client ran this campaign in three separate segments to aid in measurement.
- A direct mail campaign where targets only received a Direct Mail Piece (DMP).
- Direct mail paired with an IP Targeting campaign, where targets received both direct mail and digital ads from El Toro that were paired to arrive at the same time.
- The final segment of the campaign targeted prospects only digitally with IP targeting.
For the campaigns referenced above each segment produced significant ROAS--it turns out people who recently moved are very likely to purchase home furnishings. What’s interesting is the analysis of the ROAS for each campaign, compared to the other campaigns. You can view the results in the table below:
- Direct Mail - Produced a 2635% ROAS, which while respectable, was the lowest of the three measured segments.
- Direct Mail + Digital - Produced the second highest ROAS, simply adding digital ads to the direct mail campaign increased the ROAS from 2626% to 2951% or about a 10% increase in return by simply adding IP Targeted digital ads to the direct mail campaign.
- Digital Ads Only - This was the clear winner in this test, producing a ROAS of 4572% or about 80% higher than only direct mail.
Return on Ad Spend is one of the most valuable metrics that can be measured for any advertising campaign. It is essentially a balanced scorecard where you can measure any direct marketing campaign against any other direct marketing campaign. However, be cautious since ROAS can be highly variable based on your offer, your brand, your targets and your industry. While in this campaign the superior ROAS was produced by the stand-alone digital campaign, we are big believers in pairing digital ads with direct mail and have seen superior performance for this tactic in other case studies.
The net result is digital advertising with El Toro works, and works significantly better than any alternative. If you would like to generate more traffic, conversions, and sales - El Toro IP Targeting should be a significant part of your marketing mix. As proven by this case study, IP Targeting is an extraordinarily effective method for increasing sales and ROAS. The technology works across every industry - from gyms to automobiles; from large insurance corporations; to small non-profit firms. Straightforward and simple--El Toro works.