Online display advertising isn’t necessarily broken, but it exists in a space of inefficiency far from its potential for consumer engagement and ROI. It isn’t because of a lack of intellectual capital at the major digital agencies or because of brands’ hesitance to shift advertising spending online. There is a conspiracy of silence in online advertising that is costing companies significant dollars and quite possibly derailing potential sales, according to critics of last-click analysis like Leon Zemel, Chief Analytics Officer for X+1, a leading advertising technologies company.
Many marketers continue to misallocate media dollars every day, either by overspending or under-spending on impressions, said Zemel. They’re either erring on the side of shotgun-targeting everyone in the re-marketing pool, or conversely sending far too few branding messages to people seeking information at the top of the purchase funnel, Zemel believes. In both instances, its a critical fail for the system, Zemel insists.
The debate over last-click attribution isn’t just hype perpetuated by start-ups hoping to drum up business for new audience-buying technology. The controversy has raged for years, with reports suggesting that the last-click model ignores as much as 90 to 97 percent of spend driving conversions, according to studies by Microsoft’s Atlas Institute
and others. A recent study by ad technologies company ClearSaleing
of one billion impressions showed that an average of 36 percent, and as much as 60 percent of surveyed advertiser’s total digital ad revenues were misallocated because of a reliance on the last-click model.
“The history of this situation is that ad serves have always driven measurement and attribution in the online advertising industry and it became the default way of looking at advertising,” said Zemel. “Basically marketers just stuck with that simple story of the last-click, even though if you get them alone in a room everybody knows that the marketing strategies that this leads to are in no way the right strategy, everybody is trying to fit in to this existing legacy paradigm which drives a lot of clearly sub-optimal marketing strategies.”
According to Zemel, this open secret has created an industry that lives on far weaker results than it ought to receive, spending far more money than it ought to spend.
“For example, a company may be over-investing on a ‘sure thing’, on people who are essentially pretty deep in the sales funnel and very close to converting on their own,” Zemel said. The budget spent on those impressions are nonetheless wasted, even if it is apparent that these consumers are already on their way towards conversion, Zemel believes, because everyone, ranging marketers to publishers, wants dibs on the last credit for those conversions.
Examining the much broader population at the very top of the sales funnel and figuring out exactly which part of the audience could be driven deeper into the sales funnel is a lot harder to figure out than focusing on the last click. “The result is that they resign themselves to the simple thing,” stated Zemel. “They throw their hands up in the air and say ‘let’s go cheap and let’s go broad.'” No marketer truly feels that this strategy will drive any critical impact on the consumer, Zemel said.”One very cheap impression is not ever going to move someone from being a general prospect to entering the market to signing up or buying a product.”
Zemel is one of the industry’s most vocal critics of last-click attribution, but other leading figures have come out to condemn last-click, which has been referred to as in its death throes on a regular basis in industry press for the past five years.
“I wish (last click attribution) it was dead, but it is definitely not dead. A lot of things need to change before all advertisers insist on a full multichannel attribution model, but I think we are getting much closer to that, said Brian Lesser, WPP’s new CEO for its ad technology platform, Xaxis.
One of the things that has to change in order for last-click analysis to fall out of favor is the mindset of digital agency management.
“Marketers talk about it and they are very frustrated with (the use of last-click analysis), but there’s a challenge with these large companies (that they work for),” Zemel said. “There’s the finance department- they’re happy with a nice financial calculation out of an ad server and you have different marketing departments. You have the brand-oriented department and the direct-response department.To get everyone on the same page change the way that they look at things is a process. And some people don’t feel that they are in the position to make that change within the company.”
It will take “change agents”, Zemel believes, within agencies to steer brands away from the last-click approach.
The alternative to last-click analysis is multi-channel attribution, pulling data from multiple sources and analyzing influences on purchase decisions to get a more complete picture of what drives consumers into the funnel. According to Zemel, there is an added element to consider, the range of ad serves that offer the highest potential for engagement as well as the best ROI per audience segment. Zemel cites as a case study “a major financial services company” that as a x+1 client, saw a 20 percent lift in total digital channel sales through measuring and managing to an optimal frequency to each point in the sales funnel using broader metrics than last-click. Multi-channel attribution isn’t a new concept, but it has been slow to make it to primetime as advertising adapts to the rapid rise of online and the new technologies required to facilitate “full-funnel”, multi-sourced attribution. Other companies, such as Atlas and Xaxis offer multi-channel attribution solutions, as does X+1.
We are unfortunately stuck with this (last click) model until audience-buying becomes more pervasive and the technologies that we’ve developed become more ubiquitous across campaign,” said Lesser.