The Evolution of Digital Advertising Buying
by: Lisa Campolmi
Recently I have fielded several questions on how digital media buying has evolved in the past five years. Managers, owners or directors are often asked to review and report on advertising packages that hit their desks. Part of my job is to be sure we are measuring the most important aspects of our clients’ advertising programs, to ensure success. Like everything, this has changed over time, enabling us to be more strategic and effective. We are never complacent, and you can count on us to be on the forefront of the industry.
One of the most common ways to purchase digital advertising is to buy a package of guaranteed ad impressions. This means a digital buying service or agency will promise, for a set budget, to serve an exact amount of digital impressions. This is often referred to as impressions-based advertising. Impressions-based advertising uses cost per thousand (CPM) impressions to set the price and results.
This used to be the best way to measure digital advertising, but there are other, more effective, strategies out there, such as target-based advertising. This type of buying focuses less on total impressions and more on selecting the best individuals to reach.
The digital world has revolutionized many aspects of our lives, including advertising. Internet users expect to see ads that are targeted specifically for them, at any time of the day or night. Research suggests that when a relevant ad is placed in front of a user, they are more likely to act on it. This means selecting the best prospective audience to see an ad improves the results.
To do this, most agencies or digital buying services use a DSP or Demand-Side Platform. This is a sophisticated platform that allows the use of third-party data to deliver the right message to the right consumer at the right time. (Third-party data is any information collected by an entity that has no direct relationship to the user. Information on users is collected and aggregated together for digital marketing.)
The challenge of digital advertising is that more than one strategy can be used, and some are better than others, depending on the goal of the campaign. Verdin uses the more digitally evolved strategy of target-based buying. This strategy creates individual campaigns for each client based on their customer base, which is partnered with unique creative messaging to produce the best results.
Target-based advertising helps ads reach the audience that is most likely to be interested in the topic. Third-party data allows very detailed lifestyle, demographic, income and geographical targeting to be used, to “pre-qualify” users before they are served a message.
This is considered a “quality over quantity” approach. To explain how this would manifest in an actual campaign, let’s look at this example:
A retail client wants to reach consumers surrounding their three store locations to promote luxury accessories (jewelry, purses, scarfs). The client has done research to identify the specific common characteristics of their customers:
- 40 or older
- Higher income
- More urban residents than rural
- Likes travel, arts, entertainment and fine dining and wine
To execute a digital campaign based on impressions alone, we would create a plan to reach 50,000 local residents. The campaign would definitely serve 50,000 impressions, but who would it reach?
- Likely any adult over 18 years old
- Likely any adult within the designated geographical area
A target-based strategy, on the other hand, can better reach the desired audience:
- Women over 40
- Women interested in fine living, such as culture, dining, travel etc.
- Women who live and work in more urban areas
- Women who have annual household incomes of $75,000 or more
In our experience, a target-based campaign reaches a more desirable potential customer, which guarantees a higher engagement rate and click-through rate. The layering of multiple targeting factors (age, interests, income, gender, etc.) increases the cost of each user reached, however it is a way to avoid reaching users who aren’t potential customers. While the campaign would have fewer total impressions, those who are reached better match the client’s customer profile and are more likely to become customers.
This is just one example of how target-based digital buying offers the best possible return on investment for Verdin clients. For more information on digital advertising, reach out to Lisa Campolmi, Advanced Certified Digital Specialist, at Lisa@Verdinmarketing.com.