Unlocking the Power of Closed-Loop Advertising Effectiveness

Written By: Joshua Koran

In today’s fragmented media landscape, advertisers face a daunting challenge: maximizing return on ad spend (ROAS) across an ever-expanding array of channels and devices. With budgets being stretched across an increased number of challenges and accountability front and center, it’s essential for marketers to ensure they’re equipped to understand the holistic impact of campaigns and the opportunity to maximize every dollar spent. ROAS should not be like a scratch off lottery ticket—knowing what you paid but being surprised by what’s inside. 

To navigate this complexity, marketers must adopt a closed-loop approach that complements top-of-the-funnel metrics like awareness, consideration, views, impressions and clicks to also understand the factors that drive bottom-of-the-funnel outcomes like visits and sales from these investments. 

This holistic advertising effectiveness strategy involves two metric sets:

1. Exposure metrics: Providing insights into verified reach, frequency, and context.
2. Outcome metrics: Focusing on lift or impact on awareness, consideration, engagement, conversions, and value generated.

By embracing a closed-loop approach, advertisers can gain a comprehensive understanding of their campaigns’ true impact, enabling data-driven decisions that maximize ROAS across the entire marketing funnel, from awareness to conversion. 

Measuring exposure assesses what you buy

Measuring exposure is the foundation of assessing advertising effectiveness. Exposure metrics provide insight into the reach, frequency and context associated with the display of ads to a desired audience. Understanding these exposure metrics requires looking at a hierarchy of metrics, which begins with basic counts of impressions, as well as determining which impressions were viewable (impressions visible for at least one second for display, two videos) and filtering out non-human traffic (ads served to bots).  Finally, survey-based metrics offer insights into awareness, recall, consideration, and purchase intent resulting from these ad exposures.

Measuring outcomes assesses what you get

Even more important are outcome metrics, the value generated from media investments. Outcome metrics provide insight into the advertising’s impact on awareness, consideration, engagement, visit and value generated from advertisers’ media spend. Just as with exposure metrics, there is a hierarchy of outcome metrics. The lowest level is represented by engagement with ad creatives, such as clicks. Because of the ease in measurement, click-through rate (CTR) is often one of the most common metrics reported. Afterall, a key purpose of advertising is to attract new prospects to visit a brand’s property. Another metric related to CTR is view-through visits, where consumers visit the advertised property shortly after exposure but without clicking on the ad creative itself. Given many people who click, immediately navigate away from the marketers’ digital property, marketers often also monitor the metric focused on this behavior: Bounce Rate. For this reason, it’s important to note that optimizing for CTR doesn’t necessarily correlate with conversions. Studies have shown a poor relationship between CTR and conversion rates, highlighting the need to focus on more meaningful outcomes.

Source: Joshua Koran

For top-of-the-funnel tactics, marketers may look at brand measurement tactics such as awareness, consideration and attitudes towards the brand. For bottom-of-the-funnel tactics, most marketers focus their measurement on the visits or sales that correlate to their ad spend. Multi-touch attribution (MTA) focuses on assigning partial credit to the various ad exposures prior to a purchase event. Smart marketers measure not just the correlation of ad spend to new purchases, but also incremental commerce outcomes associated with their media investments. Incrementality measurement helps avoid confusing coincidence with causation.

By using a combination of multi-touch incrementality for addressable advertising and media impact modeling that measures non-addressable media, marketers can ensure they get a holistic view of what is working well, and more importantly what is not.

Optimizing Media Spend to Improve Results

The faster marketers can make informed decisions, the less of their budgets go to media waste. The optimal recipe for success is striking a balance between short-term campaign performance and long-term business outcomes, and aligning the proper measurement strategies to advertising tactics with their respective campaign goals and objectives.

Improved Results

Effective measurement of media spend requires a holistic approach that analyzes both top and bottom-of-the-funnel results across all channels and touchpoints. 

By combining exposure metrics, outcome metrics, and cross-channel measurement into a closed-loop system, advertisers can finally get a comprehensive view of their true return on ad spend and drive sustainable growth for their organizations.