Why ad spend will follow measurement in 2023

Measurement. We all know it’s needed, but it’s often challenging to accurately measure a campaign and its success. Even harder still is to measure advertising across channels, especially one-to-many traditional media like radio, print, linear TV and OOH. Even across digital channels, the proliferation of new platforms and devices has made cross-channel measurement a shared pain point for many marketers. The demise of cookies combined with the fragmentation of data has also made measurement, optimisation, and reallocation a significant challenge.

In fact, less than 20% of marketers revealed that they feel confident in their ability to measure ROI in a recent Nielsen survey. Therefore, in order to future-proof their business in 2023, brands of all sizes and industries will need to build confidence in their existing martech capabilities.

Liam Shaw – co-CEO Wrappr – advocate OOH.

Marketers will need to face the ROI challenge

With the current economic uncertainty, marketing decision-makers are under increasing pressure to deliver (and prove) marketing ROI.

A survey of more than 250 marketing executives, directors, and managers revealed that an inability to calculate ROI is hindering many marketing professionals from proving the value of their work. 84% are under pressure to prove ROI in order to justify their marketing spend or budget increases for campaigns and initiatives. However, many are struggling to effectively measure this ROI.

The findings also revealed that 61%of marketing leaders do not use ROI when making strategic decisions because they aren’t confident in their own data. While the average marketing department has no shortage of tools to measure channel performance, most find it difficult to deploy these solutions in a holistic and reliable manner that enables ROI tracking.

Perhaps the most critical issue is that four in ten respondents stated that marketing, sales, and finance aren’t aligned on what successful ROI looks like. Yet, this is the metric that marketers are being judged against for performance.

To borrow from Tom Roach, focusing solely on ROI is dangerous because it obscures the scale of effectiveness, lower budgets often provide higher ROI while bigger budgets can produce lower ROI and it tends to favour fragmented spends. It can be useful when used in context. However, focusing just on ROI can destroy value; “That’s because the easiest way to boost ROI is not to grow the numerator (your net profit), it’s to shrink the denominator (your budget). If you focus on growing ROI rather than actual growth, it can lead to odd decisions like accepting smaller budgets overall or atomising your budget across too many channels.” The critical thing is that marketers are able to measure the business impact of their campaigns. If it can’t be measured then budgets will come under threat.

Holistic thinking

Speaking with Tasman Page, marketing director at Employment Hero, he agrees that marketers are increasingly under pressure to deliver against business goals in 2023. “We’ve seen a period of digital growth and e-commerce stats going gangbusters. But the economic climate is an uncertain one and knowing what marketing metrics are going to really move the needle will come into sharper focus. Measuring the effectiveness of campaigns through a holistic view of return on marketing investment rather than simply relying on outdated return on ad spend metrics will allow marketers to better refine the value-add of their departments.”

How marketers manage this balancing act though will change as the increasingly fragmented marketing landscape presents challenges as well as opportunities. “To develop a more accurate understanding of impact, marketing teams will often need to combine data from multiple sources. Ultimately, if the reporting shows more of the picture, organisations will be more comfortable making the investment, especially in less certain economic times,” Page added.

A return to closed-loop measurement

Dealing with rising competition and increased digital advertising costs requires more nimble and reliable data-driven analysis of channel performance, as well as the initiatives that are driving sales, acquisition, and retention.

Marketers can leverage different types of attribution models to optimise and improve efficiency, however, when it comes to having a conversation about the financial impact of marketing, they need to look at the full funnel mix through a well-established framework. Striking the right balance between top and bottom funnel investment requires a rigorous approach to data management.

Marketers are also trying to break through digital advertising clutter and build trust with increasingly jaded buyers who have had negative online experiences with brand ads online. As a result, marketers are returning to traditional advertising and companies that earn 100% of their sales online are leading the trend. These brands are anticipating an 11.7% increase in traditional advertising spend over the next 12 months.

Some marketers are even starting to exploit the benefits of new takes on traditional media that can show measurable conversions back to physical and digital shop fronts.

Opt-in mobile data can now be used to track audiences that are exposed to an OOH campaign through the funnel. Using new OOH measurement technologies, it’s possible to track impressions all the way through to uplifted conversions, such as in-store traffic and website visits.

Whilst these capabilities are an innovation in the OOH space, it’s the online adtech players that have been here before and therefore know first-hand how the money will follow measurement.

Konrad Feldman, Quantcast CEO when asked about feelings moved into the next 12 months said: “The pressure of a downturn can create diamonds and research shows that the companies that flourish after a slowdown are disproportionately those that balance operational efficiency with smart investment in areas such as R&D and marketing…those that can better discern how investments translate to returns will more clearly demonstrate the impact of their marketing spend and benefit from new insight to improve marketing strategy and execution, both supporting long-term competitive advantage.

Across CTV for example, Feldman went on to explain how, in one example from the UK, the broadcaster Sky was able to measure its brand campaign in real-time, adjusting its strategy and optimise its creative approach mid-campaign. It resulted in a 35% uplift in product familiarity, while priming effects across multiple platforms allowed conversions to be 3x higher for those exposed to more than one funnel tactic. Again thinking holistically and across multiple complementary channels is key.

Feldman added: “While no one knows for sure what 2023 brings, marketers who can efficiently invest in both performance and brand advertising – and prove results – will be best positioned to navigate any downturn and emerge stronger still.”

Charting a smarter path to better returns

“Do more with less,” will be the CFO’s instruction for many marketers in 2023. For some, this will be terrible news, but for others, this will create opportunities. Whilst their competitors decrease spend, those marketers who can accurately measure their advertising impact will be those who win bigger budgets and will therefore be those that win market share regardless of any uncertainty in the economic outlook.

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topics ad measurement comment Konrad Feldman linear TV oOh op-ed opinion out of home print radio Tasman Page Tom Roach Wrappr

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