The future of digital advertising and marketing increasingly involves “closing the loop” between online ad exposures and offline sales. The days of the “click” are numbered.
Mobile payments early on held this promise. However mobile payments haven’t yet taken off (see Google Wallet). But that hasn’t stopped Google, Facebook, Twitter and others from developing methodologies to measure or model the actual sales impact of online ads.
The momentum toward connecting the dots between digital ads, store visits and offline sales continues to build. A case-in-point is yesterday’s Facebook announcement about telco “outcome measurement.” This is yet another ROI tactic and tool that Facebook is adding to its growing arsenal to show advertisers it’s delivering real value where it counts: at the point of sale.
Echoing comScore’s long-held position about the inadequacy of CTR as a metric for online display ads, Facebook said “more than 90% of people who made a purchase after viewing an ad on Facebook had never clicked on that ad.” The company explains how its new outcome measurement for telcos works:
At the core of Telco Outcome Measurement is Facebook’s mobile reach, which provides us with aggregate and anonymous information about devices, operating systems and carriers. From this starting point, we can establish test and control groups to determine how and when an ad on Facebook correlates to certain actions, such as a group of people switching to new handsets, tablets or carriers . . .
Our initial work with Telco Outcome Measurement has shown that telecommunications ads delivered in News Feed on desktop are 7X more effective than right-hand side placements, and that ads delivered on mobile are 9X more effective than ads on desktop.
I asked Facebook for further clarification about its methodology. I was told that Facebook is using its own mobile data to determine when consumers switch handsets or carriers and correlate that with Facebook users exposed to specific ads:
[O]ur system can recognize the device model carrier, and OS used. This helps us improve our services to our users and creates an optimized experience for our users on their mobile devices.
We realized we could also use this data in an aggregate, anonymous, and privacy safe way to gather ROI insights for our telco partners. The analysis is done in-house, without receiving any data from our partners, and that we only share aggregate data with partners
We use this data as our source for conversion – we look at switches of devices or carriers as our sources of sales data. We then use a control/exposed methodology, that is very similar to the methodology we use with the Datalogix solution for CPGs, to identify the incremental effect Facebook has on sales, and to generate insights on ROI on Facebook.
As the statement immediately above indicates this is a similar approach to what Facebook is doing with offline data partner DataLogix.
I suspect we’ll see outcome measurement or other, similar “offline ROI” methodologies continue to roll out at Facebook across categories where such measurement is possible. Indeed, retail, CPG and telcos are major online ad categories where most sales are offline.
Online-influenced offline consumer spending is at least 10x e-commerce. Major networks/publishers will implement offline ROI metrics for these categories in the not-too-distant future. This is partly about what the emerging indoor location phenomenon is about.
Outcome measurement is currently available to telcos in the US and eight other countries and will roll out globally during the remainder of this year.