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CTR, CPA, ROAS. These are industry acronyms and metrics that everyone knows. But while they’re all fairly easy to report on, a lingering question persists: Do they truly reflect the effectiveness of your advertising?
That’s the elephant in the room for digital advertisers. And the ugly truth is that by putting too much faith in these proxy metrics, the industry has been optimizing performance the wrong way.
The only measure that matters is incremental return — which is calculated as the difference in revenue between two groups: those assigned to a retargeting group (who see ads) versus those in a control group (who do not see ads). This test determines the users whose decision to purchase will be influenced by advertising, at which point advertisers can allocate ad spend to those users and others like them.
Retargeting is the best way to achieve incremental return. But with most of today’s retargeting solutions, advertisers are buying into a broken system of third-party managed services and DSPs that play fast and loose with your ad budgets and keep your data in a proverbial black box.
Want to know more about the downsides of most retargeting solutions and the upsides of measuring for incremental return? Press play on the video below.