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The acronym ROI (return on investment) gets tossed around a lot in advertising, but many ecommerce brands are still mistaking causation for correlation when it comes to ROI.
They often measure returns by looking at how many consumers viewed or clicked on their ads and how much money came back via purchases, regardless of how many sales would have occurred without the advertising in the first place. Brands need to start asking how many of those views and clicks are actually adding unique value.
“Until you can tie ROI to an actual incremental value, I think it’s just a number,” said Nariman Noursalehi, VP of marketing and customer acquisition at Overstock.com.
In a recent interview at Retail Innovation Conference 2018 in New York City, Noursalehi elaborated on this notion, stressing that digital advertising ROI has no meaning if the measurement includes consumers who are going to convert regardless of seeing your ad. Measurements must focus solely on consumers who were affected by an ad, and whose behavior was changed by that ad.
Check out the video below for more of Noursalehi’s thoughts on “incremental ROI” as well as the importance of A/B testing for incrementality and the shaky credibility of last-click attribution.
Click here for two additional segments from the Retail Innovation Conference 2018 session featuring Nariman and Jounce Media’s Chris Kane.