“Data-Driven Thinking” is written by members of the media community and contains fresh ideas on the digital revolution in media.
Today’s column is written by Julia Amorim, CEO at MediaNet.
As with traditional advertising mediums, marketers who invest in digital and programmatic advertising make a distinction between working and non-working dollars, which combined make up total spending.
Working dollars pay for the media. But the uncertainty over what non-working dollars do is for many a cause of concern.
No matter how transparent a digital buying partner aims to be, marketers sometimes question the necessity of markups, tech taxes and other fees that inflate the cost of the buy itself.
‘Non-Working’ Dollars Fund A Lot Of Work
Marketers may worry that non-working dollars are wasted money, but they go directly toward ensuring the quality of service and success of an advertising campaign. Non-working dollars pay the wages of skilled operations teams that monitor and optimize ads in real time, funding the background work that delivers qualified conversions rather than a meaningless number of accidental clicks.
In digital advertising – just as in anything else – you get what you pay for.
Non-Working Dollars Play An Important Role In All Campaigns
Though digital campaigns tend to cause more concern for brands tracking every piece of their advertising budgets, non-working dollars have always been an essential component of advertising. Non-working dollars compose a significant portion of campaign budgets in traditional media today.
In a direct-response mail campaign, for example, brands pay for the background labor to prep mailing lists, sort and qualify target customers into segments and print, develop and distribute marketing materials. These services are similar to those included in digital or programmatic display, including preparation, optimization, manual verification and fine tuning of ads in real time, all of which cost significant time and labor.
Similarly, TV ads generally have a flat rate that covers the actual media buy and other expenses, such as the wages of station employees. Brands rarely question the breakdown – or even whether an audience is actually watching the ads [PDF] they paid for, let alone their target audience.
Flat-rate mass mailing might cut curation costs, which is an important component of non-working dollars and may yield the same number of qualified leads. While a cheaper mass mailing may result in a smaller percentage of qualified responses, the overall cost per response may be proportional to the results generated by a curated direct-response campaign.
This mass-marketing approach is similar to broad awareness campaigns on digital display, where brands save non-working dollars that would have gone toward ad curation and optimization. They will statistically receive some responses by targeting massive audiences, maybe even more responses than curated campaigns. However, a lack of direct targeting means that despite more clicks, there will be fewer qualified responses [PDF].
A Higher Standard
In every media, from mail and TV to email and sponsored Facebook posts, successful advertising campaigns usually cost more money. Brands seem to accept this when budgeting for traditional media campaigns, yet digital media campaigns are expected to account for every dollar, working or not.
Perhaps digital media campaigns, and everything involved in their production, are simply more difficult to quantify than tangible products. Marketers can see their ad displayed on prime-time TV, but it’s impossible to visualize targeted views across myriad platforms in the same immediate way.
Maybe it is the emphasis on transparency within digital media itself that provokes more suspicion than an undifferentiated flat fee. When brands have access to every aspect of a transaction, they also have the power to question whether certain components are really necessary and essential to the campaign’s success.
Perhaps the real-time nature of digital media produces greater worry. Real-time data collection produces more accurate reporting and analytics, which can enhance optimization and bring in more qualified leads. This entire process requires a significantly lower investment than traditional campaigns. One might argue that for these reasons there is less need for worry.
On the other hand, instantaneous accessibility demands instant results, and this produces much more worry. TV ads and direct mail net a slower response and broader reporting – and brands are accustomed to waiting, so there is no cause for concern. But real-time data collection results can also yield real-time accountability for every penny.
No matter the reason, brands hold digital media to higher standards of accountability, despite lower costs, greater benefits and increased measurability. Digital is an established medium and deserves the same level of trust that brands place in TV and direct mail.
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