Why Agile Works for Us

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Working Planet is an Agile shop. This doesn’t mean we’re sprightly and nimble, although we generally are those things too. It means we adhere to strict Agile methodologies in how we prioritize and execute our work. We are very routinely told by clients who have worked with multiple agencies that we’re the best they have ever worked with, and we credit Agile with helping us to be the secret weapon our clients want in a digital media buying partner.

So I am often astounded when I hear marketers say Agile doesn’t work.

“Oh we tried that Agile thing” some say. “We gave it a shot, it didn’t really work for us” say others. “I think it’s a fad” you can hear whispered on social media, if whispering on social media were a thing, which it isn’t.

Agile is so critical to our work, I thought I would take a moment to try to dissect why it works so well for us and hypothesize why it might not for others.

1. Agile doesn’t work without clear goals

We optimize digital campaigns for financial results. The financial KPIs are unambiguous goals for us to pursue. As a measure of business success, profit is unequaled and unarguable, which makes it an excellent KPI. Agile, whether you are in the Scrum or Kanban camps (we’re proud Scrumban fence-sitters) works for three different reasons, one of which is the continual prioritization of what you are working on in the moment. This implies you have something meaningful to prioritize against. Our financial lens and using profit as a KPI gives us clarity for prioritization in a way other agencies might lack.

2. Agile works best when marketing is a team sport

Many agencies are set up as specialists working independently on work for the same client.  It is not at all unusual for agencies to have a unique expert for Facebook, Twitter, or data analytics.  Or they might have all work for one account done by a single person. Accomplishing any one thing when it can only be done by one person can absolutely benefit from Agile (one of my favorite books on this is Jim Benson’s Personal Kanban) but Agile really kicks into high gear for effectiveness when you have a cross-functional team. Team-based Agile Marketing is better for two reasons. The first is that teams lend strength and flexibility to client work, making deadlines attainable and vacations possible even if they happen to coincide. The second is that a team of smart people who all have intimate knowledge of the workings of the client’s campaign and finances are unmatched in effective prioritization.

The second and third reasons Agile works are through visualization of the work and the limiting of context shifting. The multiples of effectiveness in these gains at the team level cannot be overstated.

3. Agile rituals can’t be done ritualistically

Agile, and particularly Scrum, is full of rituals. The fact that they are commonly called “rituals” instead of, say, “building blocks” or “improvement checkpoints” makes them too easily bucketed into the “I have to do this because it is in my calendar” zone of things we hate but are forced to do at work. This is a shame, as Agile rituals exist for a purpose. At Working Planet we don’t stand for our daily standups (gasp) and they are more often held at the end of the day than the start (more gasp), but we do make sure the daily meeting involves a hard look at current priorities and whether reality has shifted since those priorities were made. Our Retrospectives are always held, and are always about how we continually improve as an organization. If a Retrospective is just a recap of what you did or a social chat, it doesn’t move you forward towards your goals.

Often when I read about Agile experimentation it feels like the Agile rituals are done ritualistically, by which I mean without purpose. I am guessing this might not doom an Agile migration to failure, but it won’t help anything improve quickly, or rapidly show the power of Agile processes.

4. Agile isn’t something you “try”.

As Yoda famously exhorted, “No! Try not! Do or do not. There is no try”. I know of no better place to apply this Jedi maxim than with Agile. When we first started Agile seven years ago, it was hard. It was different, it felt weird. It wasn’t always easy to voice to a team how you as an individual prioritize tasks. We wanted to just get on with the work. It feels easier to just go do something than talk about it. Like most firms starting Agile, we started with Scrum and all those meetings! It was only with time that we realized how much control it gave us. How the frequent fires became a lot less frequent. How it was easier to know what to do when everyone agreed on why to do it in the first place.

You have to see it through for a longer period of time than you might think before it becomes habit, and you will likely need everyone to do it all at once. If everyone is not doing it, it will be very hard to protect the Sprint or Kanban or process of those who are doing it. It also has to be viewed as permanent or no one will commit to it, because they know they don’t need to. Lastly, Agile also needs a champion, and (at least in the beginning) that person needs to have the power of Yoda to repeatedly hammer home that there is only “Do”, and the seniority to apply the Do Hammer to everyone.

Early last summer we switched from Scrum to Scrumban, although we call it Kanban internally to highlight the differences from our old practices. Our learning curve was much easier and within a few weeks our teams were hitting a new stride. We found it worked well, and I believe Scrumban might be the superior flavor of Agile for those delivering ongoing services vs. creating a product. With its focus on finishing over starting and softly enforced collaboration, it is a good fit for us. Our teams credit it for their being able to easily achieve some seemingly hard goals with more ease than was expected. We’re an even better agency for migrating to Scrumban. Once again, we can’t understand not doing it when the benefits of doing it are so clear.

When you have something that works, it is hard to let it go. And I think that might also be the power of Agile as a methodology of continuous improvement. Before we moved to Agile we had embedded best practices that worked for us as all agencies have practices that work for them. But Agile was better. And then the Scrumban version of Agile was better than that. Now we are testing layering on personal Kanbans, incorporating DevOps concepts, and other experiments. With Agile we test new things all the time. And maybe this is the most powerful reason I wouldn’t let Agile go. Agile won’t let you be complacent. If you embrace the purpose of Agile, embrace continuous improvement, don’t fall into ruts, and prioritize towards goals that are lofty and measurable then you simply cannot be complacent. And maybe that is Agile’s hidden strength.

Why We Are Focused on Amazon Advertising

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Last month, Fortune reported that Amazon is rapidly becoming one of the world’s largest ad networks, with over $2 billion USD in advertising revenues in Q2 2018 alone.  Their rapid appearance on the world advertising stage is only one of the reasons that we’ve been putting our sights on Amazon for some time now.  Here are our three main reasons to be all about Amazon:

1. Amazon Has Something for Everyone.

In the past, Amazon advertising has largely been focused on on-site internal advertising on Amazon.com.  Amazon has long been a go-to source for feed-based promoted product advertising. This type of internal Amazon advertising has been great for retailers and manufacturers looking to build Amazon as a channel partner. It is also highly effective as long as you watch the math as Amazon charges both for the advertising as well as their platform fees for each sale. Recently, however, Amazon has matured their offerings with the rollout of Amazon DSP to a wider audience.  I’ll speak more about Amazon DSP below, but one strength compared to other Amazon offerings is that you don’t have to sell on Amazon to use Amazon DSP.  In fact, all kinds of companies selling products, services and more are using Amazon DSP, Amazon’s programmatic solution, to profitably acquire customers from advertising delivered in programmatic exchanges across the Internet.

2. Amazon is Investing in Their Platforms

There is nothing like a few billion in revenue to attract resources, and Amazon is no exception.  Amazon is in the midst of a significant platform consolidation. Amazon’s previously disparate solutions for products, manufacturer solutions, and programmatic, and that encompass display, product, video, and store advertising have been combined into a single-login platform. This makes it far easier to know about potential offerings, to leverage knowledge across offerings, and to track and report on Amazon Advertising as a whole (well, maybe someday) We’re quickly on the road to agencies and advertisers taking full advantage of Amazon as a professionally executed network alongside Google and Facebook. This is still in the very early stages, but with hints that other Amazon platforms like Twitch advertising might follow, we are bullish.  For example, billing solutions are not yet integrated across offerings but we hope that the recent addition of single sign-on is a sign that further integration is to come.

3. Amazon DSP is Unique (as a DMP)

Programmatic is evolving faster than any other segment of Digital Marketing.  We have largely moved from the main trend being web publisher migration to exchanges. While this is mature in display, migration to programmatic it is still in early stages in traditional media like TV. Some of the newer programmatic trends involve access to data through DMP (Data Management Platform) integration in the advertiser DSP (Demand Side Platform). This and the use of AI are on the cutting edge of developments we are seeing in programmatic.  Amazon DSP (formerly Amazon AAP in a long line of product name changes) utilizes Amazon’s massive warehouse of customer demographic, product interest, and shopping data to inform targeting for ads delivered in other exchanges. Unique data for targeting is the currency of the new world of Digital Marketing. And since the abuse of social media data has curtailed targeting options in Facebook, Amazon has the ability to leverage tremendous personal data without violating the privacy protections of their users. We’re bullish on the data Amazon can bring to the table for advertising far outside of products sold on Amazon.com.

 

Amazon is changing the Digital Marketing landscape. Because of this we actively sought partnership as a firm capable of in-house programmatic management of all the Amazon platforms including Amazon DSP. We’ve invested in external and internal tools to bridge gaps in Amazon’s still-evolving reporting and to bring our deep financial optimization to Amazon’s advertising products. We’re excited about these opportunities and fully expect that Amazon advertising will be our biggest single growth network in 2019.

5 Hidden Dangers in Annual Budgets for Marketing

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Ah, the smell of the end of the Fiscal Year! Budget Planning for Marketing is in the air and the smell of burning remaining budgets lingers, backed by the sound of inter-departmental standoffs.

It doesn’t have to be like that.

Annual Budgeting is a time-honored process, but I’d argue that in today’s world annual budgets for marketing do more harm than good. Flexible budgeting based on hitting financial KPIs and working within cash-flow limits is a much better way to go.  So roll up your sleeves and get that coffee, because today we’re talking about the five main reasons Annual Budgeting can harm your marketing program!

1. Cost vs. Profit

Annual budgeting attempts to control costs while managing resources for the continued profitable execution of the business. Unfortunately, the two common tools for reviewing financial performance, the P&L (past-looking) and pro forma (forward looking) are poorly equipped to understand marketing’s direct contribution to bottom-line growth as they both separate cause (investment in marketing) from effect (profit realized from marketing).  This is solely because marketing has always been treated as a fixed cost, along with salaries and rent. But quantitative marketing, and particularly quantitative digital marketing has changed that.  Done right, data-driven marketing creates a clear and predictable relationship between investment and return, often optimizing to financial KPI’s such as Contribution Margin (post-marketing gross profit) that, if scaled, will improve the profitability of the company. Annual budgets, by definition, cap the potential upside of profitable opportunities that might exceed the estimates of the company at the time of budgeting.

The Better Way: Utilize strict measurements on the generation of profit from marketing where marketing is expected to increase Contribution Margin over time (how much time is predictable, but is based on sales/evaluation cycles and will vary widely by company). Combine these with cash flow controls so as not to overspend in advance of revenue. For example, in a SaaS company we might be able to predictably increase future Monthly Recurring Revenue (MRR) in an acceptable payback period with a greater ad spend, but monthly spend would still be capped as a percentage of current MRR for cash management reasons.

2. Limits on Course Correction

Budgets are a plan for the future, but the more detailed they are, the more difficult it will be to change course, even in the face of compelling evidence that you should do so. Budgets are often difficult to change on purpose, as the control inherent in the budget planning process is one way that leadership executes the course for the company.

The problem is that detailed knowledge of opportunities doesn’t live at the top of the organization, it often lives deep inside, at the levels of tactical decision making. As opportunities surface, the entire budget planning process, people, and leadership control needs to be challenged even to make a minor change. It sounds crazy, but is extremely common to hear “We know we should make this change and doing so will increase profit, but it just isn’t in the budget.”

In a recent example, one of our clients realized that they had given us the wrong remarketing budget and that they had no more budget for the remainder of the fiscal year. And even though we have clear data illustrating the profitable results of the investment in remarketing, the line managers decided they would rather forfeit that profit than challenge the budget process. This does not help their company’s bottom line.

The Better Way: Put money behind goals with limits on expenditures. Educate line managers on P&L level financial KPIs and enable them to move resources to improve those financial KPIs within cash flow limits. This often means addressing local optima, KPIs that don’t correlate well with financial outcomes but are intended as measures of performance separate from revenue and profit. In marketing, most traditional measures (Bounce Rate, Time-on-Site, etc,) are local optima. Local optima are blinders to good prioritization of activities that improve the business and should be viewed with caution.

3. Arbitrary Channel Blindness

Marketing is complex. Actually, that isn’t nearly as true as the fact that the human interaction with marketing is complex. Yet internally we fall in love with single-source attribution to evaluate marketing channels. Nothing feels better than knowing that this one customer came from this single source. It makes us confident in crediting programs and teams, and makes it easy to allocate budgets.

Of course, it’s dead wrong.

We know from our own behaviors that people engage in interactions with marketing campaigns that are far more complex than our tracking can fully capture. We see ads in multiple locations over a period of time. We are remarketed to. We see an ad, don’t click on it, and then later do a brand search. We switch devices before engaging with a web site. We’re human and so are our customers.

Single source reporting creates a false sense of security, and like the CEO who exclaimed, “This Brand traffic is great! Let’s move all our budget to that!” it often masks cause and effect within the complexity of real human behavior. (If it is not clear what the issue is with that comment, please reach out to me.)

Budgets, of course, make this worse the more granular they get. In addition to making my last point worse in that they can limit course corrections to better performing areas, channel budgets reinforce the false view that channels act independently of one another, and that all channels act in similar fashion with similar functions.

The Better Way: Have your financial KPIs be holistic, evaluating black/white success only when looking at the whole picture of paid, unpaid, earned, unearned customer acquisition. The channel numbers are directional and need to be evaluated carefully. Your Cost-Per-Acquisition numbers in Search and Social shouldn’t be the same, as Social typically drives 5x to 10x more out-of-channel activity that breaks source tracking. Data needs to be used to its fullest extent, but with thoughtfulness, experimentation, and a constant understanding that data collection is limited with regard to user intent. When changes need to be made, or experiments run, the budgets should easily and flexibly accommodate those changes.

4. Slow Learning

In the Mad Men days of traditional media, learning about campaign performance was slow, when it could be measured at all. Annual budgeting caused no significant harm, because annual budgets often aligned with annual media buying.  In a world where success was often obtained by the most demographically-correct eyeballs for the lowest price, demographic targeting and price negotiation were everything.

No wonder people had time for all those martini lunches!

Modern digital advertising is a world of constant measurement and constant experimentation. The limits of the budget process in slowing change and limiting complex understanding have one extremely dangerous but often overlooked effect: They slow learning. Gains in digital media are often discovered through testing (certainly this is the financially responsible approach), so how many test cycles you engage in is one control over success. A process that by nature limits the speed of testing can have a highly detrimental effect on performance that is likely completely invisible to those engaged in the budgeting process.

The Better Way: Create the freedom for testing within the budgeting process. 10% of the marketing budget that is solely for experimentation and is not held to financial KPIs will pay off dramatically in rapidly finding ways to scale profits.

5. Incorrect Time-Frames for Budget Evaluation

Fundamentally, annual budgets operate at an arbitrary time frame that is out of sync with marketing decisions that need to be made in a financially optimized, highly data-driven campaign. Quarterly budgets are not much better but will be closer to the learning cycles in most campaigns.

While the longer the budgeting cycle, the worse the problem is, the fundamental problem is that line-item budgeting for marketing is an inherently bad practice. In a world of 24/7 live auctions, shifting competition, constant learning and improvement, budgets are sub-optimal.

The Better Way: There is a better way, and many organizations already do it this way. Financial KPIs tied to cash flow-based caps given to engaged teams with line-level decision making work far better than a classic budgeting process. The best, most nimble companies we work with work off of pro formas that are not set in stone but that are live working documents, recast constantly based on evolving data.

When done right, digital marketing contains an amazing set of tools for the predictable scaling of profits. What is required is for companies to support the financial practices that allow this to happen as quickly as possible, provide financial transparency and clear financial KPIs to their marketing teams, challenge their teams to be thoughtful about complex data and behaviors, and stand back. Maybe it is simple after all.

Profit: The Only Marketing Metric that Matters

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I recently wrote about the limitations of one of the most widely-held marketing KPIs: ROAS (Return on Ad Spend). The main limitations with ROAS are that it is a measure of efficiency and not magnitude and that the efficiency it measures is revenue generation, not profit generation.

Yet creating revenues without profit, or efficiency without magnitude is not creating success, and we want KPIs that are tightly aligned with success. In fact, that is the sole purpose of a KPI.

So if ROAS sucks at being an indicator of the magnitude of profit, what KPI does work?

I’m going to go out on a limb here and say all marketing metrics are poorly aligned with business success. Which is why your marketing KPI shouldn’t, in fact, be a marketing KPI at all.

It should be a business KPI.

In fact, it should be a really specific business KPI and that is a form of profit measurement called “Contribution Margin”. Contribution Margin is pretty simple to calculate, it is just Revenue – Variable Costs. In this respect it’s a close relative of a metric we like a lot: Gross Profit (Revenue – Cost of Goods). But the key to a good Contribution Margin calculation is what’s included in the variable costs. For us, the biggest variable cost is Ad Spend. But in actuality, we also add in cost of goods and any other per-unit costs if they exist.

If it sounds complicated, you can probably simplify it. If you want to call it Post-Marketing Gross Profit that works, and in many cases may be close to the same number as Contribution Margin, depending on what other Variable Costs exist. Frankly, we find the hardest part is to get this information from clients, as it’s unusual for Marketing to know these numbers and Finance may need an explanation on why it’s important to share them.

So why is Contribution Margin a good KPI? Well, first, it doesn’t just align with the magnitude of profit, it IS the magnitude of profit. Second, if you’re looking at actual profit, a false read on efficiency can’t cause you to make bad decisions in the name of efficiency (this is called the local optima effect and I’ll post about this in the future). If you use Contribution Margin as a KPI, you actually see the drop in profit. And lastly, it lets you do two very exciting things in growing a business, and those are that the investment in marketing becomes a profit center and not a cost, AND it allows you to have a business metric that transcends channel complexity, but how that works is a topic for another time.

Why ROAS Sucks As a KPI

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ROAS (Return on Ad Spend) is the industry standard for assessing and reporting the performance of paid digital campaigns, but it really sucks as a KPI.

To be totally fair, ROAS has a few strengths. It is easy to calculate (even easier than ROI): Revenue / Ad Spend. It is a relatively clear measure of efficiency. It is a metric that can be used across channels and media. But that’s about it, and when you start digging in, ROAS has a lot of limitations, including one huge killer that makes it, well, dangerous:

You can go out of business optimizing to ROAS.

And that is where ROAS really comes into its own as a sucky KPI. Frankly, I want KPIs that align with the financial health of my business and I certainly want that alignment in KPIs used for assessing campaigns we run for clients. ROAS doesn’t do that. ROAS is an efficiency metric. It has very little to do with how much money you make. This is because (like ROI) it is only a good metric when comparing exactly the same media spend. The problem is, nobody does that.

When you look at marketing reports across the industry, you will almost always see ROAS as a standard KPI, even when marketing spend changes.  And this is where the danger part comes in. ROAS works as a comparison of efficiency, and not magnitude.  An ROAS of 6 is more efficient than an ROAS of 5, but that doesn’t mean you made more money (or any money, but I will get to that). An ROAS of 6 on $10 did not make you more money than an ROAS of 5 on $10,000,000. That is a fairly obvious example, but marketers often treat ROAS as a KPI in isolation, which means you can easily reduce the magnitude of returns in the search for higher efficiency. Google even allows campaigns to use ROAS as a target for bid optimization, regardless of the effects on magnitude. Ponder that for a moment. And while it seems crazy, we have seen marketers make the decision to optimize for ROAS, opting for efficient returns even when the magnitude wasn’t enough to make payroll and keep the lights on.

Which brings us to the second danger with ROAS which is that it is based on top-line revenue, and not profit. This is why you can have positive (>1) ROAS and still lose money. This can happen when the efficiency of the return isn’t enough to cover costs. Unfortunately, many marketers aren’t given deep enough financial information to know whether campaigns are profitable or not. They just have this one metric which will only ever tell them if campaigns are so grossly inefficient that they aren’t even covering revenue. Again, I want metrics that alert us when we are even slightly less profitable, and not just when the bus is so far off the road that it is lying at the bottom of the canyon.

So what’s a good metric? Total post-marketing profit (aka Contribution Margin), which I will cover in an upcoming post.

5 Marketing Data Mistakes Most Companies Make

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Even the most data-savvy of marketing teams can make mistakes in thinking about the use of data in optimizing campaigns for financial success. Let’s face it, marketing data is rife with issues and is never perfect, and it is easy to put on blinders based on the data you have available, the systems you use, the marketing channels you work with, or even the directives of senior executives. Despite that, everyone wants to be able to connect the dots from ad impression to profit. Here are a few common data traps we see even smart companies easily fall into. How do you rank on this list?

1. Using Average Value CPA Targets

Cost-Per-Acqusition targets are fertile ground for data issues. For example, are your targets even based on customer value, or are they merely a “seems reasonable” guess? Smart data-centric companies will base target CPAs on actual customer value to ensure that their marketing programs don’t risk over-paying for customer acquisition. However, even smart companies can fall into using a single average CPA target for all their customers. In doing so, they underpay for audiences that provide higher-than-average value customers and overpay for low-value customers. Companies can avoid this by using targets tied to segmented customer values, not averages.

2. Using Last-Click Attribution

The attribution question has long been mired in a false discussion of “who gets credit?” when there is more than one user touch leading to a sale or lead. Some companies still use last-click attribution, often in a mistaken belief that this is somehow a “truer” view of acquisition, or that it just allows them to avoid thinking about attribution at all. Google hasn’t made things easier by offering multiple views of attribution with little guidance on when and where the different options should be used. Here is our take: Avoid last-click attribution at all costs unless you are evaluating retargeting assists. Last-click attribution will severely over-inflate your brand and direct numbers and cloud your ability to see high-value first-mover channels.

3. Not Considering Out-Of-Channel Effects

Everyone looks at their channel-specific numbers, but an astonishingly few companies continually examine their direct and brand channels, looking for influence from other areas. While everyone logically understands that users did not wake up with magical knowledge of a company’s brand, it often feels like that’s the assumption of marketing teams who put on “channel blinders” when evaluating their programs. Smart companies view their data holistically, looking for out-of-channel trends that increase or decrease direct and brand engagement. While only 5% of users in a typical search campaign are likely to bounce over to direct or brand, it is not unusual for a whopping 50%-90% of sales from social media or display campaigns to come through direct or brand traffic.

4. Over-Valuing Metrics Not Tied to Revenue

What is the value of a Like? Most data-driven marketers have moved on from directly equating social media engagement as revenue-related events, but many metrics that don’t correlate well to revenue are still held as sacred cows. Any metric used for campaign optimization should be well understood in how it relates to revenue before it becomes a key KPI. Data-driven marketers with their eyes on the profit prize quickly realize that Time-On-Site, Impression Share, Cost-Per-Click, or other common metrics are not as tightly aligned with profit as they might think when other factors such as volume, customer value, out-of-channel influence, or profit margin are taken into account. Easy rule of thumb: Use post-marketing profit as your marketing KPI.

5. Assuming Traffic Equals Sales

We’re two decades into the digital revolution, and it’s still incredibly common for people to assume that eyeballs equal profit. Back in the days of traditional media the best shot you could make in media buying was the most eyeballs for the lowest cost. That approach doesn’t work in digital because of the competitive auctions, and yet “Let’s get more traffic to this page/product/site” is not at all an uncommon marching order, particularly from executives who don’t understand the auction effects in digital media buying. Smart data-driven marketers know that their job is as much about when NOT to buy traffic as it is in finding the areas of success, and continually evaluating how to increase the quality of an audience by peeling away the “eyeballs” that are not their target audience. This allows them to compete more aggressively in the auctions while protecting the bottom line. Sometimes less really is more.

These are samples of marketing data traps that are very easy to find in almost any campaign. Most of these issues can be avoided through three core practices: 1) By adhering to a holistic financial lens in optimizing the entire marketing program against financial targets; 2) By working backwards through the path that led from advertising to revenue and; 3) By not ignoring revenue that falls outside of the “channel buckets”.

7 Easy Steps to Improve Your Retargeting

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Here are seven quick adjustments you can make to take your retargeting program from “Yuck!” to “Yay!” (Listen up all of you who just use default settings and one giant bucket of targeted visitors, and don’t skip the last point below.)

1) Frequency Caps

Overexposure to ads can quickly annoy visitors and result in decreased campaign performance. Limit the number of times a tagged visitor is exposed to your ad. Understand your sales cycle and take into account how frequently you want visitors to see your ad within that time frame.

2) Audience Segmentation

Visitors arrive with different goals and needs. Are they a customer? A prospect? What content have they viewed, and how does that help define their needs? Target messaging in ads to different stages of the funnel. Keep ads relevant to the audience segment.

3) Use One Provider (to start)

Many retargeting providers, such as Google AdWords, AdRoll, Steelhouse, and Perfect Audience have a high level of overlap in their publisher network.  Use one out of the gate to avoid dilution, then add unique publisher networks as your program grows and becomes more sophisticated.  Start with a network that provides a broad reach and good feature support, such as frequency capping.

4) A/B Testing

As with all aspects of digital marketing, retargeting offers a fantastic opportunity to improve your engagement numbers through ad testing.  Ideally, optimize to increased conversions.

 5) Use Targeting Options

Many retargeting networks offer sophisticated add on targeting for geography, context, demographics, or more. If these help you better focus your retargeting spend on the audience that will most likely bring you value, you should be using them.

6) Switch Up Messaging

Many marketers reiterate messaging in their retargeting ads.  But retargeted ads are also an opportunity to say something different.  Perhaps the reason the prospect didn’t convert in the first place was that the key piece of your value proposition for that person was missing in their experience on the site.  A/B testing different ads that have different value propositions is a powerful one-two punch, and a path to success.

7) Evaluate Correctly

Repeat after me: “Retargeting is not a Channel”.  Unlike other media, retargeting only works as an add-on cost that pays for itself by increasing conversion rate.  Without your other channels, retargeting cannot exist.  Yet companies still commonly report on retargeting performance with channel-based metrics, such as a unique cost-per-action.  The right metric is cost-per-assist, and this can only be evaluated in terms of overall cost of acquisition and conversion rate. Thinking clearly about how to evaluate retargeting is key to success, as the increased use of retargeting is quickly increasing the cost and competition in the display networks.

Retargeting is quickly moving through its awkward adolescence as marketers begin to understand user behavior and find tactics that work for them.  Keep trying new ideas and you too will find that retargeting becomes a key piece of your digital marketing program.

Display & Search: 5 Things that Make them Better Together

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Marketers engaged in Search often overlook the opportunities in Display advertising, but with total Display ad spend set to surpass Search in 2016, it’s time for advertisers to take a hard look at Display.

The ugly truth is that advertisers who are used to Search often fail at Display.  Let’s chat a bit about the strengths and differences between Search and Display:

1. Immediate Need vs. Education – Search has been the go-to media for direct response campaigns because you can respond to  a clearly expressed need.  When users tell you what they want, it’s easy to tailor the message and the engagement path.  But Search is limited to those that both know what they want and are taking active steps to find it.  Display, on the other hand, offers the opportunity to get beyond the late-stage buyer.  By educating and engaging a broader market, Display can help grow your overall market opportunity.

2. Linear Engagement vs. Cross-Channel – Search-savvy advertisers often fail at Display because they apply the same tools and metrics to Display that work for Search.  The user path is completely different with Display than Search, however.  With Search, it is not uncommon for over 90% of users to click on an ad and then engage.  This linear behavior has lead to the explosion of analytic-driven marketing programs. With Display, though, the numbers may be reversed, with 70-90% of the users that engage doing so without ever clicking on an ad.  Click-to-engagement metrics can lead to Display being undervalued by a huge factor.  Luckily, more advanced approaches to understanding cause and effect are bringing Display back, as advertisers learn to take advantage of how users actually behave.

3. Create Demand – Advertisers that still use last-click attribution love their Brand traffic, but often don’t think about the drivers behind it.  Display engagement often happens through a follow-on Brand search, meaning Display can be a very strong driver of both brand awareness and brand engagement. (Pro-tip: Utilize Display ad messaging in Brand Search ads for seamless engagement.)

4. Accelerated Home-Page Testing – Companies addicted to split testing tend to focus on purpose-specific landing pages, often because targeted Search campaigns can benefit from them. With Display, more focus is placed on the home page (because of the high levels of engagement without a click) creating a bigger audience for testing.  As a result, tests can run faster, creating a conversion win for all marketing programs that drive traffic to the home page.

5. The Display + Search One, Two Punch – With Display campaigns creating demand, and Search campaigns capturing demand, the combined Display + Search approach creates a powerful combination for growth.  As we emerge from the channel-centric world into one that embraces multi-channel, multi-device behavior, this alignment creates tremendous value when executed correctly.

Creating Success in a Complex World

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Marketing is about creating success. Why, then, are marketers so often reacting to the numbers, rather than using the numbers to create success? Here are some of the current challenges in numbers-based digital marketing, with an eye to solutions.

Low-Cost Eyeballs vs. High-Value Actions

Historically, media was sold by the eyeball. In a business model based on “reach”, there was little opportunity to optimize on the fly, so traditional media was negotiated only to achieve the lowest cost. This was smart. Giving limited opportunities to improve, you had the best chance of success in being profitable if your media cost was low.

Digital auctions changed all that. Today, going after low-cost media online simply means that you cede an audience to other advertisers who are willing to pay. In AdWords, the advertiser with the best ability to monetize will win. In order to compete, marketers have to highly value actions tightly related to sales and profits, and nothing else. Only then can marketers and advertisers can make intelligent decisions related to value creation, which is the point of marketing.

Action-Centric Advertising is Breaking

While smart marketers moved from eyeballs to actions, fundamental shifts in user behavior were simultaneously breaking the ability to measure actions with total certainty. Cookie-based tracking is falling short in a world of multiple devices per person. Better tracking of multi-touchpoint data and more sophisticated measurement of “influence” is revealing that strict action-based tracking is not wrong, but may be very limited.

The impact on advertisers is immense. Companies that thought they were smartly valuing only conversions are now finding themselves increasing uncompetitive and left to fight it out in the ever-smaller world of desktop-based search.

What Next, Then?

More sophisticated tools are opening the doors to opportunity, while creating new challenges in execution::

1) Holistic measurement. The days of isolated channel behavior, assessment, and budgeting are gone. Cross-channel and cross-device behavior mandates a different view of performance, but one still rooted in value creation. Get used to Venn Diagrams and flow charts. Yes, it is more complex, but it yields better results.

2) Proactive Optimization. Too many companies use their numbers for reporting up, rather than as action points for improvement. Smart companies will isolate key points of the customer story, and will focus on improving them. They will view things that don’t work as opportunities, while recognizing that moving the needle on the things that are working will be faster and take less time.

3) A Segmented View. Marketers need to recognize that behind every average value are the good and bad segments of that audience that can be addressed individually. Sweeping “black and white” decisions based on average performance should be challenged, so as not to throw out the part of that campaign that is working.

The Future

Marketing is evolving and becoming more complex. Media diversity, multi-channel measurement, multi-device behavior, and data overload all contribute to difficulty in crafting a strategy and executing it efficiently. But as difficult as tactical execution is, the core challenge is still in how advertising is viewed. Companies that view every day as a new test and every metric, page, and ad as improvable, and who root everything in the reality of sales and profit, will excel.

Case Study: Locally-Targeted Ads Drive Donation Volume Growth

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Client:  Non-profit organization providing support to low-income families seeking home ownership

Overview: The challenge presented was to grow our client’s donation volume and donation value within a limited ad spend budget in an intensely competitive market.  We knew could find gains with a data-driven approach,  and by both maximizing the efficiency of their media buy and selectively delivering ad impressions to audiences where conversion and ROI are highest.

Analysis of a rich historical data set for nationally-targeted campaigns, including ad network data, conversion data from third-party tracking tools, and donation records revealed strong correlations between audience locations and donations. We also found that donation volume increased during periods when our client was actively working in a local area and soon after their work in that area was complete.

To leverage efficiencies observed in different areas of the United States, campaigns were created to more easily optimize around audience performance trends at the local level. Campaigns were also created to target ad delivery to audiences in locations where our client was currently working, or soon would be, and resource needs were greatest. Ad creative focused on the core values of the non-profit and featured the location targeted by each campaign.

Results: In the nine months since implementing local audience targeting and optimization strategies, overall campaign profitability increased by 10%, cost-per-donation improved by 6%, and donation volume increased by 15%.