How Marketers Can Move from the Proxy of KPIs to ROI
By Are Traasdahl
Programmatic advertising, where I spent a significant amount of time in my career, now accounts for 85 percent of all digital ad spending. It’s hard to imagine how marketers lived without it: automating media buys in response to real-time market signals was key to targeting the right people at the right moment.
But for brand marketers, even these technological advances have left gaps between the digital advertising world and the reality of store shelves. Those gaps create situations where at best, advertising ROI is unproven and at worst, ad dollars are spent where products aren’t even in stock. Programmatic advertising at its best is all about efficiency. It’s time to focus on a new stage: efficacy. And for that we need to focus on real ROI, linking media buys with actual product performance.
It’s time now to integrate existing programmatic ad buy systems with retail data to facilitate successful program execution and evaluation based on real-time, on-shelf data. We can use advanced algorithms to better identify, define, and reach target consumers, connect demand with supply, flag potential disruptions, predict store and online traffic, track inventory and product performance, trigger production requirements, optimize fulfillment options, understand store conditions, and replenish both virtual and in-store shelves at speed and scale. Rather than focusing on the KPIs of CPM, CTR and other proxy metrics measuring the ‘success’ of an ad campaign, I encourage brands to focus on the metrics that investors truly care about: market share, distribution, and sales.
While supply chain data is traditionally used for production and product planning, visibility into on-shelf inventory can help marketers make informed recommendations that will drive the brand’s business forward. Up-to-date inventory information should flow seamlessly into advertising/promotion platforms, which then target advertising based on real-time changes. What’s more, brands and agencies can use on-shelf data to move away from solely measuring digital KPIs toward a focus on meeting business objectives.
Here is how marketers can utilize supply chain data to achieve measurable ROI:
1. Sync marketing spend with available-to-buy product inventory:
Most brands don’t know where inventory actually is on-shelf at any given time. With a live feed of real-time inventory data, marketers can geo-target ads only where products are in-stock and on-shelf, eliminating ad waste. Real-time data feeds give complete visibility into product distribution and inventory down to the virtual and physical store/shelf/SKU level. As a result, brands can build precise, efficient, and effective campaigns and promotions programmatically designed to auto-adjust based on store-level inventory status. For example:
- Out of Stock: Feeding real-time on-shelf product availability by location into digital ad purchase portals with decision rules to only buy ads where sufficient inventory is in place prevents brands from driving shoppers to potentially empty shelves.
- New Product Launches: As new products roll out in stores, decision rules can be programmed to trigger ad/promotion execution upon confirmed on-shelf availability by store.
2. Drive store-level sales:
Analyze sales data to identify at-risk locations that can dictate geographical Share of Voice (SOV). Heavy up on lower-performing stores to help brands drive sales and strengthen partnerships with retailers. Brands can accelerate velocity on specific SKUs by targeting ads/promotions in locations with excess inventory, personalized to known heavy users of those items. Because this can be done on an SKU-basis, margin loss and consumer stock-up of items that are not long on inventory is prevented.
3. Trigger creative to reduce waste:
Marketers can track inventory at risk of spoilage and adapt creative accordingly, promoting a coupon to move product off the shelf and prevent waste. Real-time feeds of the remaining shelf-life of perishable products can enable decision-rule triggers to run ads/promotions specific to the right items, locations, and users to move product, prevent spoilage, and maximize gross margin.
4. Improve media planning and measure ROAS in real-time:
With up-to-date sales data down to the store level, marketers can measure actual sales lift and understand the impact of ad campaigns. With a clear view of sales trends over time and by product, marketers can use past business performance to tailor future campaigns. From there, bid strategies are piped directly into media/marketing buying platforms, both onsite and offsite. Real-time sales and inventory data feed directly into platforms to help marketers adapt campaigns based on actual behavior and product availability. Data from disparate sources is ingested, normalized, and available in real-time for campaign and tactic analytics, marketing mix evaluations, creative/content assessments, in-flight adjustments, and learning both within and across retailer programs, leading to the identification of best practices and efficiencies.
With automated performance insights across physical and digital shelves, marketers can create more refined, relevant, and measurable campaigns. Instead of relying on traditional digital marketing KPIs, brands can finally tie marketing spend directly to sales impact and calculate true ROI that are found in an annual report and quarterly earnings calls.
Are Traasdahl is the Founder and CEO of Crisp. He was a Founder and Chief Executive Officer at Thumbplay.