Many advertisers look at the cost of media as the most important aspect in a media buying campaign. Marketers are moving from a cost-based mindset to a value-based one with a greater focus on the value generated to ensure they get the return on investment desired. In this article, we explore moving from a cost-based mindset to a value-based one.
An advertiser can use different methods in evaluating how a campaign has performed. Most performance marketers look at Cost Per Acquisition or Cost Per Visit whilst searching to buy at the lowest Cost Per Mille (CPM), however, Mobile Journey analyses the value provided by the campaign and contribution to the overall company or business unit performance.
With the value-based approach, generating outcomes for clients is central to the campaign and its objectives. Customer Acquisition Cost (CAC) is a cost-based metric which assigns real value to marketing campaign efforts however many marketers that only consider the lowest Cost Per Mille (CPM), risk receiving low marketing costs without enough focus on generating value.
Poor traffic, abject conversion and a lack of generated value has been the hallmark of low-cost media buying. Some marketing companies have taken advantage of advertisers where the first priority is procuring media at the lowest Cost Per Mille (CPM) possible.
Return on advertising spend and profitable marketing campaigns are areas where advertisers can evaluate in a way that enables marketers to be less rigid on the Cost Per Mille (CPM) and more focused on the value received in return.
For many of the Footfall campaigns that Mobile Journey manages, a range of Key Performance Indicators (KPIs) help to determine the success of a campaign. KPIs such as ROI on exposed visit and Revenue on incremental visit, evaluate the value driven by the campaign rather than simply the lowest media buying cost.
Here is a working example:
A campaign has reached out to 25,000 unique users, of which 700 users visited the store.
In the control group, 177 users visited the store. The average order value of the store is £25 with an average margin of 35%.
The campaign media cost for this campaign was £3,000.
While focusing on KPIs with a cost-based approach will provide the following:
- Incremental visits = Exposed visits – Control visits:.
- 700 – 177 = 523 incremental visits
- Cost per exposed visit: £3,000 / 700 = £4.28
- Cost per incremental visit: £3,000 / 523 = £5.74
The following calculations with a value-based approach can be made, considering that each visitor also makes a purchase: (of course, if in-store conversion rates are known, this can be taken into calculation and still determine the ROI)
- Revenue on exposed visits: 700 * 25 = £17,500
- Margin: 17,500 * 0.35 = £6,125
- Revenue on Incremental visits: 523 * 25 = £13,075
- Margin: 13,075 * 0.35 = £4,576.25
- ROI on exposed visits: (£6,125 – £3,000) / £3,000 = 104%
- ROI on incremental visits: (£4,576.25– £3,000) / £3,000 = 53%
Mobile Journey execute campaigns and adds value on results, instead of efforts. The starting point is the customer’s needs to determine the most suitable approach, where the media buying model is always value-based. Developing return-on-investment models based on the outcomes of the client has been vital to the growth of Mobile Journey’s clients.
In managing campaigns, it is imperative to determine the campaign effectiveness once representative learnings are taken from the initial results. Once evaluating effectiveness, the campaign team optimises towards the variables that lead to the highest value for the client.
Mobile Journey’s data-driven approach enables advertisers to meet their marketing objectives and share learnings across marketing channels to advance strategy, campaign management and ultimately, deliver in conversion. In contrast to platforms with walled gardens, sharing data across channels allow for marketers to approach the total marketing funnel in a more holistic way.
Working with several data partners, Mobile Journey provides highly targeted campaigns for advertisers that would like to deliver tailored messaging to an array of audiences. From delivering on performance objectives such as customer acquisition to brand objectives such as reach, positions Mobile Journey as not just a mobile partner but an extension of the client’s marketing team.
Do you want to discuss how to change from cost-based to a value-based approach?
At Mobile Journey, we are Mobile advertising specialists that partner with forward-thinking companies, providing Footfall Intelligence, Online Performance and Custom Solutions. Want to know more? Contact us now.