How to Measure Advertising Effectiveness & Ad Performance

Advertising is a fair business. If your ad is good, it delivers results. If your ad is poor, so too will the results be. The same goes for your media planning and buying. If you buy smartly, you will get more eyeballs and more responses. So far so good. But how do you know which ads of yours that are good? And which media buys that deliver on both the effectiveness* and efficiency* parameters?

The first step in most post-buy reports is to focus on the technical delivery: the number of impressions and viewable (in-screen) impressions. And then you match that with the conversion rates, whether it is just the click-through to your web site or all the way to the check-out. 

There is nothing wrong with that approach. But it is also an approach with its limitations. For a start, you can see how well your ads perform, but it does not give you any indication about your relative performance. Marketing is not about being good or bad on an absolute scale. Marketing is a relative game – it is about being better than the competition. So what really matters is if your ads perform better than the competitors’ ads? Were your ads visible to more people than your competitors’? And even more importantly, did more people see your ad than your competitors’ ads? Did you generate more attention than them?


Understanding ad performance

If you want to understand how well your ads are likely to perform, it is not enough for you to know if people were able to see the ads. You want to know if people actually saw your ads, and for how long – what was their attention span? And, equally important, how this compares to the brands you compete with. You might also want to know how this looks for different audiences – for example, if people in your core target group are more likely to see your ads than the general public.

Analyses like this should be part of your regular performance review. Understanding the conversion funnel of media buys provides a foundation for evaluating how well your ad delivery strategy works. For example, do you base your CPM numbers on the number of impressions, viewable impressions or viewed impressions? As you want to evaluate the ads’  ability to convert, it seems logical to do so based on the people who actually saw the ad, does it not? After all, people who do not see the ad are not going to respond to it, are they? 

This means that tracking the actual views and attention levels, rather than the viewability, gives you a much more powerful diagnostic tool for understanding how well your ad execution works. A common metric is to look at the rate of served impressions that are actually viewable, i.e. in screen. But basic logic tells us that tracking the full waterfall all the way to viewer’s attention should be the norm. Looking at the sequence of “ad impressions” => “viewable ad impressions” => “viewed ad impressions” enables you to evaluate both your media buys and your creative executions in one go:

  • The rate of viewable (in-screen) ad impressions compared to total served ad impressions is an indication of how well your media buying strategy performs. Viewable impressions is thus the most relevant metric for your media buy.

  • The rate of viewed ad impressions compared to viewable ad impressions (and their attention levels) is an indication of how well your ad execution performs. This is mainly a metric for the creative execution, even though targeting against relevant audiences and using relevant context will often influence the overall results. 

  • The rate of viewed ad impressions compared to total served ad impressions should hence be your most important metric for evaluating how much real cut-through you get from your digital media investment.

Closely monitoring this waterfall is a first step to understanding how your digital campaigns work, and where opportunities for improvement exist. The second step is to compare your waterfall to those of your main competitors – how much attention are they able to generate from their delivered and/or viewable impressions? Let’s call it SoA, Share of Attention, and monitor that closely to see what you should expect to see in terms of both brand and activation effects vs your competitors.

Measuring effectiveness beyond short-term clicks

In addition, not all ads are always about generating short-term clicks and incentivized leads. This is because in many cases only around 5% of your target audience is actually in the market for your products rights now.** Sometimes your ad strategy might therefore be about targeting the other 95% of the audience as well, as they represent a significantly larger group that are likely to buy from you at some time later in the future. And who might even then be prepared to pay full price for your product – if you give them good reasons to like your brand and value it a little bit higher. But as this group is more about “storing the message in memory for later use” and less likely to click on your ad right now, you need to monitor their interest in other ways. How convenient, then, that attention levels can help you a long way with this. 

* Effectiveness and efficiency are terms that are often mixed up in marketing analysis, but it helps to keep them apart. Effectiveness is about the results generated; results that help deliver business value. This means that both sales-related and brand-related metrics qualify here. Efficiency is about how well a company uses its resources to deliver the desired effects. Most media metrics, such as CPM, CTR, CPA etc. are efficiency metrics.

** Studies show that in most infrequent-purchase categories, only a small minority, often in the range of 5% of the total buying population, is active in the market at any one time. The other 95% are passive, but will enter into a purchase process at an unknown later stage.

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