One of the most effective ways a company can reach a target audience online is through advertising. In today’s world of rapidly expanding online business, most companies have allocated much of their ad spend to digital advertising to help convert customers and scale their brand.
But is it possible that even the best structured marketing plans can actually miss the mark and result in wasted ad spend?
The simple answer is – Yes!
- 1 A global problem
- 2 How to mitigate wasted ad spend
- 3 Alternative options
- 4 Mindfulness In Digital Advertising
A global problem
Waste in ad spend is becoming a serious problem all around the world.
In fact, according to results of a report conducted by Melbourne-based independent digital media agency, Next&Co., and published by Mumbrella, over $134.4 million in wasted ad spend occurred in the first quarter of 2022. That figure, according to the report, is up from $104.3 million in the last two quarters of 2021.
The organization audited 81 companies in the Asia-Pacific region with ad budgets ranging from $500,000 to $39 million, according to the article. Of the $134 million, retail saw the largest waste of $31 million, followed by insurance at $28 million, finance at $25.5 million, real estate at $18.8 million, education at $16 million and health at $14.7 million.
Across digital media channels, the report noted the following waste per platform:
- Facebook, $53 million
- Google, $43 million
- LinkedIn, 28 million
- Bing, 10.7 million
As the figure of ad spend waste grows, companies must learn how to get the most out of their efforts to ensure their advertising dollars are being used to target the intended audience and meet the businesses’ objectives.
Even if a brand has experienced significant ad waste, there are some highly effective ways to help them reverse course.
How to mitigate wasted ad spend
Lessening wasted ad spend can begin with a thorough look at a company’s measurement practices. By analyzing how their advertising money is being used, companies can determine what works well and what isn’t working to achieve their marketing objectives. Those companies can then make informed decisions about the changes needed to redirect budgets in the right direction.
There are several other moves that marketing departments can make to ensure the company’s ad spend is optimized.
Use Bill-per-customer Marketing Channels
One fail-safe way to reduce waste is by using providers that bill you only for new customers, rather than for “clicks” or “impressions.” A collaboration with customer acquisition service providers that only charge when new customers are actually acquired can guarantee less waste.
While success-fee-only services are rare, they do exist.
Full-service Tech Companies
Compado is a trailblazing start-up from Berlin that specializes in reducing wasted ad spend through such sign ups. The full-service tech platform operates thousands of exclusive media sites, offering rankings, reviews, quizzes and other relevant content. Brands that partner with Compado are only billed if a new customer signs up through a recommendation.
This, according to Joschka Weltgen, chief strategy officer for Compado, enables brands to reach audiences that are motivated to convert, converting at rates beyond 10%, which is significantly higher than Google Ads average of 3.5%.
“You can basically add them risk-less to your marketing mix and see where it gets you,” he said.
Israel-based tech company Natural Intelligence is another bill-per-customer agency. The company’s xMatch program helps connect brands and consumers through technology much like Compado.
In addition to bill-per-customer companies, affiliate marketing is another way to target ads to consumers likely to convert. In the process of affiliate marketing, brands can sign up for one or several networks that connect an offer with bloggers, influencers and other marketers. Commissions are paid when users sign up through a link.
Affiliate networks are different from affiliate marketing programs in that they do not require brands to do much of the initial leg work in setting up the processes and finding appropriate affiliates. But they do oftentimes involve membership fees, which can negate a great deal of savings from ad spend waste.
Another downfall for affiliate networks is that conversion tends to be a slower process as compared to more full-service tech platforms like Compado and Natural Intelligence, where thousands of new customers can be generated rather quickly.
Tech giant Google Ads, the market leader in digital advertising, has introduced its own success-fee-only campaign. The service allows brands to pay only for conversions, rather than clicks. Those eligible to use Google Ads bill-per-customer service must be using the company’s Target CPA (cost per action) with Display campaigns, an additional cost to the brand.
Google’s campaign is not full-service, which means brands must manage their own campaigns. However, as a market leader, Google’s service does denote a willingness to expand more ways of advertising.
Optimize Your Google Ads Campaigns
Those looking to reduce wasted ad spend can look to their Google Ads to ensure they are fully optimized to increase traffic and convert sales.
As the world’s largest digital advertising network, Google Ads can do so much for a marketer, but if the ad is full of ineffective keywords that are leading to no conversions, it can be a huge waste of advertising dollars.
But it isn’t just keywords one must consider – its also date ranges, campaign levels, broken hyperlinks and other considerations that could lead to waste.
Less than 1% of AdWords campaigns reflect the strategies needed to keep them strong, said Michael Erickson in an article published on searchscientists.com.
“By implementing these strategies, you’ll increase the likelihood your campaigns will be profitable. You’ll also reduce some of the account waste that is inherent in so many search campaigns,” he wrote.
Use high-converting marketing channels
While providers like Compado and Natural Intelligence are opening doors to more full-service pay-per-customer programs, which lead to successful conversion rates, another option is using high-converting traffic sources.
Some of those successfully proven sources include:
- Search Engine Advertising (SEA) – SEA is an extremely helpful tool for digital marketers in that the traffic is reaching the good or service by a simple search for something in which the searchers are already interested.
- Search Engine Optimization (SEO) – Much like SEA, SEO is extremely important in the name of the game of ranking higher in Google results as well as other platforms like Yahoo! and Bing. According to the Search Engine Journal, SEO “is the best way to understand the voice of the consumer.”
- Email Marketing – Reaching customers via email has been around for quite some time, but the practice is still proving to be highly effective in converting to new customers. According to designmodo.com, over half of consumers prefer that brands contact them through email, rather than other methods such as social media.
- Social Ads – One of the most highly-converting social channels is Facebook Ads. Whether they are in the form of images, posts or videos, these ads are incredibly effective because they target specific groups of people based on user information. With a reach of over 6 billion people, Facebook’s paid ads proves successful for brands.
Run targeted campaigns
Ideal advertising means getting a product in front of a viewer who is most likely to buy the product or service. That is where targeted campaigns come into play.
Reducing ad spend means you are not wasting money putting ads in front of everyone, but instead, methodically putting those ads in front of people who are measurably more likely interested.
For instance, rather than a butcher shop in Ohio placing an ad on all United States media sites, they could place it to target only people in an age range of 18-70 who live within driving distance of the shop and have exhibited an interest in farm-fed strip steaks in their online browsing history.
Targeted campaigns can help direct ads to the right people. According to Indeed.com, when placing targeted ads, there are four popular traits to consider. Those are:
Mindfulness In Digital Advertising
Digital ad spend has been increasing year over year as brands tap into resources that help them gain a larger reach and scale their business. Through the use of social media, search engines and classifieds, online advertising grew by over 26% in 2021, according to Ireland-based businessplus.ie.
Digital advertising is an opportunity for brands to grow tremendously, but the problem of waste could curtail, or at least slow down, that progress significantly if continuously ignored.
By using bill-per-customer marketing channels, optimizing Google Ad campaigns, running targeted ads and considering high-converting marketing channels, brands can drastically reduce ad spend waste.