New Research Points to Principles for Driving Higher Return on Ad Spend

Joel Rubinson of Rubinson Partners, Nielsen Catalina Solutions (NCS), and Viant have just announced a new study aimed at helping CPG marketers understand how to better target advertising to drive the highest return on ad spend (ROAS).

The research provides what we’re told is a “clear methodology for identifying audience segments that are most likely to make a purchase as a result of advertising, and for understanding when in the purchase cycle to engage them for maximum sales impact.”

The Principle of Recency theory, used widely by media planners, proposes that advertisements are most effective when they are delivered right before a consumer is about to purchase a product.

It’s also a popular belief that targeting non-brand buyers, or driving trial, is the best strategy for driving the greatest response to advertising. Combining in-store purchase history from NCS with first-party data from Viant, it was possible to test the hypothesis that ROAS is greatest among consumers who are nearly ready to make their next purchase and who are heavy brand buyers, a group labeled “The Persuadables.”

According to the digital campaigns studied, advertising delivered to “The Persuadables” drove up to $21 in sales for every dollar spent on advertising. In addition, this segment exhibited unprecedented lift of roughly $17-48 of sales return per ad dollar. The ROAS for this segment was up to 16 times higher than the seven other segments studied, which included a segment for non-brand buyers targeted close to the next purchase. Recency combined with the heaviness of a consumer’s spend was the top driver of ad response in the study, which looked at three CPG campaigns that each reached between 25MM-40MM households.

“Brand marketers have access to large amounts of customer data, but they still have challenges connecting the dots to understand the customer journey, from knowing not just who to target, but when to target them,” said Jon Schulz, CMO at Viant. “For the first time, this research utilizes CPG shopper data to construct and test a new segmentation framework, designed to help marketers better understand their key audiences. NCS’ consumer purchase data, combined with Viant’s first-party data, advertising reach, and targeting capabilities, delivered extremely promising results.”

“The findings from the report enable marketers to precisely identify the audience segment that will yield the greatest return for their spend,” said Joel Rubinson of Rubinson Partners. “By incorporating the persistency of a people-based approach into digital advertising campaigns, marketers can identify their most valuable consumers and accurately predict when they are most likely to purchase a product, essentially defining the Persuadables segment.”

To download The Persuadables: How Advertisers Can Use the Principles of Recency and Spend Level to Significantly Improve ROAS, click here.