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Uncommon Sense: How to Increase Your Digital Advertising Effectiveness Through ‘Reach Efficiency’
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Uncommon Sense: How to Increase Your Digital Advertising Effectiveness Through ‘Reach Efficiency’

Over the last few years, digital audience measurement has been getting better: measurers are on the lookout for “fraudulent” views, are working to include only “viewable” impressions, and are measuring what percentage of people reached by a campaign actually belong to the group the advertiser was paying for.

These are all fundamental steps toward effective digital advertising: Your digital ad isn’t worth anything if it’s viewed by a “bot” rather than a human; even if a human is sitting at the screen, your ad has to be viewable to have an impact–“viewability” being defined today as being on screen for at least one second when you click onto the site; and it has to be viewed by the right human.

There’s room for improvement, of course: The ANA recently published a study showing that advertisers are wasting huge amounts of money through fraudulent digital ad impressions. And, over about 20,000 campaigns, data from our Digital Ad Ratings (formerly called Online Campaign Ratings) shows that, on average, only 59% of digital impressions reached the intended audience.

Even while they make great progress on these fronts, however, few advertisers and agencies are tapping a considerable additional opportunity to improve advertising effectiveness. Getting the ad to where it can be seen by the right humans means reaching your intended audience. Advertisers and agencies need to be asking, “How efficiently am I reaching my intended audience?”

Reach efficiency is a measure of how effectively a given website delivers unduplicated reach—you always want 10 people to see an ad once rather than 1 person to see an ad ten times. There are arguments to be made for duplication, but research demonstrates that reach is more valuable than frequency. In fact, there appears to be a linear relationship between reach and sales impact: an increase in reach of 50% will increase advertising-driven sales by 50%, all other things equal. So the primary media objective of most advertisers is to maximize reach at a frequency of one.  

Let’s put this in stark financial terms: Advertisers pay for GRPs (gross ratings points), which are calculated as reach times frequency, and they buy whatever number they need to in order to achieve a certain reach. Forgive me for sounding a little bit like your high-school text book, but if Site A needs to charge for 50 GRPs in order to deliver 10% reach, it’s because its viewers see its ads five times on average (10 x 5 = 50). If, however, Site B can deliver 10% reach with only 20 GRPsthat is, each viewer sees the ad twice on average (10 x 2 = 20), then you have a much better deal: The same reach at about 40% of the GRPs (and 40% of the cost).

In the delightful land of theory, it’s obvious what to do: increase your reach efficiency! Unfortunately, this isn’t so easy for websites. If it were, Site A would have gotten its act together a long time ago. In fact, our data shows very high variation in reach efficiency across web sites—a difference of up to 10 times between the most and least efficient websites.

The good news is that we have worked out a few things about what actually drives reach efficiency:

  1. Registration data: Digital publishers with good viewer registration data can serve ads at the individual level.
  2. Frequency capping: As their name suggests, these tools enable publishers to cap frequency at a given level, so that an advertiser’s budget can focus on building reach without overdoing frequency.
  3. Cross-device identity systems: Publishers that can recognize the same individual across devices can obviously manage frequency more effectively, because they can avoid exposing the same person to the same ad on different platforms.

To get started, advertisers and agencies need only break down their digital advertising plans by reach, frequency and GRP’s for each site in the plan. As noted, reach x frequency = GRPs, so reach efficiency is easy to calculate by site within any plan. This will immediately flag opportunities most advertisers and agencies don’t even know are right in front of them. Then they can ask publishers about the state of their registration data, whether they use frequency capping tools, and how good their cross-device identity systems are.

Digital advertising is a big opportunity for most advertisers. Getting reach right is the foundation of any well-designed, well executed-digital media plan. It’s tempting to concentrate on creating the right impression on your audience, but, if you want to stay in business, you have to reach them efficiently in the first place.