Advertising on Google and Facebook has become the standard way to generate leads, and why wouldn’t it? It’s measurable, performance-based (well, sort of… as we’ll see below), offers broad reach and rich segmentation and is relatively straightforward. Better yet, according to many industry reports, this ad spend generates healthy returns. In fact, the Google Economic Impact report claims that every $1 spent on Adwords generates $2 in revenues.
So what’s the problem? Well, it turns out that the reality is not so pink. In fact, most businesses find that unless they are able to retain an acquired customer, they end up losing money on their ad spend. They find that their competitors are driving up bids until the point where it doesn’t make economic sense for them to bid further. Theoretically, that point is the point where the ROI of their spend drops below the ROI of their other lead gen options. For the sake of simplicity, we can assume that competitors will bid until their ROI is 0%. However, it turns out that the reality is even more grim, as your competitors are likely miscalculating their ROI, causing them to overspend and you to be left scratching your head and wondering why your leads are becoming so expensive.
So what exactly is going on here and why aren’t people more upset?
The first issue that needs to be clarified is that of metrics. While it is true that online ad spend achieves a positive ROAS (return on Ad Spend), this is often erroneously reported as it’s ROI (Return On Investment). This is a critical distinction, since unlike ROAS, which takes into account only the direct revenues and costs associated with the investment, the ROI actually looks at the margin generated by the ad spend. So it is ROI that really matters, and not its more pitch-friendly buddy ROAS.
Why then are we seeing these overly optimistic reports? For one, actual ROI is very challenging to estimate, as it changes from industry to industry and from company to company. The results are that for an independent observer it is virtually impossible to estimate actual ROI for ad spend. To make things worse, both Google and Facebook have built committed partner networks that have a vested interest in the success of the platform. Whether its creative partners, agencies, optimization partners or others, they all feed off of the underlying assumption that these platforms generate a positive ROI.
So does that mean that I shouldn’t advertise on Google and Facebook?
Not at all! Google and Facebook are amazingly effective tools for lead generation, as long as they are managed in a value-optimized way:
- Consider your actual cost basis, margins and LTV when calculating your ROI
- Know your goals and make sure you optimize for them
- Identify niches that are not yet optimized to the degree that leaves no value on the table for advertisers
Such niches are usually found around emerging technological innovations, where the uptake has not yet reached critical mass and where the resulting media cost leaves room to manoeuvre
Hacking online advertising: Dynamic Video
Video advertising has traditionally been used for branding and awareness campaigns and is therefore far less optimized than the clear-ROI world of Direct Response marketing. Video advertisers lack tools to accurately gauge the value created by these campaigns, resulting in inefficiencies. According to HubSpot, 51.9% of marketers named video as the type of content with the best ROI, which probably explains why digital video spend on Google grew 35% last year alone.
Dynamic Video represents an even more interesting opportunity since unlike legacy video, it lives somewhere between the traditional branding and awareness campaigns and direct response campaigns. Being data-driven makes Dynamic Video advertising a more transactional tool that drives action, not just awareness. As a result, Dynamic Video campaigns achieve an average uplift of 5X in CTR over traditional video ads.
It’s this performance uplift coupled with the relatively inefficient video advertising market that create a perfect storm of value creation for advertisers.
Dynamic video? That sounds complicated!
It’s not. Idomoo earned its status as a Facebook Marketing Partner on the back of its successful integration with the Facebook Ads platform. This integration automatically generates hundreds or thousands of ad variants and matches them to the right audience on the Facebook platform. In short, the integration makes launching a Dynamic Video Ad campaign with thousands of ad units as easy as launching a traditional campaign with one ad unit.
You don’t even have to create your own video content. Instead, you can repurpose existing video content in a breeze like Trivago recently did.
Plus, personalizing your marketing isn’t really optional anymore. A McKinsey report referred to digital personalization at scale as “Marketing’s Holy Grail”, and noted that “This issue of relevance in our era of instant gratification is particularly pronounced because consumers are bombarded with messages, most of which are off target. Personalization—the tailoring of messages or offers to individuals based on their actual behavior—promises to address this issue.” The report adds, “personalization can reduce the acquisition cost by as much as 50%, lift revenues by 5-15% and increase the efficiency of marketing spend by 10-30%.”
These messages about the importance of personalization apply everywhere, but nowhere more so than on social media. The social media experience is inherently a personal one, and users have a growing expectation of personalized and highly tailored experiences. Now that Dynamic Video Advertising on Facebook is readily available, there’s no excuse not to give it a shot.
Advertisers need to consider what in their arsenal is really adding value to their clients and their campaigns. Bidding for keywords isn’t enough anymore. The market is crowded, and the returns are being squeezed.
One option to consider is Idomoo’s Dynamic Video Ads for Facebook. Dynamic Video Ads exploit platform inefficiencies, radically improve returns and ensure that value is captured by the advertiser, not just by the advertising platforms themselves.
To learn more about Idomoo’s Dynamic Video Ads for Facebook click below to schedule a demo.