October 5, 2016
By Sharath Gokula, Director of Analytics, Analytic Mix
Our clients often ask us whether it’s better to focus on reach or conversions to plan their media strategy. Working with clients across industries and verticals, we see that there is a bias towards focusing on driving reach rather than conversions which are business metrics such as sales, revenue, orders, etc. In reality, the choice between optimizing on reach or conversions depends on your target audience and marketing objectives. The bias to focus on reach exists because traditionally there has been no easy way to link offline channel spend with conversions. Therefore, the default behavior was to use a tangible metric such as audience reach. However, with advanced statistical techniques, we are able to derive a link and in some cases it makes more sense to optimize on conversions.
Let’s look at the traditional offline media planning process that involves maximizing reach and frequency. Reach refers to the total number of your target audience exposed to your ads. Frequency refers to the number of times an individual notices your ad. The idea here is that if your audience sees your ad and sees it enough, then they will be aware of your product and eventually purchase your product or take the intended action. Media planners then identify the channels they can reach the target audience and place ads to influence their target. For instance, in the case of television, media planners will identify the television station and dayparts to place the ads.
Audience reach and frequency makes sense in early stages of the buying cycle. If I am building awareness for my product among the target audience, then the reach and frequency approach works well. Therefore, if I am launching a new product this is the approach to take. It also makes sense for brand building. For example, if Coca Cola wants to build its brand or defend its brand position against Pepsi this works well.
However, you need a more direct approach later in the purchase funnel and this is when direct marketing campaigns are employed. At this stage, it’s about moving your product in to your target’s consideration set or moving your target towards a purchase decision. An analogy is digital media which operates at the lower stages of the funnel and is used to close the deal. To measure this, the digital world employs tangible performance indicators such as cost per conversion. Based on the cost per conversion, the media planners will then choose the properties upon which to place their ads. This same process can be replicated in the offline world as well, in the context of direct marketing.
Therefore, the focus of offline media should not always be audience based strategies such as reach or frequency. In cases where the campaign’s aim is to drive action, media planning should look at optimizing on conversion based metrics. Using advanced econometric and attribution methods, a link can be developed between media spend and conversions. This approach will help media planners to choose the stations and dayparts that will maximize their conversions. So, in closing, it depends on your situation. What’s most important is optimizing on the right end metric based on your target audience and marketing objective to meet your business goals.
We’ve done this for our clients and we can do the same for you. Contact us to learn more.
About the Author:
Sharath Gokula, Director of Analytics at Analytic Mix, is a technology-driven marketing analytics expert with more than a decade of experience in delivering client-centric business intelligence.