In today’s fiercely competitive advertising landscape, where every marketing dollar counts, advertisers seek more than directional metrics like impressions and click-through rates. Enter Outcomes-Based Advertising (OBA). Its central tenet is ceding more control to advertisers by offering clarity and context. In this blog, we’ll delve into this shift, exploring its core principles and why it’s gaining traction among marketers across industries.
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Understanding Outcomes-Based Advertising
Gone are the days of straightforward campaign evaluation. Today’s marketers face a myriad of complexities as they navigate omnichannel strategies. Balancing top-of-funnel initiatives with bottom-of-funnel tactics adds layers to the measurement process, where both engagement and performance are paramount.
At its core, Outcomes-Based Advertising transforms the advertising landscape by anchoring every facet of each campaign to meticulously defined objectives. It transcends the limitations of traditional performance marketing, which often fixates solely on predefined “directional” metrics such as targeting a click through rate (CTR) or prioritizing that you need to reach a certain cost per click (CPC). It’s important to note that sometimes what is perceived as directional is actually mis-directing because it’s partial, biased or correlated but not causal.
Instead, Outcomes-Based Advertising embraces a holistic perspective, where strategy and optimization seamlessly intertwine. It’s not merely about hitting targets; it’s about the relentless pursuit of budget optimization,performance excellence, and the discipline to continually fine-tune ad delivery strategies to move the organization forward, contributing to revenue and growth. It’s strategy in motion, where each adjustment is a deliberate step towards achieving unprecedented success.
Performance marketing, as outlined by Gartner, often ties agency payment terms to brand objectives, releasing fees upon campaign success. In contrast, outcome-based advertising focuses on ongoing operations, consistently identifying ad uplift potential and driving decisions based on performance.
Most importantly, it enables advertisers to harness the advantages of enhanced performance and reduced costs. However, a common challenge with many performance models is their emphasis on ‘market rate’ rather than individual advertiser outcomes. For instance, while an industry average customer acquisition cost (CAC) may be around $798, industries such as eCommerce and B2B SaaS often achieve significantly lower costs.
Key Features of Outcomes-Based Advertising
Let’s dive into the core features of Outcomes-Based Advertising. This approach relies on advanced data analytics and AI to provide precise insights into user interactions with ads, enabling real-time result tracking and campaign optimization.
- Precision and Actionability: Outcomes-Based Advertising harnesses advanced data analytics and artificial intelligence (AI) to gain unprecedented insights into user interactions with ads. Brands can now proactively manage real-time and incremental results with precision, allowing for agile decision-making and optimization.
- Closed Loop Optimization: By leveraging AI’s predictive capabilities, marketers can analyze past performance and anticipate future trends. This proactive approach maximizes current campaign effectiveness and lays the groundwork for future success.
- Beyond Proxies: Unlike limited proxies such as clicks or impressions, Outcomes-Based Advertising focuses on meaningful business outcomes. It aims to move prospects along a path—from awareness to conversion—ultimately increasing customer lifetime value while lowering ad costs. Results could be long-term (e.g., brand awareness) or immediate (e.g., lead generation, transactions, revenue).
The Impact on the Advertising Landscape
In a world where people are overwhelmed with messages, cutting through the noise is crucial. Outcomes-Based Advertising offers brands the opportunity to engage and influence their target audience at every stage of the consumer journey. Whether it’s boosting brand awareness, driving foot traffic, or generating sales, the emphasis is on meaningful action.
Key Points to Consider:
- Measuring Success: Outcomes-Based Advertising shifts the focus from mere outputs (such as impressions) to actual outcomes (such as conversions including leads, transactions, revenue, foot traffic, etc.). Brands can now tie their ad spend directly to measurable results, translate that to informed investment decisions, thereby ensuring a better return.
- Agility and Adaptability: Harnessing real-time data and AI-driven insights, marketers wield the power to dynamically tailor campaigns across diverse platforms. This surpasses the constraints of traditional auto optimization within a singular platform. Whether it’s swiftly adjusting targeting parameters or fine-tuning creative elements, this agility becomes a potent tool in navigating the multifaceted landscape of digital advertising. It’s not just about reacting in the moment; it’s about strategically adapting to the ever-evolving ecosystem, ensuring campaigns remain effective and impactful across all fronts. According to Forbes, “Traditional attribution models, like single-touch and multi-touch, have been used for years to measure marketing effectiveness. These models, however, have limitations. They often oversimplify the customer’s path to conversion, failing to capture the complexity of real-world interactions.”
- Predictive Analytics: Outcomes-Based Advertising leverages predictive analytics to anticipate user behavior. By understanding patterns and trends, marketers can fine-tune their strategies for maximum impact.
Choozle’s Approach: Driving ROI Through Outcomes-Based Advertising
In our pursuit of innovative solutions, we’ve teamed up with ChannelMix to transform the way marketers determine optimal advertising budgets. ChannelMix’s platform empowers marketers to make strategic budget allocation and media mix decisions with ease, armed with comprehensive analytics and actionable recommendations.
Outcome-based marketing boosts customer lifetime value while reducing ad costs. According to MMA Global, it surpasses reach-based media planning by over 50% in terms of ROAS (return on ad spend). Additionally, it accurately predicts ‘movable middles’ with 99% accuracy, highlighting its effectiveness.
What is ChannelMix AI?
ChannelMix AI is ChannelMix’s groundbreaking solution, delivering precise predictions on optimal budget and media mix to achieve your goals. It provides specific budget allocation recommendations for each marketing channel, drawing on a comprehensive analysis of available data sources.
How it Works:
An algorithm examines large amounts of historical data to find relationships between media activity and a target outcome. It uses those relationships to make predictions about future performance.
Predictive Accuracy: ChannelMix AI calculates the exact budget needed to reach your objectives. Each scenario presented includes recommended budget allocations for various marketing channels, ensuring you achieve optimal results.
Confidence in Decision-Making: ChannelMix AI displays the predicted performance to goal for each scenario, allowing you to confidently select the media mix that aligns with your business objectives.
Six Steps for Achieving Discipline in Iterative Paid Media Optimization
Having this visibility allows marketers to implement an agile approach to their optimization. Specifically we recommend:
- Establish a solid baseline of your existing paid media strategy and how it aligns with your current business operations
- Use data science to understand the interactions of various channels and ensure sufficient confidence factors are integrated into the model.
- Define incrementality in your goals, such as increasing lead generation by 15%, to set clear objectives for optimization efforts
- Interact with the recommendations provided by the model to devise a strategy tailored to your organization’s needs. This may involve reallocating budget from channels with diminishing returns, adjusting overall budget allocation, and optimizing tactics in underperforming channels.
- Implement measured changes to your media buys based on the refined strategy, and closely monitor how outcomes align with the modeled expectations.
- Commit to running this optimization cycle on a predetermined frequency to ensure continuous improvement. This ensures your campaigns adapt to changing environmental factors such as seasonality, competitive pressure, and significant events that can influence media pricing.
Embracing Cutting-Edge Technology
At Choozle, we’re on a mission to propel brands into the spotlight, connecting them with their target audience across diverse media and channels. Choozle seamlessly consolidates a suite of digital advertising tools – from a demand-side platform and data management platform to smart tag management – all unified within a user-friendly platform and augmented by our media experts. Partnering with ChannelMix empowers us to offer our clients advanced solutions for optimizing their advertising strategies. With ChannelMix AI’s predictive analytics capabilities, marketers can make informed decisions to maximize their advertising ROI and stay ahead in today’s dynamic landscape.
Welcoming the Future Today
As we look ahead, Outcomes-Based Advertising is more than just a trend; it’s a fundamental shift in how we approach marketing. Agencies and brands that focus on outcomes rather than outputs can create campaigns that capture attention and deliver unparalleled value in today’s competitive landscape.
Adam Woods
Adam Woods is the Chief Executive Officer (CEO) and held two other roles at Choozle — Chief Client Officer and Chief Technology Officer. Throughout his tenure at Choozle, he has been improving the way that advertisers buy media through the Choozle platform. He has led initiatives to ensure that Choozle leads the space in terms of being a consultative partner that helps ensure the effective deployment of media through a combination of omni-channel planning, targeting best practices, upfront goal setting, and effective measurement.
