Inaccurate Segments May Be Costing Advertisers Billions

Survata AdExchanger
Our CEO Chris Kelly was featured as a guest writer on AdExchanger’s “Data-Driven Thinking” column, calling for more Segment Validation in Programmatic Advertising. Read the full piece below:

Inaccurate Segments May Be Costing Advertisers Billions

We’ve all read the doom-and-gloom news about programmatic problems, from YouTube’s brand safety issues to brand advertisers culling their spending and companies like Chase maintaining performance with drastically reduced ad placements. We’ve seen death prognostications of programmatic as the future of digital marketing, then even the death to the death of programmatic predictions. Dizzying.

The one good thing resulting from the discussion has been the honest reflections on how programmatic can grow up.

However, that’s where it largely stopped, and I can’t help but notice that we only addressed half of the equation. While the industry collectively groaned about the “where” within programmatic advertising – where the ads show up – we haven’t sufficiently reflected on its “who,” as in who is seeing the ads.

Do the audience segments that power programmatic contain who they’re labeled to contain?

It’s a fair question. As New York Times CEO Mark Thompson recently wondered, “When we say a member of the audience is a female fashionista aged 20 to 30, what’s the probability that that’s actually true?”

The reality is that it may be quite low. We’ve been so consumed with brand safety and fixing programmatic spray-and-pray approaches that we haven’t really thought about segment validation. Are we sure a segment of “in-market SUV buyers” contains a larger percentage of buyers than a randomized control group? How can we prove that?

Perhaps this “who” question is programmatic’s next dirty little secret. Data scientists creating segments have many economic incentives to make a segment larger, but few to make it more accurate. And they’re allowed to sell it as a black box. Under these circumstances, we can’t expect consistently accurate audiences.

So, how can we get ahead of this issue before it rises to “crisis” levels, like the brand safety scandals?

The first step is admitting there is a problem. Based on industry chatter, we’re already in the first phases. It’s time to dig in and ask tough questions.

Sanity Check, Please

Sometimes the math behind a segment just isn’t there. I’ve seen a segment that supposedly contained small US business owners that was larger than the Census Bureau’s count of small business owners, multiplied by any reasonable device-per-person ratio. Even if you ignore the impossibility of more than 100% membership rates in a category, is it possible that a model captured 70% of people in a certain category? Sanity-checking audience sizes against a Google search should be a first move, especially when millions of advertising dollars are at stake.

Understand Different Data Types

The “who” within advertising segments is generally determined by three types of data: declared, observed or inferred. Many may know that, but if you’d like a refresher, see here.

Understanding the different types is critical because programmatic segments are made up using one or more of these types. Yet brands often don’t ask their partners which is which. I’ve often seen a brand think a segment it’s getting is observed when it’s actuality inferred. That matters, especially if you don’t know the criteria that determined the inferences.

Check The Source

I’ve heard horror stories about agencies doing a forensic dive into segments to learn people who read about a car crash were put into an “automotive intenders” segment. I’m convinced these are more true than apocryphal. Brands should find out about the precise criteria for being put in certain segments. What trade-offs were made between accuracy and scale? Don’t let it be a black box.

Building audiences is hard. The challenges are significant: Offline data may be available only at the household level, family members may share devices and modeling may be unavoidable in many cases. So, the expectations shouldn’t be that a segment contains only people with a specific attribute, but that it contains significantly more people with that attribute than an untargeted group.

Even acknowledging those difficulties, I can’t help but think of the billions of dollars wasted over the years marketing to incorrectly targeted audiences. Programmatic spend is nearing $33 billion in the US alone this year. It’s hard to know precisely the media dollars powered by third-party data versus first-party data, but even conservatively admitting that 10% to 20% of third-party segments are invalid implies billions of media dollars are suboptimally deployed.

To learn more about Survata’s Ad Research solutions, please contact us.

Amazon Takes 49 Percent of Consumers’ First Product Search, But Search Engines Rebound

Survata Bloomberg Amazon

As covered by Bloomberg, Survata’s Amazon study data powers some of the most important stats in business and brand intel.

Amazon Takes 49 Percent of Consumers’ First Product Search, But Search Engines Rebound
2017 Survata Study Finds 84 Percent in U.S. Expect to Buy Through Amazon This Holiday Season

A new study of 2,000 U.S. consumers by ad and market research firm Survata found that Amazon is still the top spot for consumers’ first product search, yet the company lost some ground to rebounding search engines like Google. Now, 49 percent of consumers turn to Amazon first when shopping for products online, with search engines taking 36 percent and retailers falling farther back at 15 percent. In 2016, a Survata study – previously commissioned by BloomReach – found Amazon at 55 percent, search engines at 28 percent and retailers at 16 percent.

Not only did search engines do better overall this year, but they also did very well – beating Amazon – when searchers were looking to be inspired and didn’t have a specific purchase in mind. Nearly 46 percent will start on search engines when they have no idea of what they want, with Amazon trailing at 39 percent. The remainder, 15 percent of U.S. consumers, said they’d start at a preferred retailer when they weren’t sure what they wanted. Related to specific product categories, electronics, apparel and home furnishings had the highest likelihood for consumers to start on a search engine over Amazon.

The rebound for search engines to 2015 study levels as consumers’ top choice could be attributed to the growing proliferation of mobile devices and traffic, coupled with the improvements in mobile search. Mobile commerce has grown rapidly in the last few years, and online-shopping traffic via mobile this holiday season is expected to account for more than half of retail visits for the first time. Search engines like Google have prioritized mobile search, and a previous study by Google found that search was the primary and most often used mobile-shopping tool.

However, with Amazon still having the advantage on search engines overall and a stranglehold on retailers, Survata also wanted to know why Amazon had that edge. Surprisingly, the study found that price was not the most common main factor consumers started on Amazon.

    -28 percent of consumers credited Amazon’s experience and easy-to-use navigation.
    -27 percent cited Amazon’s product variety and selection as their primary reason for starting there.
    -25 percent named prices as the reason, coming in a startling third place.
    -17 percent said Amazon’s shipping capabilities gave them the edge.

Amazon’s dominance over retailers was even more bleak as it related to holiday shopping. Conducted in the heart of this year’s record-setting holiday-shopping season, Survata’s Amazon study found that 84 percent of U.S. consumers expect to buy a gift on Amazon this year, with nearly half planning to spend at least 50 percent of their holiday budgets through Amazon.

How and where consumers choose to search for products online have significant implications on brand advertising, especially as the competition for advertising dollars between Google and Amazon stays hot. Survata’s Amazon study found that Amazon’s ads were slightly more trusted than Google’s, though not overwhelmingly. Approximately 31 percent of consumers felt that Amazon’s ads were better for finding trusted brands, compared to almost 22 percent for Google. Nearly half, 47 percent, felt that neither was better. A September analysis of 1,000 U.S. consumers by Survata found that 44 percent reported clicking on at least one sponsored product ad on Amazon, versus 46 percent who hadn’t. Approximately 10 percent said they didn’t use Amazon.

ABOUT SURVATA
Survata is a fast-growing technology company that provides brand intelligence to the world’s leading brands and agencies. Clients use Survata’s platform to talk to consumers after every touchpoint, from ad impressions and site visits to purchases and offline behavior. Survata integrates with the leading Data Management Platforms to enable powerful ad research, customer research and market research. The company is headquartered in San Francisco and backed by leading Silicon Valley venture capital investors, including YCombinator, SoftTech VC, PivotNorth Capital, IDG Ventures and Bloomberg Beta. Learn more at www.survata.com

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Survata is Proud to Sponsor the Brand Knew Podcast

Brand Knew is a new bi-monthly podcast featuring interviews with marketing leaders of major national brands. Hosted by Austin Moorhead, the podcast will dive into how consumers are changing and what brand leaders are doing about it. Survata is proud to be the initial sponsor – check out their first episode below and be sure to subscribe for future episodes with marketing thought leaders.

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Brand Knew Ep. #1: Discovering Fashion Consumers with Aimee Lapic, former CMO of Banana Republic

In the past five years, online consumer attention has shifted dramatically. In 2012, consumers spent 4.3 hours a day online, with 36% of that on their mobile devices. Today it’s 5.6 hours a day, with 54% on mobile [Source: Mary Meeker Internet Trends] That requires a shift in the marketing strategies of fashion companies, as consumers discover fashion inspiration in new places.

While consumers were changing, so was the competition, with the emergence of subscription model fashion companies such as Stitch Fix and LeTote. These companies try to combat high return rates by predicting what their customers will decide to keep – an approach that may eventually be their undoing.

On this episode of the Brand Knew podcast, Aimée Lapic reveals how she responded to these challenges as CMO of Banana Republic, and provides perspective on the challenges facing the new model fashion companies. Excerpts of Aimée’s interview below:

On the Banana Republic customer:

“I found out that Banana Republic, at the time, did not know who their customer was. They thought that the customer really was looking to Banana for fashion guidance and advice and inspiration. And instead the customer had moved beyond that and was more about expressing themselves through fashion. They were very self-confident people. They did not dress for one occasion versus another – they dress to accentuate their personalities and what they were looking for in a brand such as Banana Republic is a partner in that.”

On the shift from traditional advertising to digital:

“When I inherited the role about 80% of our media was focused on what I call traditional media, print magazines out-of-home advertising, even radio. And quickly I changed that structure to be 90% focused on digital marketing and about 10% focused on still the traditional marketing because that’s where the customer was looking for fashion inspiration. For example, something like 30% of customers at Banana Republic received their inspiration from social media websites.”

On which fashion companies are winning ecommerce:

“I do think there are smaller companies that are willing to take risks in how they go to market and how they meet customer needs that seem to be winning. For example, like a Stitch Fix. According to public information they are close to a billion dollars now in sales which is a super-fast growth rate. I think what makes them win in this ecommerce space is the idea that they’ve taken the risk out of not being able to try on clothes having easy returns for different customers. They’ve put a lot of focus on the data algorithm that allows them to really understand what customers need in terms of fit and styling and types of clothes they like over time.”

On the challenges of a Stitch Fix or LeTote:

“I frankly think the biggest issue for the subscription based businesses over time is retention of customers. The reason the customers are signing up for a Le Tote or a Stitch Fix is because they want to try new things. They want new things in their closet without a lot of risk. Over time, does Stich Fix or LeTote represent new things anymore or does it become part of what their norm is? I think the reason people are attracted to them in terms of innovation may be their undoing over time unless they can continue to keep it really new and different.”

Join us for our next episode where we will be talking to Melissa Waters, VP of Marketing at Lyft, about the past and future of ride-sharing.

Find Brand Knew Podcast on SoundCloud and iTunes and be sure to subscribe.