Marketing

When It Comes to Measurement, the Ad Industry Can Follow the FDA’s Lead

If you remember one thing, remember that when you are using single- and multi-touch attribution, CPA does not actually measure your cost per acquisition. Instead, it measures the cost per attribution, and these attribution methods are not aligned with how effective your ads were at influencing users. 

Incremental attribution isn’t easy, but it’s worth it 

Incrementality is the more challenging, yet rewarding, attribution option. Skeptics of incrementality lament that it requires more cost and effort, but having an accurate and scientifically sound approach to measuring KPI is the bedrock of marketing efficiency and success. 

Measuring CPA using an attribution methodology factors in how many conversions would have occurred without a campaign’s advertisements. The gold standard method for measuring incremental CPA is to conduct a randomized controlled trial (RCT), a rigorous approach to measuring the number of conversions a particular campaign actually drove. The Food and Drug Administration uses this scientific methods to measure the safety and efficacy of pharmaceutical products. Importantly, these trials remain accurate even if the campaign they are being used to measure is run alongside other campaigns, including other channels of media.

Typically, RCTs for measurement in advertising involve showing a public service announcement (PSA), or other irrelevant creative, to a group of users. While this comes at an expense, the reward is a truly accurate measure of how effectively campaign dollars are spent. 

Beware of ghosts 

The accuracy of an RCT depends heavily on how carefully the trial is executed. It is critical that users are randomly assigned to the ad group and the PSA group, and that they are treated identically except for the creative they see. Otherwise, the results will not be accurate—imagine if you put retargeted users in the ad group and random users in the PSA group. For this reason, it is important to understand the methodology being used to make incremental measurements. 

Sometimes the term incremental CPA is used to refer to measurement based on attribution that uses ghost ads or ghost bids. These methods essentially try to simulate running a PSA control without actually spending the budget. These methods come with the risk that the measured performance completely depends on how accurately the PSA control is simulated. This can be a dangerous assumption, so unless you run a real control and find the ghost methodology produces accurate and consistent results, proceed with caution.

Looking ahead 

In addition to incremental CPA providing a scientifically valid measure of campaign performance, the data generated by randomized control trials has added benefits. New statistical methods, borrowed from the field of precision medicine, can analyze RCT data to understand which audiences are most influenced by which creative. These insights can, in turn, be used to improve the performance of future campaigns. 

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