The ROI of Data Quality in Your Digital Advertising

Here's how it can be tracked, measured and proven

JIRAROJ PRADITCHAROENKUL/iStock

While programmatic ad serving platforms tend to get the lion’s share of the media attention these days, it’s the quality of your own data that will have the biggest impact on the ROI of your digital advertising spend. And for all the talk about data-driven advertising and marketing business models, Forrester revealed in a recent webinar that less than 0.5 percent of all data is ever analyzed and used.

When someone says that their company is data-driven, it’s time we peel back the layers of the onion and ask what they mean by that. Think of data-driven as more of a spectrum than a binary “I am” or “I am not” data-driven. Some people think that occasionally looking at their Google Analytics makes them data-driven, while others are ever-vigilant about the uptime of their third-party pixel tags so that they don’t lose any data on their traffic. If you’re truly data-driven, then you’re going to want to raise the bar on what that actually means for your organization.

In the webinar, which centered on data quality and ROI, InfoTrust shared this statistic from a recent Salesforce report: CRM-powered ads are 47 percent more effective than traditional targeting. And Richard Joyce, senior analyst at Forrester, says that “just a 10 percent increase in data accessibility will result in more than $65 million additional net income for a typical Fortune 1000 company.”

So why isn’t data quality a bigger priority if it can deliver substantially higher ROI from your digital advertising investment?

Data quality’s competitive advantage

Forrester estimates that as much as 42 percent of advertising and marketing budgets are allocated to some form of technology, yet little attention is paid to the overall data quality.

“Marketers who can effectively manage data quality will have a competitive advantage,” said Richard Joyce, senior analyst at Forrester. Because of the barriers to data quality, companies that invest the time and budget to solve the problem will have a distinct competitive advantage.

“The value of analytics is all in how you apply it,” says Michael Loban, CMO at InfoTrust. “Marketing tests and optimization efforts should all be documented, with the ROI achieved with and without optimization efforts outlined.” In this way, the true impact of improved data quality—and the cumulative effect of your tests or experiments—can be tracked and measured, and the ROI of digital analytics can be determined.

Measuring the ROI of improved data quality

With improved data quality, advertising campaigns can be more accurately measured for their impact and overall effectiveness. The end result is better budget allocation and, with improved ROI, the ability to secure a substantial budget increase.

“If there is going to be a higher cost to acquire better data, it’s got to be justified by a higher ROI,” says Jeff Weiser, CMO of Shutterstock in a recent AdExchanger article. “The formula is how many fewer impressions did you buy in order to justify the KPI goals? Did you buy 10 percent less media? If you paid the same amount overall, then the data is wasteful.”

Meanwhile, Procter & Gamble has required third-party audience verification on all P&G budgets for digital media, and they are not alone. Unilever has championed GroupM’s viewability standard for the past two years. Improved data quality in digital advertising is a growing trend, and advertisers are looking to their agency partners to provide validation in addition to higher ROI for their digital advertising dollars.

In speaking with Loban, he outlined three distinct areas where the ROI of data quality can be tracked, measured and definitively proven.

  • Finding the Best Customers: With enhanced digital analytics, companies can better understand their customer lifetime value (LTV), which allows them to identify their most profitable customer segments. This data can inform campaign targeting to focus more heavily on those audiences that are most likely to have a high LTV.
  • Improved Value Proposition: Through rigorous testing, companies can determine which components of their advertising message and core value propositions are resonating with their ideal customers and which are not.
  • Better Overall Advertising Campaigns: The best driver of ROI from enhanced data quality is the ability to develop better advertising campaigns and data-driven marketing plans that will deliver more predictable results. By knowing where to invest advertising dollars for the maximum return, companies have a higher degree of confidence in their marketing investments and are likely to invest more over time.

The time has come to stop “talking the talk” when it comes being data-driven and instead demonstrate what higher-quality data can do to deliver the desired outcomes we all seek.