RE: Intelligent Advertising (was Re: Venting)

From: Carmen Paulino <clpsf_at_mindspring.com>
Date: Fri 20 Jul 2001 14:03:08 -0500

KELLEY MITCHELL <esc1krm_at_ups.com> WROTE:

>My point is: I know I have to get a certain amount
>of traffic through the door to make the rest of the
>model work. If I don't get traffic, I can have no
>conversions. Thus, CTR is important to me because it
>has an impact on conversions. I will not keep a
>campaign with a great CTR but low conversions, because
>of the impact on ROI. But if I only get 10 people
>through the door, 9 of them become buyers, then my
>conversion rate is 90% - great, right? Nope, because
>I spent $5,000 getting those 9 buyers who spent $10
>each = $90. Devise your own yield model and revise it
>as you learn. Don't be fooled by agencies telling you
>a 0.03% is acceptable - likely, it is not sufficient
>to drive the traffic you need to gain decent conversions.

CARMEN PAULINO <clpsf_at_sirius.com> WROTE:

>Most agencies have the empirical data and resources
>to provide clients a series of hypothetical scenarios
>for predicted outcomes under certain assumptions. Ask
for them.

TOM CUTHBERT <tom_at_OptimaliQ.com> WROTE:

>I respectfully disagree with Carmen's statement that
>agencies have "empirical data and resources" that are
>relevant to optimizing a campaign in the way the Kelley
>has described.

Tom, you took my comments out of context by using a
different quotation from Kelley's message than I
referred to and copied above. Notwithstanding, agencies
are -- or should be -- able to **predict** outcomes
under certain assumptions. Kelley was discussing the
mechanism for managing an **active** ongoing campaign
by using a full range of elements in an equation, that
is, number of clicks, the CTR (front end), (in our case,
we also measure the number of actual lands after the
click), conversion and acquisitions (back end) to discern
whether an active campaign is working or not.

There is a difference between a forecast (prediction),
which is what I mentioned, and active management of an
ongoing campaign as Kelley described. You say that

<<Using information to develop "hypothetical scenarios
>and predicted outcomes" is useless.>> You might want to
>point this out to all of the science/technology and
>business schools out there that make Statistics and
>Forecasting required learning.

You also say that

>Information (data) should be used to drive quantifiable
>results.

That's the whole point -- but if we're going to do
intelligent anything, let alone intelligent advertising,
we might want to include step 1, forecasting expectations
so that we have a reasonable reference point or benchmarks.

If an agency representative says that a 0.03% CTR is
acceptable, then an advertiser might want to put the rep
to task. Agencies that represent a diversity of clients
over a number of years have sufficient experience,
knowledge of certain types of placements, and other
relevant data and resources to forecast the outcome of
a campaign. Forecasting is a science, and therefore not
intended to be perfect, only a guide. It is another tool,
like building pro forma's for conducting business
activities, and advertising is a business activity.

Such an agency can, within a reasonable range of accuracy,
determine potential CTR and other outcomes under certain
hypothetical scenarios. I know because we do this as a
normal part of every media plan. If an agency has a
proprietary or other back-end advertising tracking
program in place and specific business data, such as
an advertiser's leads to sales ratios, cost of sales,
etc., the forecast can be even more specific and trued up.
Forecasting is a discipline based on statistical analysis
using assumptions, weighting, and a set of common criteria
and constants drawn in large part from empirical data
(whether the agency's and/or the advertiser's) and
experience. Any agency (and experienced advertiser)should
be able to do this and an advertiser should ask for more
specifics than just a cold guess of 0.03%. An ensuing
campaign test, as one example, becomes even more valuable
when forearmed with predicted expectations, and vice versa.

Carmen Paulino



Received on Fri Jul 20 2001 - 14:03:08 CDT