Consumer Engagement Index

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1 Consumer Engagement Index Volume 1 Issue 1 Spring 2014

2 The Vantage Media Consumer Engagement Index Content and media are being consumed on different devices at a growing rate, while consumers want better control over their experience. Plus, consumers are growing more impatient; they command what they want, how they want it, when they want it. This changing consumer behavior has made ad engagement increasingly difficult for advertisers. But while advertisers allocate big portions of their digital ad spend to mobile to address this new consumer behavior an estimated $31.45 billion in it may not provide the ROI they hoped for. So how can advertisers be better prepared to make advertising investments that will engage consumers and convert them into customers? We sought to help advertisers with this issue by introducing the Vantage Media Consumer Engagement Index. This is the first in what will be a series of consumer engagement tests across different forms of digital media available for advertisers. There are two main pieces to the consumer engagement puzzle, which were addressed in a February 2014 report from the Interactive Advertising Bureau (IAB) 2. In the report, the IAB discussed two approaches to ad relevance. The first approach pertains to an ad existing in the right place. If the consumer has interest in a particular topic and has, as a result, sought out relevant content, advertising that occurs within the context of the content is likely to produce consumers more inclined to engage advertisers. For example, a car ad within an automotive review article. The second approach refers an ad reaching the right person. An advertisement that is completely irrelevant to the context in which it exists can still be relevant to the consumer if that consumer has, in some way, shown intent to purchase the product being advertised. For example, a car ad is not obviously relevant in an article about March Madness. But, if the person reading the article has used a search engine to look for cars recently, then the car ad actually is relevant since the consumer showed purchase intent for that particular product. What is not addressed in the IAB report is how timing plays into this topic of relevancy. In other car-site.com CHEAP CARS SAVE Right Place Right Person Right Time 1 emarketer, March Measuring Digital Ad Engagement: Advancing 3MS, Interactive Advertising Bureau, February 2014 Page 1 Spring 2014

3 words, showing an ad to someone who is actively shopping for that product, at that time. This third approach is especially important because even if an ad is in front of the right person, in the right place, if they have no intent to buy that product at that time, the chances of the consumer engaging are lowered. This semi-annual report from Vantage Media examines consumer engagement across different media to help advertisers who are focused on improving the return on their ad spend. In this report, we look at the purchase intent of consumers across a variety of media, ranging from social, to traditional display, to display purchased through a demand-side platform (DSP), to mobile, search, and more. The data from the tests can help advertisers optimize the allocation of their advertising budgets to improve consumer engagement. Our Methodology It is important to define what consumer engagement is. We define consumer engagement as the event when the consumer, after clicking on the ad, completes an interview process or conversion funnel, is presented with advertiser matches based on the interview, and ultimately selects an advertiser. We measured the number of actual consumer engagements and from that data created an index to show how consumers engage advertisers within different digital media sources. To keep consistency in the consumer experience, we tested one product to advertise across all forms of media. Since we have extensive expertise in marketing auto insurance online, we decided to market auto insurance for the engagement index. We recognize that there may be differences between verticals and advertisers should keep this in mind. We felt that picking one was the best way to identify directional insights but we plan to test other verticals in future indexes to compare outcomes. We looked at both desktop and mobile media channels in our research. The desktop channels tested were the Facebook News Feed, Facebook Right Rail, Pandora, behavioral targeted display, retargeted display, premium display, YouTube display, news stream, and display advertising through a demand-side platform. The mobile channels we tested were the Facebook News Feed, Pandora, and advertising via a mobile platform. We also tested search, native advertising within article content, and advertising. The test was run within a defined time period. The ad creative for each of these channels was the same, with size variations depending on the media type. For example, the ad creative in the Facebook News Feed was larger than that in the Facebook Right Rail. We measured the number of actual consumer engagements and from that data created an index to show how consumers engage advertisers within different digital media sources. Page 2 Spring 2014

4 Our Findings Our tests produced the following results: Consumer Engagement Index by Digital Media Type Search Facebook News Feed (Desktop) Content/Articles (Native Advertising) Retargeted Display Pandora (Desktop) Demand-side platform Facebook Right Rail (Desktop) Behavioral Targeted Display Premium Display Facebook News Feed (Mobile) Pandora (Mobile) YouTube Display Mobile Advertising Platform From the data, we can see that Search is the media channel that is most likely to produce consumers who will engage with advertisers, signifying that ad timing is a big factor. We indexed Search to 100. The second-highest indexing media in our test was the desktop Facebook News Feed, with an index of 92. These results suggest promise in using Facebook to engage consumers through relevant targeting. Native advertising also indexed high relative to Search at 73, pointing to its power and the influence of relevant context discussed earlier. This finding suggests the substantial potential for media giants like Yahoo! and AOL to create value from native advertising. Another interesting find was that video performed poorly in our index. This video test featured static ads at the bottom of the video screen on YouTube. We recognize, though, that alternative forms of engagement from within the video itself will undoubtedly perform better than static overlays or pre-roll, and we look forward to testing these options as they become more available. The news stream test also indexed near the bottom, further driving the importance of context and targeting. Native advertising also indexed high relative to Search at 73 Mobile vs. Desktop Looking at the data from a macro level, we can deduce that mobile still lags behind traditional desktop advertising in consumer engagement. In fact, of the five media types that indexed the lowest, three were mobile sources. This is especially important for advertisers to consider given the February 2014 data from Nielsen and the Mobile World Congress 3 which indicated that Americans spent 34 hours using their mobile 3 Nielsen, How Smartphones Are Changing Consumers' Daily Routines Around the Globe, February 24, 2014 Page 3 Spring 2014

5 In fact, of the five media types that indexed the lowest, three were mobile sources. $ Save on the Best Brands phones in December 2013, compared with 27 hours spent on average online on a regular computer. The mobile advertising platform we tested, which displayed ads in mobile apps, actually produced no consumers that engaged an advertiser in our test, despite consumers clicking on the originating ad creative. When comparing desktop vs. mobile within Facebook, the Facebook News Feed on the desktop channel indexed at 92, while the Facebook News Feed mobile only indexed at 6. In other words, desktop was 15 times more likely to produce an engaged consumer. Pandora had an even greater variance between desktop and mobile. Desktop indexed 50 times higher than mobile (25 for desktop, vs 0.5 for mobile). The vast differences between mobile and desktop could be attributed to accidental clicks on mobile devices, which are common on the small screens of mobile devices. Regardless, these low engagement clicks cost money and throw off advertising metrics. The Cost Equation It is critical to recognize that it is not only important to focus on engagements, but to also focus on cost when making advertising decisions. For example, even though the demand-side platform in our data test had mediocre absolute performance, if its cost was significantly lower than advertising on search, an advertiser may see similar return on their advertising spend when comparing cost vs. effectiveness. For that reason, we plan to include advertising cost in future indexes so we can provide a more comprehensive picture of media type options to consider based on advertising goals. Targeting and its Significance The index demonstrates the value of targeting when trying to drive consumer engagement. Take display media for example. We can see that behavioral targeted display performed 33% better than premium display, while targeting available through the DSP delivered more than twice as many engaged consumers. Further, retargeted display putting the ad in front of consumers that had already indicated they were shopping for auto insurance produced almost five times more engaged consumers than premium display. These statistics point to the meaningful power of targeting and its influential role in engaging the relevant consumer. Page 4 Spring 2014

6 Conclusions The Vantage Media Consumer Engagement Index demonstrates that advertisers face a complex challenge in engaging consumers such that they become buyers. Search indexed high because it instantly shows a text ad or listing based on the keywords the user is searching for at the time, pointing to the importance of ad timing. Content drives consumers with high purchase intent through the power of native advertising, which points to the importance of an ad existing in the right place. Finally, the result of the Facebook Newsfeed test not only shows the vast advertising opportunity within the social network, it also points to the effectiveness of targeting the right person. Another challenge that advertisers face is the massive variance in results among the different media. While all of the digital media types are useful in promoting brand awareness, only a select few are inherently effective in direct response. A platform where advertisers can bid to engage the right consumer, in the right place, at the right time would create tremendous value for advertisers dealing with the changing landscape. While all of the digital media types are useful in promoting brand awareness, only a select few are innately effective in direct response. We started this series of data tests because we think the concept of measuring engagement over time is significant, and will continue to be important to advertisers and media companies looking for the best ways in which to engage consumers. We are confident that advances in advertising technology and changes in consumer behavior are certain to affect the Consumer Engagement Index over time. We also know that cost is a big factor that should be considered, and could change an advertiser's strategy to accommodate their goals and individual situations. Ultimately those companies who continue to invest in advertising technology with a focus on consumer experience will capture the most value. To learn more about Vantage Media and our real-time bidding platform for engaging active buyers, go to Page 5 Spring 2014

1 Sales Relationships Trust Opportunity Source: The Trade Desk 6 Source: The Trade Desk 7 2014 WORLDWIDE Source: emarketer 2014, Display RTB 8 2017 $20.8B WORLDWIDE U.S. $10.4B EUROPE $3.3B LATIN AMERICA

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