How do you measure return on investment from digital advertising on Google and Facebook?
“Advertisers fundamentally want to know what happens to somebody who sees the ad compared to somebody who doesn’t—that’s the causal effect of the ad, which directly translates to return on investment for the money put in. But the problem is that because of algorithmic targeting, the people who see the ads are super different from those who don’t.” — Florian Zettelmeyer, a professor of marketing at the Kellogg School of Management
The solution: A small, cost-effective number of randomized controlled trials (RCTs), in which a randomly selected group of consumers is shown an ad and is compared with a randomly selected control group that doesn’t see the ad. This data is then combined with data on industry-standard measures like last-click conversion counts. This model allows advertisers to predict how well a campaign will do in terms of true causal effect.
Take a closer look at the research at Kellogg Insight.
