Your company signs an advertising contract with a local radio station: $15,000 for a series of 15-second ad spots during peak drive time hours. Estimated reach in your local market? One million impressions*. Sounds like a great deal, right? That’s just a penny and a half per impression—money well spent!
Except that it’s often not money well spent. Hidden in the margins of these pennies is a significant amount of wasted budget: costs most companies pay without even realizing it.
Let’s take a closer look at your deal in context.
How many people listening to that particular radio station at that specific time are part of your target audience? How many of them live within your service area? How many actually need or want the product or service you’re advertising? These qualifiers and a dozen others chip away at those one million impressions until you’re left with an audience that’s much more relevant… but much, much smaller.
After it’s all said and done, let’s be extremely generous here and assume that only 200,000 out of those one million impressions actually care about your ad spots. Your cost per meaningful impression is a CPM (cost per thousand) of $75. Another way of looking at it? You’re paying for 800,000 impressions that don’t count.
Imagine what all that waste is doing to your true spot cost. Actually, you don’t need to imagine: just look at the math! It’s ballooning it by a factor of five.
That’s the pervasiveness of media waste: advertising dollars better-used elsewhere.
Traditional media is rife with waste
The radio advertisement deal from above isn’t a far-fetched example. Brands often come to JXM heavily invested in traditional media channels—print, radio, broadcast TV, etc.—looking for better results from their advertising spend. The sheer amount of media waste that lives in the margins of these traditional media advertising contracts is staggering! The only fictional part of our example is the dollar amount. In reality, many brands pay hundreds of thousands or millions more than they should each year for advertising that isn’t best-suited to them.
Even old-school marketers and savvy channel experts overlook this waste. Worse, sometimes they accept it as the cost of doing business. All those impressions are great, but they don’t measure intent—which is notoriously difficult to pin down. The ad placement may feel tailor-made for your customer, but what you’re really doing is slinging out one-size-fits-all t-shirts into a crowd. There’s no way of knowing if that “one size” is an XS or XL, or if your customers intend to ever wear it. Paying for access to a million people doesn’t make sense if what you’re really reaching for is the smallest fraction of them.
This isn’t to say that traditional media is a worthless budget-suck. In fact, it’s quite the opposite: underutilized in many markets and stirring with potential. The key to preventing waste and tapping into that potential is understanding how to best-utilize traditional mediums within the scope of the customer journey. When JXM works with a brand, we create a more flexible, brand-specific approach to selectively incorporate only the right traditional media elements for them.
No matter the medium, know exactly what you’re spending money on and what level of spend justifies the effort, be it brand awareness or an active push for conversions. A firm grasp on intent can quickly open your eyes to wasteful spend.
Waste Not, Want Not.
Media waste still hides in digital channels
While it’s true digital media has its own levels of waste, there’s a lot more recourse for recognizing and correcting it. Unlike traditional media, digital media campaigns can be adjusted at any point based on outcome. You can’t pick and choose which radio station listeners hear your ad spot. You can target PPC ads to a very specific audience and hone that targeting as you go.
In a digital space, the biggest generator of waste is lack of engagement on the part of brands. It’s too easy to pick a few keywords and allocate budget, and let a campaign run until it’s over. What many brands more familiar with traditional media approaches may not realize is that they have a lot more control in this medium. Brands can leverage the exceptional targeting capabilities of digital advertising channels to remain nimble—and to root out media waste.
One way we do this at JXM is by segmenting the customer journey. This often means adjusting KPAs and KPIs not performing at desired levels. In some cases, it means throwing out old metrics that don’t apply to the audience, medium, or goal. In other situations, it means breaking them out into a different conversion funnel that accounts for where that group is in their buying journey.
Digital channels offer great potential for squeezing value out of every last advertising dollar. However, to siphon out waste takes stringent oversight, frequent modification, and real-time scrutiny of each campaign’s approach and performance.
Identifying purpose is key in eliminating waste
Across both traditional or digital channels, the simplest way to identify and eliminate media waste is to take a step back and look at your objective. Chances are, the objective you have and the execution strategy you’re rolling out don’t line up.
Some brands try to draw a straight line from messaging to conversion, forgetting the road most travel along the customer journey is, by definition, a winding one. Trying to smooth out this curve quickly whittles down the efficacy of your campaign—and jacks up its costs. Instead of blasting out a radio ad to a million people and hoping the majority will care, start thinking about where you can meet those one million listeners in their personal buying journey. Then, ask yourself if your campaign, spend, and medium are capable of doing that.
Keep in mind that conversions don’t need to be as simplistic as a “sale point” or purchase. Conversion tactics can be used at any stage within the customer’s journey to optimize the effectiveness of ad campaigns. Did you grow brand awareness and credibility? Take market share from a potential competitor? Create a brand ambassador who will pass on your message to someone else? These might not be sales, but they have the potential to culminate in them.
Remember that conversions happen after the sale too. Your current customer base can be a large source of untapped revenue and growth, and channel advertising isn’t only about attracting new buyers. Customers who’ve already purchased are still on a buying journey.
Start scrutinizing your ad spend
Marketing is already one of the costliest endeavors for any business—why spend orders of magnitude more than you need to for results that aren’t effectual? Try not to cling to metrics that justify ad spend while ignoring marketing intent. And, above all, remember not to force customers into a sales funnel that’s not representative of their personal buying journey.
*These figures are for example only; we purposefully uncomplicated the traditional measure of reach and frequency to calculate gross impressions (audience).