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Marketing’s Last-Click Obsession is Undermining ROI

July 11, 2022


When marketers talk about what makes them great at their jobs, it is not uncommon to hear them tout their “data-driven” credentials. But marketers’ approach to data can be problematic given that some tactics and channels more easily lend themselves to ones and zeroes than others. If marketers simply focus on the most accessible data, they risk automatically prioritizing channels that are more easily measurable but may actually deliver misleading or incorrect results.

 

Case in point: the temptation to focus on last-click attribution as the sign of which tactics and channels are driving value. It is easy to target high-intent customers on channels such as search and social, record high click-through rates, and conclude that these channels are more effective than, say, earned media and video, especially TV. But that assumption is not based on an accurate assessment of the efficacy of each channel.

 

In fact, ROI Genome research by Analytic Partners analyzing hundreds of billions of dollars in advertising spend across the world has found that optimizing toward last-click attribution can lead to massive waste in spend and poorer overall performance. Let’s explore the numbers to understand why marketers shouldn’t discount top-of-funnel tactics with less readily quantifiable impact.

 

Last Click Obscures the Big Picture

 

Focusing on the last click does not account for the whole customer journey and the many touchpoints that win hearts and minds. For example, recent analysis by AP found that 30% of paid search clicks are due to other marketing activities. Linear TV and digital display were the most common drivers of last clicks on search, followed by radio, social, and digital video, among others.

 

It is not hard to imagine how these other channels drive customers to search. Marketers commonly recognize that video, such as TV, connected TV and streaming video, is an especially powerful storytelling medium. Many customers see a TV ad, search for an item the same day or later, and then buy it, making TV the primary driver of conversion.

 

Due to this dynamic, data on performance metrics such as last click overstate the role of activities such as search and display by 10x and consistently understate the role of video, according to AP research. The average brand would lose as much as $50 million for every $25 million spent by optimizing toward the last click.

 

Why does optimizing for last-click not just distort marketers’ view of various channels’ efficacy but actively undermine ROI? Channels that lend themselves to last-click analysis, such as search and social, and tactics that do the same, such as targeting of individuals who have previously browsed a brand’s products, do not focus on introducing the brand to new audiences. These channels and tactics mainly help brands convert customers who are already interested in them and may have or will purchase anyway, while TV, video, and display on the open web might bring advertisers into contact with broad, new audiences likely to spur incremental growth.

 

The data bears out this hypothesis in regard to performance tactics, too, not just channels. For example, according to a 2022 AP ROI Genome report, contextual targeting is 1.2 to 2.5 times as effective as first-party data-driven “hyper-targeting” at similar cost. Again, this is a question of reaching new audiences who are engaging with content related to an advertiser’s products or services, as opposed to reaching familiar suspects who are very likely to convert but unlikely to move the needle.

 

What advertisers should focus on instead of last click

 

For marketers, the road to effective measurement, targeting, and channel calibration does not go through individual user-level tracking or last-click metrics that are often incorrectly touted as providing definitive ROI. The answer is not to cut back on anything that does not lend itself to granular measurement, either.

 

Rather, marketers should adopt a holistic view of marketing performance and understand the direct and indirect effects of advertising across channels to determine how much each channel is contributing to success.

 

If marketers expand their view beyond last-click metrics and high-intent performance channels, they will not just outpace competitors glued to those easily acquired, misleading and incorrect metrics. They will also craft more compelling marketing programs largely independent of user-level tracking and the last-click metrics increasingly disappearing from the walled gardens due to privacy changes. So, looking beyond the last click is not just more effective. It is more sustainable, too.

 

 

 

 

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