Micro-conversions and the future of digital marketing

What if everything you thought you knew about digital marketing was wrong?

Success these days doesn’t necessarily mean making a sale, acquiring a new user or even knowing where customers clicked right before they clicked on your ad.

“I think the most interesting trend we’re seeing, probably in the next year, is the idea of micro-conversions,” says Justin Adler, director of product at Montreal ad tech company SourceKnowledge. By micro-conversions he means charting out a customer’s paths to purchase and assigning a relative value to each step along the away.

How many screens did the customer look at after he put his first item in his e-cart? How far did he make it down the cart confirmation? If he didn’t make it, where did he stop?

The solution, says SourceKnowledge president Patrick Hopf, is a more holistic approach to advertising. “We have a client, BuildDirect, who focuses on B2C sales of home renovation stuff. They were making a lot of decisions based on click-through rate, which is a really dangerous way to operate and spend.”

So SourceKnowledge started prospecting clients for them and retargeting using more than 50 intent signifiers (from the device on which the user viewed the ad to how long he or she hovered over it before clicking) to target ads to customers who would spend more – and spend more often.

Compared with a brick and mortar business, digital advertising is far behind, says Adler. Take an Abercrombie & Fitch store, for example, where everything is strictly controlled, from the packaging, to what staff wear, to the smell (you’ve smelled that waft before), with the goal of attracting and retaining a certain kind of customer.

“We’re getting to a tipping point where the industry is going to wake up a bit,” said Adler. “If you’re serving really obnoxious ads that are bothering your users, they’re never going to come back to your product again. Or they’ll install an ad blocker and then you have no revenue.”

With more users turning to ad blockers to get rid of annoying expanding video ads or small sidebar videos where you can never find the pause button, some ad specialists have quit video completely, saying it’s not worth the money. But Hopf insists that video advertising is all about doing it right, because when you do do it right, video ads are up to 20 per cent more valuable.

A five-second to seven-second video about a product that resonates with a consumer is better than image-only, he says. “[Digital advertising] is all moving to mobile phones and I just don’t see where these 15 seconds would work. But if you saw the ad and knew it wouldn’t be wasting a huge chunk of your time, you’d be okay.”

Besides, why would any company want to waste money on people who don’t want to see their ads in the first place? For SourceKnowledge that just means the advertiser has targeted the wrong user.

Digital marketing consultant Thoma Daneau of Montreal agency Daneau + Truong doesn’t take the same “we’re better off without them” stance. On the contrary, he thinks that those currently opting out could be a lucrative demographic.

“Users that are using ad block are often more tech-y than the usual user, making them a great target for advertisements,” he says.

To Daneau, not making consumers angry is about analyzing the relevant intent signifiers.

“That’s a no-brainer,” he says. “In a perfect world, every user would have a different ad based on all the info we have, but we have no choice but to ignore some data to make a campaign more manageable. So if I want to reach parents, I don’t care if they like Star Wars.”

Adler and Hopf agree. “If you want to target men aged 25 in Ontario who are married and who like rolling stones, you often end up finding out that a lot of those things, outside of geo, of course, have no correlation to conversion behavior,” says Adler. “Whether you’re married or have a higher income level are largely unrelated to conversions or sales.”

And while many startups go the lean route with Google and Facebook ads, these advertising behemoths don’t provide all the best intent signifiers. That’s why SourceKnowledge’s customers pay more – a minimum of $5,000 to $10,000 a month – for their smart bidder technology.

“We know how a user behaves when they see the video advertisement,” says Adler. “Like how much of the video did they watch, did they skip it, did they mute it, did they hover over it?”

That’s bad news for a startup working with a small budget. But according to Hopf, working with an ad agency specialized in big data can help a startup scale up rapidly. “For us, it’s all math,” he says.

And while Adler and Hopf say Montreal doesn’t compare to the US in terms of ad tech companies, they don’t think bigger companies need to invade user privacy to maximize sales, even if it means having more intent signifiers to play with. “We want to know if you’ve made purchases on campaigns we’ve run. But we don’t want to know your name or address. And that’s something Google does know, and that’s frightening,” says Adler.

“You’re an IP number to me,” adds Hopf. “You bought shoes. So maybe next time you’ll be interested in a coat. That’s good enough.”


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