Creative Testing for Return on Ad Spend (ROAS)
Can Creative Testing Improve Return on Ad Spend (ROAS)?
The analytics community has never had a sufficiently robust set of data that captures creative impact on business results. In ABX testing of 365,000+ ads across the top 26 industries, we found that creative is the largest contributor by far at 50–60% of sales lift. Without creative data factored in, it’s no wonder that correlating Ad Spend to business outcomes becomes very difficult.
At present, insights directors and marketers use media spend data as inputs into their marketing mix models. However, the question John Wanamaker asks can’t be easily answered because Ad Spend doesn’t account for the variability of creative. Some ads are effective, but at least fifty to sixty percent are not. Also, an accurate Return on Ad Spend or ROAS can’t be produced from the small portion of one’s advertising that has been through pretesting.
Thus, for advertisers to see the results of a campaign in the language of management, they need to put ALL their advertising through creative testing, which can be done today affordably. The creative scores are then married to Ad Spend and the Market Mix Models snap into place. See the great case studies below, and then see definitions for Return on Ad Spend (ROAS), ROI, Predictive Analytics and Marketing Mix Models.
Health & Beauty Brand – Ad Spend vs Creative Impact on Revenues
This study compares the effects of the media portion of Advertising Spend versus creative testing scores on sales revenues for one of the world’s largest cosmetic brands. ABX provided a robust set of advertising effectiveness measurement scores for client ads across all media types over a period of 30 months, which were integrated into the marketing mix model. Insights included:
- First, it demonstrated that when media dollars were spent regardless the quality of the ad, virtually no correlation was found between media spend and revenues. This picture changes drastically when more spend is dedicated to the ads with higher creative power. In this case, had the advertiser spent more on highly effective creative and less on poor creative, the sales impact would have been $26M.
- Second, in an ideal world, media spend on an ad by ad basis would align perfectly with ad sales lift, but this is not the case in this study nor in the real world. As we see below, the correlation between the quantitative ad spend-per-spot and sales lift had a very low correlation of r²=.1138. When we married creative testing scores as a qualitative measure to the media spend, the correlations soar to r²=.743.
- If creative isn’t good, media buys are virtually wasted. As mentioned above, had the client used creative scores to allocate media budget, it could have generated an incremental +$26 million in revenue. Creative effectiveness drives sales whereas ad spend is a much weaker driver. (Courtesy Bottom-Line Analytics).
Soft Drink Brand Case Study – Weighted Media Spend vs Sales
A similar approach was taken with one of the top carbonated beverages in the world. The marketing mix modelers weighted the media spend with creative testing data and compared it to sales revenues over a three-year period. A high correlation of 71.2% showed the weighted creative scores did very well against sales. (Courtesy Bottom-Line Analytics).
State Lottery Study – Creative Testing and Incremental Sales
A large state lottery’s average creative score index over the past year was 91, which was short of the 100 “average” in advertising effectiveness. This case was particularly interesting because the marketing mix modelers showed how much sales revenues could increase as creative testing scores went up. (Courtesy Bottom-Line Analytics) Amazingly, for every single data point increase in the Florida Lottery average ad effectiveness score, the incremental revenue would be $715,000. This is predictive analytics at its best. In the chart below, as the Copy Score weighted average increases (horizontally), the incremental sales revenues also increase (vertically). The creative team has a great deal of power to positively affect sales results.