Reach Efficiency: An Untapped Opportunity to Increase Your Digital Advertising Effectiveness

Randall Beard

Over the last several years, digital audience measurement has taken several major steps forward with the measurement of non-fraudulent views, viewable impressions, and on-target audience delivery.

These are all core building blocks to effective digital advertising:

• Your digital ad can’t be effective if it’s” viewed” by a non-human bot. The ANA (Association of National Advertisers) recently published a study showing that advertisers are wasting huge amounts of money through fraudulent digital ad impressions.
  
• Assuming there’s a real human in front of the screen, your ad has to be “viewable” to have an impact. While there is some debate about exactly how to define viewability, the standard industry definition is that the ad needs to be “above the fold” (e.g. in view) for at least one second.
  
• Finally, delivering your digital ad to the wrong audience isn’t going to drive great results either. Nielsen Online Campaign Ratings across over twenty thousand campaigns shows that, on average, only 59% of digital impressions are delivered to their intended audience.

Measuring non-fraudulent ad impressions that are viewable and delivered to the correct audience are all very important to effective digital advertising. But there’s another untapped opportunity in reaching digital audiences that few advertisers and agencies are taking advantage of: reach efficiency.

Why Is Reach Important?

Before we dissect reach efficiency, let’s first remind ourselves why reach is so important.

First, the obvious. An ad has to reach your intended audience to have an impact. And, it stands to reason that the more reach you have against your target audience, the more impact your advertising will have.

Most research has shown that there is a direct and linear relationship between reach and sales impact. So, an increase from 50% to 75% reach (1.5x) will increase sales due to advertising by 1.5x, all other things equal.

Reach vs. Frequency?

What about frequency? Numerous single source studies have demonstrated that, on average, incremental reach is more valuable than incremental frequency. To take a simple example, a single ad exposure against ten people is going to generate more sales lift than a single ad seen by the same person ten times. This simple concept means that most advertisers want to maximize reach at one frequency as their primary media objective.

Reach Efficiency—What Is It?

Back to reach efficiency. Reach efficiency is a measure of how effectively a given web site delivers unduplicated reach (reach with minimal frequency). Said differently, how many GRP’s are required to achieve a given level of reach? Here’s an example:

• Low Reach Efficiency—Site A delivers 10% reach with 50 GRP’s. This means that each point of reach has 5 frequency—e.g., 10% reach x 5 frequency = 50 GRP’s.
  
• High Efficiency Reach—Site B delivers 10% reach with only 20 GRP’s. Thus, each point of reach has only 2 frequency—e.g. 10% reach x 2 frequency = 20 GRP’s.

In this example, Site B is much more efficient. It delivers the same reach at about 40% of the GRP’s (and cost) of site A. Obviously, a smart advertiser would want to spend more in site B and less in site A.

What Drives Reach Efficiency?

Nielsen Online Campaign Ratings data shows that there is a very high variation in reach efficiency across web sites—up to a 10x the difference between most and least efficient web sites. What drives this?

1. Registration Data—Digital publishers with good viewer registration data know viewers identities and can manage ad serving and delivery at the individual level.
   
2. Frequency Capping—These tools enable publishers to “cap” frequency at a maximum level so that an advertiser’s budget is focused on building reach without overdoing frequency.
   
3. Cross Device Identity Systems—Publishers who can recognize the same individual across devices can better manage frequency. This is because they can avoid exposing the same person to the same ad multiple times across different platforms.

What Should You Do?

Advertisers and agencies should start looking beyond non-fraudulent, viewable, on-target audience impressions. They need to start asking the question: “how efficiently am I reaching my intended audience?”

A good start is to simply understand the reach, frequency, and GRP’s of your digital advertising plans, and reach efficiency by site within the plan. This will immediately flag opportunities that most advertisers and agencies don’t even know are right in front of them.

Digital advertising is a big opportunity for most advertisers, and getting reach right is the foundation of any well designed and well executed digital media plan. Reach for efficiency, not just making an impression on the right audience.

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