Calling “outcomes-based advertising” an emerging industry trend would be a bit of an understatement.
Talking about outcomes is practically a mandate, especially in the CTV space, where ad buyers and vendors alike are heavily invested in streaming television’s potential as a lower-funnel, performance-driving channel.
But the way ad tech companies use the term “outcomes” can often be nebulous. And like many comparable fads, the more it becomes a talking point (or, more accurately, a selling point), the mushier it becomes.
Maybe a better understanding of how the industry got here in the first place will help clear things up.
Welcome to outcomes
Typically, “outcome” is used to describe any campaign metric that can be tangibly connected to the growth and success of a business.
Some metrics, like sales and conversions, are categorized as outcomes across the board. Others depend on who you ask. Brand lift, growth of market share and clickthrough rates, for example, may also be included on the condition that the measurement is accurate and incrementality is provable.
Many also like to define what an outcome is by demonstrating what it isn’t: namely, a “vanity metric,” which is a similarly squishy term that refers to anything that’s measurable but not actionable. Think impressions, social media followers and clickthrough rate.
The debate over definitions aside, however, most agree that brands and their agencies should be the ones to figure out what works and what doesn’t, rather than rely on a vendor to make those decisions for them.
“Anytime you assert what an outcome is, versus asking the advertiser what their most valuable outcome is, you’re kind of crossing the line into blurriness,” said Jason Fairchild, co-founder and CEO of CTV startup tvScientific.
In which case, if a business has enough evidence to suggest that clickthrough rate, for instance, is important to its success, then technically a click could qualify as an outcome within that context. (Just don’t assume that everyone in the industry agrees.)
Outcoming and going
If this is all feeling pretty Digital Marketing 101 so far, that’s because it kind of is.
Outcomes-based marketing strategies aren’t a new phenomenon by any stretch. In fact, Emet Advisory principal Erez Levin frequently argues that the industry has actually been in its “Outcomes Era” (a term that Sharp Pen Media’s Joe Zappa coined year) for over a decade because marketers have been incentivized over time to prove themselves with cold, hard numbers.
In a roundabout way, this increased focus on delivering measurable results might be what’s led to the recent trendiness of “outcomes” as an ill-defined buzzword.
Walled gardens like Meta and Google accelerated the efficacy craze by allowing advertisers to granularly optimize ad campaigns at scale using data.
This “led people to believe that they could understand the impact of those specific platforms by using that data in isolation,” said Kasha Cacy, chief media officer at media agency Known. As a result, buyers funneled more money away from brand awareness and into search, social and programmatic as individual silos, causing their marketing to be less effective over time and costing more in the long term as a result.
Meanwhile, marketers would often choose to optimize for problematic metrics within each silo. In many cases, benchmarks that are now typically thought of as vanity metrics – such as impressions, reach, frequency and individual ROAS scores – ended up becoming the default.
“Google will point to the sales that they do drive, but they will prioritize the volume and the impressions that they’re driving for customers as their currency, because that’s where they make their money,” said Matt Wasserlauf, co-founder and CEO of blockchain-based measurement company Blockboard.
Now, some of the brands that previously allocated budgets in isolated channels – without considering the bigger picture – are putting a greater emphasis on outcomes … “brands are framing a greater emphasis on outcomes as a way to get back to basics, said Cacy. These brands are focusing on tactics that contribute to growing their business, rather than as a way to justify ad spend for its own sake.
Coming apart at the seams
Except, measuring how well outcomes-focused tactics work is easier said than done – and that goes double for both linear and streaming TV.
Spending on both channels is easily justifiable for large brands investing in awareness, but not sustainable for smaller businesses who can’t afford to buy “based on vibes,” as Levin put it.
For some companies, favoring cost-per-acquisition (CPA) over impressions can be a good first step. Similarly, certain cross-channel methods of reporting, like incrementality studies and media mix modeling, can help marketers better understand how their CTV spending impacts and intersects with their other channels.
Still, price and accuracy will always be sticking points where outcomes are concerned.
“If you’re going to get a small percentage of sales from scanning a QR code or clicking an ‘add to cart’ button and then you can’t prove whether it’s incremental or [it’s] a sale that would have happened anyway, is it truly an outcome?” said one media buyer who spoke to AdExchanger on the condition of anonymity.
Ultimately, they added, the vendors that will benefit most are the ones who can prove that they’re driving incremental value based on the media being bought, as opposed to those that are simply great at making numbers go up.
In the meantime, figuring out the ideal blend of performance and awareness tactics will only get more important with the ongoing threat of economic uncertainty.
Typically, advertisers pull back on brand marketing budgets and prioritize doing more with less during economic downturns, which naturally lends itself to more outcomes-based strategies. But as both Levin and Cacy point out, that kind of thinking can hurt a brand in the long term because it doesn’t account for all the soft, subjective reasons consumers choose to spend money.
According to Cacy, half of the CMOs that Known works with are concerned that they’re spending too much on performance advertising.
“[They] come to us and say, ‘My team keeps saying that we need all this money in search and Meta and Google Shopping – but it feels like a lot, and if I take a step back, nobody knows what my brand is. Nobody has a relationship with it,’” said Cacy.
Ultimately, in the race for clicks and conversions, perhaps brands are starting to realize that real outcomes aren’t just measured in numbers; they’re measured in relationships. In that way, advertising campaigns are a bit like relationships – you can optimize for certain outcomes, but you can’t guarantee they’ll come to pass.