vendor yield optimization

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If we take a digital campaign funnel as an example - even the best campaigns will have some waste.

Only some of the impressions shown convert to clicks, from the clicks, only a few will install an app, and from those installing the app, only a very few will become paying customers. These very few are expected to return the investment over the entire spend.

The Adtech industry is an entire industry dedicated to helping Advertisers improve the conversion rate. From probabilistic targeting companies, to dynamic creative generators.

We can’t say that there is a perfect way to Advertise. Real Time conversion sharing with publishers provide a ton of value for Advertisers and Media vendors.

However, this irony, or caveat, is something every marketer must be aware of when they decide how to split their budget and how to read their own performance reports.


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Why Is There So Much Waste ?

Advertising is not an exact science. It is a way to get a message across to convince customers and prospects to user or buy a service or a product. 

Advertising has become such an effective means that companies dedicate significant resources to this activity. Personal and budget.

Performance Marketing was Supposed to be the Solution

With Performance Marketing, Advertisers were given an opportunity to pay media providers only once a user performs an action, like an Install or a Purchase. 

This sounds like a great way to save Advertising waste.

By providing media vendors with real time indication of conversions, Media vendors would be the ones responsible for optimization of campaigns in order to get paid.

Media vendors would be the ones assuming most of the risk, eliminating most, if not all, risk from Advertisers paying for inventories that are not going to translate into clicks, installs, or purchasing users.


Performance Marketing is an Ironic Subset of Advertising

By moving the risk to media vendors - Advertisers create a situation where vendors do everything in their power to minimize their own risk, so that they waste the least media they must in order to be credited for a conversion.

We like to call this: Targeting the people who are already queuing up to make a purchase

Performance Marketing Biggest Caveat

The Irony in What Should Be Plain

Digital Marketing came with a very big promise: Everything is Trackable. Marketers became more Math Men than Mad Men , learning how to utilize innovative technology platforms providing analytics and insights so that marketers can utilize the oceans of data for their advantage. Everyone wants to assure an incremental sales lift.

With tracking, marketers were able to associate the direct performance of their media spend by using attribution solutions, as well as providing a performance feedback to their media vendors, all offering Advertisers with optimization methods to attract Advertisers to spend more with them.

Yet, over twenty years of technology advancement hasn’t yet solved the oldest problem of the Advertising industry: “Half the money I spend on advertising is wasted; the trouble is, I don't know which half “ (John Wanamaker)

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