Be wary of analytics, and experiment wisely: five ways to ensure ROI in up-and-coming outlets.
In 2023, Meta introduced AR ads on Instagram Reels, Lyft introduced in-app ads, and the New York City transit authority feted programmatic ad buys for their OOH inventory. With new ad outlets already on the horizon for 2024 (how many brands will be launching a BeReal influencer strategy), one thing is certain: to succeed in marketing today, brands need to be strategic about if, and how, they invest in the latest channels.
Of course, the very newness of these channel investments is precisely why investing in them is so challenging. With no clear track record to rely on –and often, no ready-made integration into tech stacks and operations – how can brands understand the ROI of spending money on these new players?
The good news is that new channels have been around for a long time – and here at LiftLab, we have a clear playbook for thinking through and succeeding in new channel investments. To help you better plan for these greenfield opportunities, I offer five recommendations we give our own customers when considering jumping into new channels. I’ll start with two hard truths you need to face, followed by three strategic approaches for the wisest new channel investments possible.
1. Be prepared for analytics challenges. One of the many benefits of standard marketing outlets is that standard analytics is (relatively) easy to come by. Analytics packages and measurement services routinely work these standard channels into their offerings; perhaps equally important, KPIs are often straightforward and at least directionally clear.
Not so the newcomers to the market: they may not integrate easily with standard analytics tools, and KPI comparisons across channels may often be apples to oranges. Meanwhile, while using tagging to track direct interactions may help, it’s unlikely to capture the whole influence for top-of funnel channels.
2. Take new platforms’ self-reported analytics with a grain of salt. To be sure, marketers should always view self-reported metrics carefully. After all, it’s not hard to find examples of highly respected outlets making major errors, including inflating their own numbers. But new outlets give particular reasons for caution. Overly hungry startups in a “move fast and break things” culture may see an incentive to be loose on self-serving reporting. And even with the best of intentions, new companies creating new offerings are figuring things out as they go along – and they’re bound to get some things wrong along the way too.
3. Treat every new channel as an experiment. If it’s so hard to get clear reporting on new channel impact, how can you know if investing in that new channel is a waste of money or highly worthwhile? And how worthwhile, exactly? To answer this question, we at LiftLab recommend to clients that they treat new channel investments the way they would treat any other channel: As an experiment.
4. Use Rollout Tests to smart small. Rather than going all-in, it’s best to start your investment small, gather proof of worth, and grow carefully from there. It’s an approach we call a Rollout Test: concentrate experimental spend on a fraction of the country, and then expand as you learn.
Rollout tests have the benefit of being able to go “all in” within representative areas within the country, often providing more complete data to work with than you might get by scattering minimum spend across as many markets nationwide. We recommend starting with anywhere between 20% and 50% of the market – a portion that’s big enough to be meaningful but still limited enough that you’re not going “all in” right away.
5. Beware of the point of saturation. Even if you’re proving massive ROI from a new channel at first, keep in mind that those returns may not last forever. Newer channels tend to have smaller audiences than their more established counterparts, and they also may lose popularity if they fail to achieve traction. Taken together, this means you’re liable to run out of new ideal customers to reach sooner than you’d like. Meanwhile, with smaller advertising pools to pull from, new outlets may be forced to run your ad on repeat – increasing the risks of ad burnout. And so, while there’s an inevitable point of diminishing returns in nearly every ad channel, newer channels may hit that diminishing returns point sooner than more established ones. Continually run Diminishing Returns Experiments to examine what happens to total revenue at different spend levels within a given platform.
What new channels will you have to consider as a marketer in the coming months? The answer is likely more than one – possibly including major channels that don’t exist yet today. By approaching each new channel as a formal experiment, you’re setting your brand up to succeed in the new channels you dive into, and with the ones you decide to pull back from as well.