BOSTON--(BUSINESS WIRE)--Nanigans, the leader in performance advertising software, today announced that in 2017 U.S. retailers missed out on an additional $5 billion in net-new revenue by not adopting an incrementality-driven approach to digital ad remarketing.
Legacy remarketing providers aim media spend toward consumers with the highest organic conversion rates and then take credit for those purchases. This artificially inflates the impact of an advertiser’s returns and wastes budget by serving ads to users who would have purchased without the advertising. This flawed approach causes marketers to ignore consumers who should have been targeted but were not because of their low expected purchase rate.
To overcome this costly and often neglected issue, marketers should turn to incrementality to determine the best use of their budgets. The first step is to measure incremental revenue generated from remarketing, which is calculated as the difference in revenue between two groups: consumers assigned to a remarketing group (who see ads) and consumers in a holdout group (who do not see ads). Knowing this difference allows marketers to stop serving ads to frequent purchasers and replace them with consumers who are less likely to purchase but are predicted to have high incremental lift.
In 2017, total U.S. retail digital ad spend was $18.2 billion, and about 14 percent of that – more than $2.5 billion – was spent on remarketing, according to eMarketer. If all U.S. retailers had embraced incrementality, that would have resulted in an additional $5 billion in net-new revenue.
“CMOs are allowing their marketing vendors and teams to focus on advertising metrics that may not mean anything for their business,” said Ric Calvillo, co-founder and CEO of Nanigans. “Optimizing for incrementality could be the difference between a profitable and an unprofitable quarter. It’s the only metric that truly maximizes revenue profitably. At a time when the retail industry is facing major pressure from customers and competition, it’s critical that remarketing budgets are not wasted on consumers who didn’t need the advertising nudge to begin with.”
About Nanigans, Inc.
Nanigans arms marketing teams to drive incremental revenue with the most powerful and transparent cross-channel buying platform. Sophisticated commerce advertisers currently optimize more than $700M in annual ad spend through the Nanigans platform. Nanigans is headquartered in Boston with offices in New York, San Francisco, London, Singapore and Seoul. For more information on Nanigans, please visit www.nanigans.com.