Key purchasing measures not accurate, new research shows

When you buy the latest headphones or pair of shoes online, the chances are that savvy marketers will analyse your email and internet searches to see what drove your purchasing behaviour.

Was it an email from your local music store that prompted you to buy those wireless headphones? Or were they featured in a glossy magazine inside the weekend newspaper?

New research from Monash University questions how advertisers are measuring the effectiveness of advertisements for online shopping purposes. And it says the basis on which they’re doing it is all incorrect.

“At the moment, if a consumer buys a new toy online, Google can look at the search patterns that person has had over the past few days, or whether they’ve received any emails from a department store such as Kmart,” says Professor Peter Danaher, Head of the Department of Marketing at Monash Business School.

“They use a method called ‘last touchpoint attribution’. So, if the consumer last opened an email about toys, the email gets the credit. It they last did a Google search on toys before making the purchase, Google gets the credit.

“The advertising industry has used this method for the past five years because it’s simple and effective. The problem is, this method ignores how long consumers remember an advertisement.”

Previous studies have shown the effectiveness of mail catalogue advertising, but the attribution method ignores this fact.

“This means that businesses are spending up to four times more on email and online advertisements compared to print or television, because they think this is where their market is located. Television and magazine advertisements are far from useless in selling products,” Professor Danaher says.

Professor Danaher has developed a new “future media allocation” strategy that takes into account advertising costs, budget impacts, and the impressions each advertisement makes on the actual purchase outcome.

“It also takes into account the carry-over effect, or how long the effectiveness of a particular form of advertising may last,” he says.

“As advertising becomes more dynamic in an effort to capture those no-fuss consumers, it’s critically important for companies to get their marketing strategies right.”

/Public Release.