In digital marketing, companies should aim to execute the activities that will move the revenue needle forward. Your money must be spent smartly and strategically in a way that affords the highest results.
“Growth isn’t impossible when it comes to marketing,” says Crimson Advantage co-founder and CEO Louis Amira. “But you need to have the right ideas and focus to succeed in your growth.”
ROAS, short for Return on Ad Spend, is one of the critical indicators of marketing success, and testing is essential to ensure the best return on a marketing dollar. Exploring your brand's best ROAS is rather simple by utilizing geotests to identify how you should manage your ad campaigns and marketing budget. Geotesting is one of the methods companies can utilize to smartly tackle marketing needs.
On a mission to demystify growth, Louis shares what geotesting is and how its results can bring success to your marketing strategy overall. Continue reading below about this essential marketing tactic to use for your company’s growth.
What Is Geotesting?
Geotesting is a sophisticated method of measuring the return on investment (ROI) for ad campaigns. This is a valuable test method that aids in making informed and strategic decisions regarding future advertising movements.
“During the time of Mad Men, marketing agencies would view how different markets responded to commercials and hone in on what led to more sales,” says Louis.
There is now a more manageable and analytics-driven method of conducting these experiments, and Louis offers, “results can lead to thousands or millions more in revenue as sales are attributed to the various testing.”
This upsurge in revenue also leads to a deeper understanding of how markets react to advertisements. With this level of knowledge, companies can redirect their marketing efforts and transform how they speak to each region in a way that leads to continued success.
What Does an Experiment Measure?
Geotesting uses non-overlapping geographic regions, separated into specific areas called geos, to undergo different marketing treatments and track consumer responses to those treatments. Simply put, this shows how spending significantly more or less in various geos directly affects your ROAS.
A geo ad experiment aims to find significant, favorable responses that give you the insight to build your marketing strategy. “Geo ad experiments measure consumer responses to various marketing techniques, presenting valuable insight into how the targeted markets react to particular advertising,” Louis explains. Responses are particular to the test a company wants to run, and some common ones include:
Sale of a product
Download of a white-paper or other content piece
Subscription to a newsletter
Website view
Link click
“A company can attribute a direct sale [or other consumer action] in one of the tested regions to the marketing treatment itself,” Louis states.
This then leads to clear and actionable data the business has to positively affect market strategy decisions. A response number that is significantly higher to a baseline means that the geo is responding favorably to the experiment - something that should be replicated for continued, favorable responses. If the ads are the only thing that changed between the two regions, it's probably safe to assume that they were the cause of the incremental revenue.
Geotesting in Real Terms
Geotesting tracks how different advertising strategies encourage (or discourage) sales in various geos. Encountering a revenue number drastically different from the norm is a sign that the market is responding to the test.
Several cities are randomly selected to be the test geos for the experiment. As a note of consideration for eligible areas, it must be possible to serve and track ad spends in the geos. Each geo is then assigned a different marketing treatment, and they undergo these variable changes for a predetermined length of time. A standard marketing treatment to utilize in geotesting is assigning a far greater or lesser ad spend than average. Experiments can finish in as short as six weeks or over the course of several months.
"To provide an example, a company's average consumer response rate may be $5:1 as they spend $10k in marketing for $50k in revenue. A baseline response to geotesting may be $50k in marketing for $250k in revenue," Louis shares. However, with geotesting in place, a significant and favorable response to the experiment may be $50k in marketing for $500k+ in revenue. This is an experiment worth learning from to continue trending revenue upwards.
Upon completion of the geotest, the business has significant data to use for future marketing strategies. Brand-name companies are known to geotest several times throughout the year to keep their marketing efforts efficient and effective.
Consumer Responses & Bias
A geo ad experiment looks into the overall impact a marketing treatment has on specific geos. These are picked randomly so that the consumer responses remain unbiased and test results random.
Louis encourages clients to strive towards randomness in testing. “Everytime you directly select a variable in the test, you are introducing bias and losing the randomness of the test.” Being selective in the areas that receive treatment introduces bias into the experiment and muddles the results. Consumers' responses are valuable when an unbiased test runs successfully.
“More prominent companies run geo ad experiments monthly or quarterly as they recognize the process is straightforward and significant,” Louis explains. Any size company in any industry can find similar results when launching a geotest and increasing their knowledge of how consumers respond to ads, bringing significant returns on investment and ad spend.
Understanding consumer responses to various advertising methods places your business in a higher orbit of marketing expertise. You can make more tactical decisions of ad spend, transform your marketing efforts, and gather data that will impact all areas of business development.
