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5 Ways to Decrease Wasted Ad Spend

5 Ways to Decrease Wasted Ad Spend

Digital ad spend worldwide passed $600 billion in 2023. Much of that ad spend, however, ends up wasted. In a recent survey by Rakuten Marketing, digital marketers estimated they waste 26 percent of their budget on the wrong strategies and channels.

Wasted ad spend is a significant problem in the marketing industry, but you don’t have to fall victim to it. There’s a lot you can do to make sure your ads get seen and reach the right audience. How can you avoid ad waste? It’s crucial to:

Let’s explore each of those points.

1. Target Your Specific Audiences

Aiming too broadly with your marketing efforts can result in ad waste. When you target a broad audience, you pay more to reach more people, but only a small percentage of them will convert. When you narrow down your targeting specifically to the people most likely to be interested in your business, you spend less and get a higher proportion of conversions. Preventing digital advertising waste means focusing on quality over quantity.

Make the Most of Your Ad Spend

So, how you can find out what your niche audience is? With a combination of first-party, second-party and third-party data. What are these various kinds of data?

  • First-party data is the kind you collect yourself about your audience. It can include data about behaviors users take on your website, information email subscribers provide you and more.
  • Second-party data is essentially another company’s first-party data that is shared directly from the company that collected it.
  • Third-party data is data you buy from aggregators that pull data from various sources.

Using a data collaboration platform, you can collect and organize all this data and analyze it to uncover insights about who your audience is and reach new customers. First-party data is your starting point. It can tell you about your audience’s demographics and psychographics.

Demographics refers to information such as age, gender and occupation. Psychographic information tells you about your audience’s attitudes, beliefs, aspirations and other similar attributes. You can also see data about their online behaviors, such as which devices they use and how often they make purchases on your website.

Once you have information about your current audience, you can find new customers using second-party data collaboration and third-party data. Within this data from other sources, you can find users who have characteristics akin to those of your existing audience. Because these people are similar to your current customers, they’re likely to also be interested in your products and services.

2. Reach Customers in the Right Locations at the Right Times

Target Customers

Sometimes, not every person searching a particular keyword phrase is part of your target audience. You may need to narrow down the group of people who will see your ad based on other factors. One common factor is the customer’s location. You may also want to control when your ads appear, so they reach people at optimal times.

Make the Most of Your Ad Spend

Target the Right Locations

By default, Google and other ad platforms will typically try to show your ad to as many people as possible. If you don’t change your ad’s settings, this can result in showing your ad to people in regions you don’t serve. If the location of the customer is essential for your campaign, make sure you specify that when setting up your ad.

One common mistake is targeting your location as a keyword, rather than targeting people who live in your target area. This practice could result in your ad displaying to people who are searching for information about the history of Philadelphia, for example, when you wanted to target people who live and work in Philadelphia. If you’re a small business serving the Philadelphia region, the second group of users is likely the only ones who would convert. Targeting the first would result in wasted advertising dollars.

Location is becoming increasingly essential in digital advertising, as more people use their smartphones to find goods and services when on the go. Google has said around 30 percent of mobile searches have local intent, meaning the searcher is looking for a local result.

Target the Right Times

You might also want to consider the times at which your ads display, though this may or may not matter to you, depending on the goals of your campaign. Restricting your ads to appear only during optimal times is an excellent way to save on your advertising budget.

For instance, if your goal is to get someone to call your business or purchase a product at a physical store, you might not want to show ads during times when your business is closed. If buying your product likely requires someone to contact you, you might not want to run ads late at night, unless you have 24/7 customer service. On the other hand, if the goal of your ad campaign is to get users to fill out an online form or make an online purchase, it doesn’t matter what time they see your ad.

If you’re not sure if time affects your conversion rate, you can look at your metrics at the end of your campaign to see when you got the most engagement.

Advertise on the Right Channels

Make the Most of Your Ad Spend

You also need to make sure you advertise on the right channels. You have a lot of options when it comes to channels for your ads, including search, social media and websites.

To figure out what the right channel for you is, you need to find out where your audience spends their time online, especially when they’re looking for data related to your products or services. You can do this by collecting data about your audience’s online behaviors and organizing it in your data collaboration platform, or DCP. If you’re selling business software, you might find LinkedIn is the best channel for you, since it’s a platform for professional networking. If you’re advertising a lifestyle product, however, Facebook might be a more appropriate channel.

In today’s world, people use multiple platforms and devices. Sixty-one percent of internet users start shopping on one device and then continue on a different one, according to Google. To make the most out of your marketing campaign, you want to reach them cohesively across all these platforms and devices. Focusing on just one platform can mean a competitor swoops in when they move to another one.

To reach prospects across multiple devices and platforms, you can use a cross-device marketing strategy. Lotame’s cross-device solutions analyze signals flowing between devices, determining the relationships between them. Once you know the same person owns two devices or accounts, you can deliver sequential messaging across them. Sequential messaging involves presenting a series of ads in a specific order that tells a story to engage the viewer. Cross-device marketing also enables you to reach customers when and where they’re ready to convert, no matter what device they’re using.

4. Use the Right Keywords

Use the Right Keywords

Keyword selection is a critical part of creating a campaign that will be effective, rather than result in advertising waste. Successful search engine marketing (SEM) campaigns, including pay-per-click (PPC) advertising, strategically use keywords to target the right audiences so those ads lead to conversions.

Make the Most of Your Ad Spend

People searching for specific terms are actively seeking information relevant to their search query. If your search ad matches what they’re looking for, there’s a better chance they’ll click on it.

Here are three tips to help you accomplish that.

Find out What People Are Really Searching

To reach people in search, you need to figure out what phrases your prospects and customers are searching for when they’re looking to purchase your products and services or learn more about what you offer. Sometimes, these terms aren’t what you’d expect. For example, a company might use industry jargon as a keyword, when most customers are searching for a simpler, everyday term. If you’re advertising smartphones, you would be better off using the keyword “smartphone” or “phone” over “mobile device,” since people typically use those phrases in everyday conversations.

To figure out which keywords to use, explore competitors’ sites to see what they’re targeting, use keyword research tools like the one from Google Adwords and ask your existing customers for ideas.

Use Specific, Long-Tail Keywords

Generic, broad keywords are some of the most expensive, but they’re not the most effective. Targeting broad keywords might get you a substantial amount of clicks, but you’ll spend a lot of money to get them, and they’re not going to convert as well.

Instead, you want to target more specific keywords. When people search more detailed terms, they’re more likely to be ready to buy. You’ll also spend a lot less, increasing your return. These more detailed search terms are called long-tail keywords and are typically at least three words long, although they can occasionally be shorter.

“Shoes” would be an example of a broad keyword. Someone searching that term is likely in the early stages of their purchase journey and isn’t likely to make a purchase just yet. On the other hand, if someone searches for a phrase such as “red men’s basketball shoes size 11,” they’re probably ready to buy.

Include Negative Keywords

Another idea is to include negative keywords in your targeting. When you add a negative keyword to your campaign, users who search that term won’t see your ad. Use these terms to avoid showing your ads to people who won’t be interested in your products or services.

For example, if your business sells construction equipment but doesn’t rent it out, you could designate “construction equipment for rent” as a negative keyword.

5. Engage Your Niche Audiences

Engage Your Niche Audiences

Knowing where, when and to whom you need to target your ads is essential to a successful campaign. Of course, you also need to create high-quality ads the niche audience you identified will want to engage with. If you don’t produce quality content that appeals to your audience, you’ll end up wasting advertising dollars, despite your best targeting efforts. On the other hand, the more appealing your ad is to your target audience, the higher your ROI will be.

Make the Most of Your Ad Spend

To make your audience want to engage with your ad content, you need to create content that provides value to your target audience. Rather than focusing on your products or services, think about your customers. Show them how your product can meet their needs and improve their lives.

For today’s customers, it’s essential for ads to align with their needs. Otherwise, you’re interrupting them, and they will ignore the ad or click away. When you target your ads to a niche audience, they’re more likely to align with their audience’s needs. Focusing on the customers’ needs in your content helps spark interest in your ad and encourages engagement.

The Power of Personalization

You can take this a step further by using your DCP to personalize your content for different audience segments or even individuals. With the help of your DCP, you can divide your audience based on differences in demographics, psychographics and behaviors. For example, you might segment your audience based on their interests.

Maybe you’re advertising a car, and you want to emphasize its trunk space. Audience segmenting would allow you to show different versions of the ad to people with various behaviors. You could create an ad for people interested in outdoor activities in which someone packs the car with camping equipment. Or, you could show people interested in music an ad in which a musician loads up the trunk with instruments and sound equipment before a gig.

Personalizing your ads to your audience’s interests can help them perform better. In a recent survey, seven out of 10 consumers said they prefer ads and content that’s personalized to their interests and shopping habits.

How Lotame Can Help You Reduce Ad Waste

Every marketer wants to prevent wasted marketing dollars and improve the ROI of their campaigns. To accomplish that, you need to have the right strategies in place, as well as the right tools and the right partners.

Lotame’s technology provides the capabilities you need to uncover valuable audience insights that enable you to better target and personalize your ads. With Lotame’s end-to-end data collaboration platform, Spherical, you can collect first-party, second-party and third-party data and analyze it to help you understand your audience better. The better you know your audience, the more accurately you can choose keywords, target the right locations and times, choose the best marketing channels and engage niche audiences with quality content.

If you want to learn more about how Lotame can help you get Data Empowered request a demo or contact us today.