What the F Caps! Dwindling digital ad efficiency vexes adtech

The incidence of the ads that we’re shown in relation to what we search, type, watch, and listen to is all but ubiquitous at this point, with consumers having made their peace with the value of exchange for digital recompense.

What is getting annoying though is being shown the same ad multiple times, as we scroll through our way through the day and the multiple apps and websites that consume so much of it.

This phenomenon, resulting from the breaching of frequency caps (the maximum amount of times a consumer is shown a certain ad), is inflating inefficiencies in ad spends, and advertisers are starting to notice, and more importantly object.

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“It is a universal fact that if the frequency is high, fewer people will be reached with a fixed budget and vice versa for low frequency,” says Shailendra Singh Mehta, Head, Paid Media, AdLift, laying out a simple formula.

Frequency equals the number of times an ad is shown divided by the number of people reached.

So, if a brand has Rs 100 and an ad can be shown 1000 times with this money, there can be two cases: If planned frequency=4, then number of people = 1000/4 = 250; if breached frequency= 6, then number of people = 1000/6 = 166.

“So, a breached frequency limits the number of people who see my ad. And it will certainly increase the cost if you want to reach a planned number of people that is 250; Cost will increase to Rs 150, an increase of 50%. So, if the frequency goes beyond the planned threshold and the brand still wants to reach out to the same number of people, it will drive up the cost,” says Mehta.

Ad fatigue is a common issue in advertising, where showing the same messages too frequently diminishes their effectiveness rapidly. This results in people paying less attention and remembering less, leading to lower clicks and purchases. To counteract this, marketers employ strategies such as limiting the frequency of ad displays, generating diverse content, and targeting specific audience segments.

Arjit Sachdeva, Co-Founder, VDO.AI says the issue of breached frequency caps has grown into a significant concern within the AdTech industry. “This situation has dual consequences: amplified costs and diminished impact. When a repetitive ad targets a limited audience, not only does it result in ad fatigue and reduced user engagement, but it also exposes the inefficiencies in spending. Advertisers find themselves investing more without attaining the anticipated outcomes, a far cry from the digital advertising world's optimal objectives.”

The significance of breached frequency caps in terms of ad measurement and efficiencies cannot be underestimated. When these caps are surpassed, causing users to encounter the same ad excessively, a domino effect resonates throughout the entire advertising ecosystem. Foremost, user engagement, click-through rates, and conversions dwindle due to ad fatigue. This engenders a skewed perception of the ad's efficacy, which could potentially undermine the entire campaign strategy.
“The squandering of impressions due to overexposure directly impacts ROI and budget allocation. Furthermore, breached frequency caps can distort KPIs, making it challenging to accurately assess campaign success. Metrics like conversion rates and click-through rates lose reliability, influenced by ad fatigue rather than genuine user interest. As a consequence, advertisers might base ill-advised decisions on these inaccurate metrics,” says Sachdeva.

However, Mehta does not completely agree with the point of diminishing impact, saying, “Being a digital marketer, I have learned to never doubt your tools. There is a solution for everything, and it is a combination of the right skills and ways to use the tool right. To achieve planned frequency, there are solutions on digital platforms to control the frequency.”

And it’s true that Google offers frequency capping, Meta offers Reach and Frequency campaigns, while programmatic systems offer frequency management.

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Gopa Menon, Head of Digital, South Asia for Mindshare, lays it out plainly. “Yes, frequency caps being breached is a problem. And it is one that is being addressed by some advertisers, while others are still to get on to it. It’s all a matter of a brand’s objectives. There are suites of tools that can address very specific issues like these, but they’re not cheap; many require substantial investment, which a company may not be for just yet.”

Karan Anand, SVP – Strategy, Interactive Avenues (the digital arm of IPG Mediabrands India), says that solving excessive ad frequency also needs analysing data to find overexposed segments. “A lot of self-serve platforms have the capability to limit the ad frequency which helps balance engagement. In addition, a good strategy is to tailor content through audience segmentation, which keeps the messaging interesting. Testing and regularly updating content fine-tunes campaigns for better results.”

Anand further points out that brands tell their stories through a series of ads across different platforms. Watching metrics helps adjust engagement. “Feedback from the audience shapes the story's evolution. Retargeting reignites interest from past interactions. Campaigns incorporate breaks to reflect and thereby sustain their effectiveness. This approach creates engaging ads while avoiding ad fatigue issues,” he says.

Indeed, marketers agree that a multifaceted approach proves indispensable in dealing with issues like these.

“Firstly, refining the algorithms accountable for ad delivery holds utmost importance. This entails harnessing AI and data analytics to better predict user behaviour, ensuring that ad exposures remain within predetermined limits. Secondly, consistent monitoring is essential to swiftly detect breaches and adjust frequency caps in real-time. Thirdly, diversifying ad creatives combats ad fatigue, as novel and pertinent content sustains user interest. Lastly, collaborating with platforms and data partners can offer insights to optimize frequency caps and customize ads more effectively,” asserts Sachdev.

Menon adds that the market is still evolving, and as these issues crop up, there are also means to address them that follow suit. “There is no universal means of being able to measure efficiencies and impressions for every consumer to a 100% just yet, but the tools and technologies to get us there are going further every day.