Arms race

As online advertising turns into a veritable arms race, Los Angeles-based SteelHouse is intent on stockpile more nukes than anyone else. We’ve reported in the past the company’s success with retargeting, real time offers, and drag-and-drop rich media ad creation tools. Each of these tools together is a single weapon in the battle to convert online audience into online consumers. Collectively, they are a formidable arsenal.

There’s a reason why the company has recently added Getty, Staples, Oakley, and RayBan to its already stout roster of clients that includes North Face, Coffee Bean and Tea Leaf, Rosetta Stone, Toms Shoes, Comedy Central, Cooking.com, and others.

Today, SteelHouse rolled out its latest weapon of mass conversion, Slingshot, a multi-channel ad sequencing and performance analytics technology. Slingshot combines the company’s existing retargeting and onsite offers products with mirrored messaging. In other words, if a consumer sees a display ad on one website offering a particular deal, and then later visits the brand’s website, they should be served with the same messaging through a real time offer.

It sounds simple and intuitive, but this rarely happens today. Part of the problem is that advertisers often don’t know who a consumer is when they reach their site without arriving directly, rather than clicking through from an ad. Through the use of simple tracking pixels, SteelHouse is able to provide brands with this information and design Slingshot campaigns accordingly.

In a case study completed with Creative Labs, these sequenced campaigns have shown an 87 percent lift in conversion, a 332 percent lift in overall revenue per visitor, and a 27 percentage increase in average order value.

It’s easy to cite figures like these with a limited sample size, but SteelHouse says that it has been testing Slingshot since October and has recorded billions of customer interactions during that time. In December 2012 alone, the company claims to have served ads to 160M consumers and recorded 1.6 billion consumer shopping actions. According to President and CEO Mark Douglas, the performance lift has been comparable to that of Creative Labs across the board.

That’s not to say that SteelHouse isn’t looking at online activity differently than others. One of the core differences is a focus on “view-through” behavior, rather than just click-throughs. A view-through occurs when a consumer views a brand’s ad and then navigates directly to the brand website a short period of time later without clicking through the ad unit itself. SteelHouse counts this as an ad conversion when it happens within an hour of the original impression.

“There’s an overriding belief in the display advertising industry that only clicks count, but we’ve seen from our client’s Slingshot campaigns that view-throughs actually result in more sales and higher conversions than click-throughs,” Douglas says.  “Brands don’t know what happens when consumers reach their destination site, and the ad industry doesn’t measure that. But we’re connecting the dots through our data, and our data shows that a view-through ad carried influence, even if it didn’t lead to a click.”

In the case of some brands, for every person that actually clicks on an ad, six people navigate directly through to a brand’s site after viewing but not clicking, according to Douglas. Some of the company’s clients are having this happen as much as several hundred thousand times per month – making it unlikely to be a coincidence. Before Slingshot and ad sequencing, the advertisers were treating these individuals as an unknown visitors, rather than maintaining a consistent narrative to help drive a sale.

Doing the latter makes sense, given that we’ve all heard some version of the old adage that you need to hear a brand message approximately seven times before you remember it. And there’s nothing more annoying than seeing a promotion elsewhere on the Web but arriving at a brand page and failing to find it anywhere. It’s this type of incongruity that leads to abandonment.

It sounds extremely self-serving for SteelHouse to count these previously untrackable behaviors as ad conversions. After all, the company gets paid to deliver conversions and the more behavior it can lump into this bucket, the better for its bottom line. But Douglas argues that advertisers and agencies have long know intuitively that this view-through activity was happening and simply lacked the ability to track it. As a result, rather than hearing skepticism, he’s receiving praise – and increased ad budgets.

“They say to me, ‘This is the report i’ve been looking for. Something that substantiates what I knew was happening instinctively but didn’t have data to back up,’” Douglas says.

If the conversion rates hold true, and the ads lead to quantifiable increase in sales – not just site visits) then brands are unlikely to protest.

Like SteelHouse’s other products, Slingshot can be implemented with a single line of code and is priced on a CPM basis. When a client creates an ad campaign through SteelHouse – which typically consists of both display ads on third party sites and real time offers on a brand’s dynamic landing page or homepage – they can elect whether to implement Slingshot. Given the demonstrated conversion lift and the fact that the product is priced on a performance basis, there appears to be no reason not to.

The risk with SteelHouse and Slingshot is that consumers grow uncomfortable with advertisers following them online like the ever-staring eyes of the Mona Lisa. It can be unsettling when it seems that a company knows too much about you, and one too many Slingshotted campaigns could easily give this impression.

But that notwithstanding, much of the problem with online advertising is lack of relevancy. Steelhouse believes in using data to deliver the most relevant, and therefore valuable, experience possible. If an offer presented through a display ad leads a consumer to a brand’s site, theres a good chance that their intent is to learn more about that offer. Delivering that information is simply good customer service.

Steelhouse has grown its team to 83 individuals, including 72 in Los ANgeles and 11 in London, with plans to hire another 50 across both offices in the coming months. The company has raised $15.8 million in outside financing from Qualcomm Ventures, Greycroft Partners, Baroda Ventures, Rincon Venture Partners, SV Angel, and Daher Capital.

“Marketers and media planners need to rethink their inherent beliefs about clicks,” says Douglas. “There are more meaningful metrics for evaluating campaign performance and view-throughs are certainly one of them.”