The importance of measurement.
The famous quote from John Wannamaker “half the money I spend on advertising is wasted; the trouble is I don’t know which half”, is rooted in measurement and demonstrates it’s always been front of mind but has changed in ease and accessibility over the years. If only he’d had access to a good econometrician, we’d have been robbed of one of the most famous marketing quotes of all time!
In the last 15-20 years, digital, and strictly speaking, digital performance marketing, has come to dominate the landscape and budgets. The lure of easy-to-access metrics, real-time data and direct link from ad to action moved the focus from effectiveness to efficiency and convinced us that you didn’t need to measure any more. Not proper measurement. All you needed to do was count.
Count the impressions, the clicks, the visits and the sales. So, we did.
And we became addicted to this immediate feedback loop, and any channel or activity that didn’t offer this started to be sidelined.
However, the impact of this obsession with fast-moving media metrics and an overly simplified last-click link to sales effects, has led to several negative outcomes that have been plaguing marketers for years.
Losing sight of the metrics that matter
Digital media spits out dozens of data points with impressions, clicks, views, likes, visits and conversions (among many, many others) all vying for our attention. Indeed the DMA’s
Value of Measurement report identified 189 different measures in current usage. With so many metrics, changing daily, marketers have attempted to keep up with all of them, not really ever getting an understanding of which ones actually mattered (if any!) and how to react to the constant fluctuations in the data.
A shifting focus from business outcomes to media outputs
As a result of the exponential increase in media metrics and KPIs on offer, focus shifted from the actual media outcomes for the brands and businesses. Now, admittedly, sales remained a focus, but only those sales that came from a narrow set of media channels, collected through online sales channels and in the immediate time frame. There is a lot of talk about marketing teams not speaking the “language of the boardroom” and this shift in focus to media KPIs has been a large contributor.
The rise of short-termism
Unless you’ve been living under a rock, wearing a blindfold and noise-cancelling headphones, this will not be a new concept or phrase. But the addictiveness of short-term, directly linkable sales, still blinds many brands and businesses to the reality of media contribution and incremental growth potential. This has been exacerbated by the demand for weekly reports demonstrating the impact of marketing spend on hard business outcomes.
Declining effectiveness, brand health and growth
The industry data shows that in the era of digital dominance, brand health has suffered. The short-term sales data has masked an overall decline in base sales for many businesses. The result is that whilst the digital marketing team has been high-fiving around the office on their latest last-click sales figures, the CFO has been watching total revenues decline.
This trend was perfectly mapped by Dr Grace Kite in her recent Cannes talk about the 3rd age of effectiveness, highlighting the corresponding decline in effectiveness with the rise of digital.
So what can be done to reverse this trend?
A greater focus on measurement is the antidote to these negative impacts and can help marketers overcome these issues. But where to start? Below are our top tips on how to build a culture of measurement and set yourself up for success:
Re-connect your marketing and media outputs to overall business objectives
Review what your business is trying to achieve. Objectives tend to fall under 3 categories:
- Volume – The actual number of sales or whatever the ultimate conversion event is.
- Value – The revenue attached to the conversion events
- Profit – The margin being made on each conversion event
Whilst businesses always need to have a combination of all 3 to succeed, 1 will always be the priority and we should be pointing our marketing measurement efforts at delivering that priority metric.
It’s also important to remember that sometimes these 3 objectives can’t all be improved at the same time, and depending on the situational nuances of a business, its size and the market in which it operates, the ability to shift them all will change.
Create a measurement framework
A key issue in the digital age and the focus on last-click measurement, has been that the vast majority of media contribution to business outcomes has been completely missed, particularly outside of the bottom of the funnel.
We need to work to make sure there is an understanding of how our marketing spend is impacting mid and upper-funnel outcomes, by being clear about what metrics we expect to shift and having the methods in place to monitor and measure those shifts.
Below is an example framework that you can use.
Invest in Experimentation and measurement
Whilst Econometrics is the gold standard of measurement approaches, it can be a daunting task. However, it’s not necessarily as expensive as perceived and as a percentage of total marketing spend, can be very low, especially when you consider it will unlock an understanding of how that marketing spend is contributing to business growth.
Another increasingly valuable approach is to use geographic-based testing, sometimes called Incrementality testing.
In this approach, a test is designed with one set of multiple geographic regions running the test and another set of geographic regions running the control. The analysis then determines the difference in performance vs prediction in the test regions and in the control regions and whether the difference is significant. It’s important to note, this is NOT just an AB test and requires input from a data scientist to design the test, using some historical data. Whilst primarily developed for digital channels, Incrementality testing can be used for any media that can be bought on a post-code level basis and can be used to test to a very granular level, including bidding approaches and creative messaging.
And finally, don’t let perfect be the enemy of done. For smaller brands, or brands just getting started on their measurement journey, remember the adage “It’s better to be roughly right than precisely wrong”. You don’t need huge budgets or complex modelling approaches to make a start. A great starting point is to look at simple correlations between the Paid Activity you are running (on or offline) and some of the following metrics which often have paid effects misattributed to them and act as leading indicators for consumer interest and intent, off the back of paid activity.
- Brand Search query volumes – indicating increased brand interest, aligned to increased brand visibility in other channels.
- Increases in Direct, Referral and Organic traffic in GA4 (or other web analytics platforms) – Often beneficiaries of indirect effects of paid media, look for increases in these figures alongside new or increased paid activity.
By Matt Dailey, member of the Measurement Media, Marketing and Measurement Consultant
Help shape the measurement conversation in the marketing industry by joining the DMA’s Councils here – contact the team for more details.
Alternatively, if you or your teams would like to super-charge your measurement skills, sign up for the DMA’s Measurement Masterclass: https://www.theidm.com/training-course/marketing-measurement-masterclass
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