Why the Current Tools for Measuring Campaign Performance are Doomed
I was recently reading an article by Facebook’s head of measurement, Brad Smallwood. The topic was the inadequacy of existing techniques for gauging reach and, to a lesser extent, the poor state of existing tools for measuring campaign performance. Anyone who has worked in marketing, at an ad network, or at a technology enabler for marketing is very familiar with this topic. Truthfully not much has changed in the measurement and analytics business for quite some time; innovation has been rather lack luster. I have to wonder whether GRPs (gross ratings points) or other tools that measure reach and frequency across multiple media types really the way to go, or is it just a bit of smoke and mirrors to help facilitate media buys?
Prior to the rise of social and mobile marketing, the ecommerce and display advertising world bemoaned the lack to tools and techniques to adequately address measurement. There are a lot of reasons as to why things were stagnant. First, investment in the space has been minimal. The big analytics players (Omniture and Coremetrics) completed their land grab and were subsequently acquired by rather large, established companies (Adobe and IBM) which probably had them focus more on integration than innovation in recent years. Maybe they will emerge from their deep sleep sometime soon, but I wouldn’t hold my breath.
Second, venture capital and entrepreneurs have not been active in this space. In recent years VCs have invested in mobile, gaming, social and just about anything other than "analytic" applications. Analytical companies are complex and take time to develop and establish which runs counter to today’s short term, swing for the fences, and launch your app tomorrow mentality.
Third, everyone recognized the shortcomings of using CTR, CPA, 30-day look back, and other techniques to measure web marketing success but were willing to live with it since it was relegated to the small web advertising budgets (when compared to other spend categories). The prevailing sentiment was that “we are just trying to figure this thing out.” The balance between art and science, and ROI vs. experimentation was still doable. With more people migrating to the Internet for entertainment, and a proliferation of avenues (mobile, social, video, etc.) available to reach them, the inadequacies of measurement are just too hard to swallow.
I do laud Facebook for trying to tackle the measurement problem across so many disparate platforms, tools, and techniques. The companies that invest in marketing will be using multiple methodologies that encompass branding and direct response elements. It is not uncommon for us as a company to see clients running direct mail, catalog, email, radio, search, TV, display (often retargeting), mobile and social advertising campaigns. To maximize a marketer’s return on investment, and find the right audience (since that is certainly changing) he will most likely be using more avenues and techniques now than ever before.
Where I don’t agree is that GRPs or other similar types of metrics such as click through rates (CTR) are the right or primary way to go. There are three shortcomings that will doom it:
1 – Cost
Setting up and maintaining such systems will not be cheap or easy. The number of players in the space will most likely be limited, leaving the traditional set of players like Nielson in the driver’s seat when it comes to pricing. With limited competition I would expect marketers to pay a hefty premium to access such information. The small and midsize marketers will be effectively shut out.
2 - GRPs are a least common denominator
Extolling the merits of reach and frequency as the primary metric completely ignores relevance and, more importantly, measuring the impact to your bottom line. So in the end you are still left asking the question – did I get my message to the right people at the right time? What it does do, however, is make life easy on the buy side. Companies are still going to look for a way to back into ROI.
3 - It leaves the system open to gaming
If a marketer is not looking to measure (and maximize) the impact to the bottom line, only turning levers like GRPs that are proxies for business value, the marketer is left open to being taken to the cleaners. Any large marketer will tell you that it is not uncommon to see the agency “beat up” the vendor (such as an ad network) for better performance in order to impress their clients and prove their worth. Behind the scene the ad networks, especially those who arbitrage, play all sorts of games such as temporarily running a campaign higher in the session stack, inserting additional audiences (a “clicker” audience – people who just love to click) to boost CTR, or swap out poorly or deceptively designed sites for better performers.
Working for an attribution company, I am obviously biased in my point of view that we have cracked the nut of how to improve measurement in today’s multi-channel world. At the core, marketers need to measure each user and look at revenue of their purchases (or lack thereof). The data will do the talking when you use advanced statistics to get at the truth. MarketShare has made a huge leap forward in terms of not only measurement, but also using the platform to predict and optimize future campaigns.