Every action we take on a digital device is measurable, hopefully anonymously, but measurable nevertheless. That has turned marketing from the unreliable step-son of business into a golden haired child. There has always been a need to measure the performance of advertising, which produced Nielson ratings for TV, Arbitron for radio, and the Audit Bureau of Circulation for print. Digital measurability, however, has restructured our expectations to think we should be able to fully understand the effect of every marketing dollar we spend. While we are closer, this is, unfortunately, not yet true, and measurement still remains a combination of art and science.
Measurement still remains a combination of art and science.
The science is in measuring activity. We can and do that with everything, especially digital marketing. The art is in picking the right measures to pay attention to and then drawing the correct conclusions. Setting KPIs (key performance indicators) that are important to the business are essential. Sales, of course, is the ultimate KPI, but connecting marketing metrics to sales is still a trick. Invariably there is a tracking gap between marketing activity, and the sale itself. Multi-touch Attribution is a growing solution. It is the methodology of assigning weighted credit to the ad touches which lead to a conversion. How important was the last touch? How did previous touches play a part? Although still very imperfect it will be very influential in the future, and is preferable to only giving credit to the last thing someone sees.
In paid digital advertising there are numerous metrics. A sampling includes impressions or cost per thousand (CPM), unique visitors, click through rate (CTR) cost per click (CPC) cost per lead (CPL) percentage complete, and time-spent viewing. There are many more. The idea is to figure out the type of behavior that gets closest to inferring the outcome you want from the campaign. For example, a pure brand campaign, designed to create awareness and brand favorability, might focus on time-spent viewing on a landing page, which a viewer arrived at by clicking an ad. This would tell you the degree to which the prospect was interested and engaged, which we might infer would result in an increase in brand awareness and favorability. While these metrics would not directly measure sales or intent to purchase, they would give us an indication of the effectiveness of our branding.
Advertising & marketing is a value chain.
Advertising and marketing today, however, are not a series of isolated activities, instead they are part of a marketing value chain, in which many touches layer on and interact with each other until the consumer is ready to act. Just like Chinese water torture, we believe that one drop will finally do the trick, we just don’t know which one. For that reason, the KPIs we select for any campaign should reflect the step in the consumer journey that the campaign is addressing. So while a brand awareness campaign, at the beginning of the journey, would measure engagement, a demand generation campaign, later in the journey, would measure conversion. Teams should produce weekly campaign reports that not only show activity metrics, but also performance against KPI goals. These are often best integrated into dashboards so that business leaders can see the greater meaning of consolidated data from across your marketing.
Traditional research is also still a valuable tool to determine important psychological measures such as brand recall or purchase intent, which are difficult to measure with activity metrics. Once again these insights are still a couple of steps from connecting to sales, but represent valuable steps closer. If our target audience shows solid brand awareness, brand preference and intent to purchase, we know we are on track to get conversions. Resist the temptation to just look at sales for the period and if they go up figure the marketing worked and if they go down, decide that it didn’t. The problem is that while there is probably some truth in this, it does not enable a marketing organization to become smarter and more effective over time by learning. The only way to do that is to know which parts of your marketing are working and why so you can constantly improve your performance.