Advertising has value only to the degree that it influences consumer behavior. But whether advertising succeeds in driving people to purchase products and how well it is able to do so are among the most important and difficult-to-answer questions faced by marketers, media companies, and agencies. Indeed, the measurement of advertising effectiveness has long been a frustrating and imperfect science, leaving marketers with few options but to toss out messages in various directions and hope that some indication of consumer response would appear.
As unsophisticated and unreliable as traditional media measurement approaches may have been in the past, they did provide standards and currencies that enabled marketers, buying agencies, and media companies to transact business. Today, however, this equilibrium has become unstable. Marketers demand more effectiveness and efficiency from their media buys. Digital media are reaching critical mass with consumers. And the promise of more granular (or even real-time) data capture of consumer response to advertising is tantalizingly close to realization.
“Lately, marketers have become less interested in the number of eyeballs that see a screen or hands that touch a page and more interested in the behavior of the owners of those hands and eyes, and how the ad message connects with them,” says David Verklin, CEO of Carat Americas and chairman of Carat Asia-Pacific, the world’s largest independent media buying agency.
Or, put another way, the proliferation of media (from yesterday’s print, radio, and TV to today’s Web, cell phones, podcasts, GPS systems, video games, PDAs, and more) and the fragmentation of audiences have rendered the traditional currency of advertising — audience exposure, or “reach” — a much less compelling measure of media value than it was before. In turn, the very prospect of new metrics has contributed greatly to the popularity of digital media among advertisers. In a recent Booz Allen Hamilton survey conducted with the Association of National Advertisers, 62 percent of marketers surveyed said that they would spend more on digital media if better cross-platform metrics existed to gauge advertising effectiveness.
Marketers can use digital media to deliver contextually relevant messages and product information to specific concentrations of potential customers, targeting only consumers looking for a new Volvo, planning a ski trip to Deer Valley, or searching for organic baby food. And they can measure the actual results of those efforts instead of relying on extrapolated audience estimates. Moreover, consumer actions, including browsing, clicking on an ad, sharing information with a friend, and buying a product, as well as the development of brand loyalty, can be recorded and analyzed, allowing marketers to track with greater precision how a specific piece of advertising influences consumers to make brand and purchase decisions.
With these possibilities, it’s little wonder that marketers have so rapidly embraced Google’s pay-for-performance advertising model, in which advertisers pay Google only when potential customers actually click through to their Web sites. No longer do marketers just ask, What is the cost of the gross rating points that we are buying? Now, they want to know results at a much more detailed level, asking, Who is searching for my brand or product and how often? What sites are my target consumers going to, and what do they do there? How many online registrations are my advertisements generating? And, most importantly, how does all this activity correlate to actual sales?
But the media metrics for the new digital media environment are still of uneven quality. They lack the standardization that would enable the simple comparison of advertising effectiveness both within the online environment and across other media channels. Marketers, agencies, and media companies all agree that improvements in these metrics are going to be essential; without them, it will be difficult to profit in an advertising market increasingly characterized by more choices among more media. In other words, there will need to be a wholesale shift to metrics that are both outcome based and comparable across many channels.