Dear Agencies: Stop Validating Your Own Success Metrics – Part 1

  |  September 27, 2012   |  Comments   |  

As an industry we focus too much on "optimization," and not enough on effectiveness. Here's why.

Let me first start by saying I'm NOT a brand manager, but if I was... most of the reports provided by media/creative agencies would be thrown out the window. Because the focus of these reports are mostly about "patting ourselves (indeed I'm from an agency) on the back," rather than increasing digital marketing accountability and effectiveness.

With that said, let me show you some examples of typical agency reporting and what we can do to increase its effectiveness. Part 1 of this article will cover media agencies, and Part 2 will cover creative agencies.

Media Agency Post Buy

Since I work at a media agency, let me first point the dagger at our own industry by asking a fundamental question: "What's the point of reporting and analytics within digital media buying?"
Most media practitioners would say: "to measure the effectiveness and optimization of media buys." BUT from my experience, as an industry we focus too much on "optimization" and not enough on effectiveness.

Let me show you what I mean by a sample report below:

Now what does this report tell me? From an optimization perspective, it indicates that this particular campaign (made up data) had lower CPC/CPM and a higher CTR compared to the industry benchmark.

Woohoo! Good job to the media planner, let's celebrate! Wait... what about from a media effectiveness perspective? Impressions and clicks are high, so what? It tells me nothing about whether the traffic was effective in driving conversions.

Instead, let me suggest the following report to show media buy effectiveness:

From this report, you can see a breakdown of engagement, investment, and conversion by channel. Looking at a combination of click vs. cost, you can gauge the audience affinity by channel. An indication of an effective channel is: comparatively lower cost and higher clicks. But if we add the conversion metric to the equation, we can truly see how effective each channel is in driving conversions after the users clicked on the ad (display, video, social, etc.).

Great! Let's Do It!

Hold on there tiger... while the above report seems easy to produce, there are actually a couple of core factors to why most of us don't do it. These factors are: conversion complexity, and data silos.

 1.  Conversion Complexity

Let's first talk about conversion point setting within a digital campaign. Campaigns with e-commerce are the easiest, with conversions being measured in transactions. However, most branding campaigns need custom definitions of conversion, which may be: registrations, visits to the contact page, playing a game, etc. When you examine these activities, media buy is only one of the many factors that contribute to conversion. Things like user experience, content effectiveness, and design decisions are all factors that can greatly increase/decrease conversion rate. Hence, it's hard for a media agency to use conversion as KPI, because so many things are out of our hands.

2.  Data Silos

This interesting problem lies in the fragmentation of tracking tools. Let's explore this further by examining a typical campaign. Media agencies use their media tracking tools to track display ads on various media channels. When the user clicks on the ad, it directs them to a form of digital asset: whether it'd be a mini-site, brand site, etc. At this point it enters the creative agencies realm, which use another set of web analytics tools to track user behavior and engagement. Now media data (impressions, clicks) and conversion data (user path, behavior) are completely segregated from each other in different databases. This makes it impossible to conduct cradle to the grave analysis from impressions all the way to conversion.

The Solution: Shared KPIs and Data Centralization

The fundamental cause of the above issues boils down to the lack of cooperation between media and creative agencies. As brands continue to use a combination of different agencies (many of them in different media groups), the relationships among agencies are almost competitive, let alone cooperative. So in order to provide more effective analytics and reporting to our clients, we as an industry need to work closer together.

From measurement perspective, agencies should have shared KPIs that measure the delivery of conversions, which ties directly to business results. Media agencies should no longer carry the attitude of "I delivered the impressions and traffic, whatever happens afterwards it's not my problem." And creative agencies need to set clear measurement KPIs to gauge creative and user experience effectiveness. (This will be covered more in Part 2.)

From a technology perspective, agencies should adopt the "single core platform" policy. Whether it'd be Omniture, Webtrends, or Google Analytics, make sure it's used on both the display ad copies, as well as the digital assets. Of course, there will be more specialized tools used for specific purposes such as keyword optimization; these tools should be used in conjunction with the main tracking tool.

Conclusion

In the end, agencies need to understand that analytics is a tool to measure the delivery of digital marketing business objectives, rather than the verification of their own success metrics.

Next column, I'll be covering what creative agencies should do from their perspective to increase analytics and reporting effectiveness.

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ABOUT THE AUTHOR

Charlie Wang

Currently the digital partner for Mindshare, looking after the digital and search team in Beijing. Charlie is an experienced digital marketing professional with strong IT consulting background and a passion in data-driven marketing. He has more than seven years of digital marketing and consulting experience across U.S., Hong Kong, and China. His areas of expertise focus on direct response, lead generation, e-commerce, CRM, and programmatic media. An active advocate of data-driven marketing in the China market with various speaking engagements and publications on digital analytics and programmatic media. His client portfolio spans across IT, B2B, and FMCG.

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