As marketers, we are often challenged to demonstrate value in every investment. With the proliferation of digital media channels, the myriad of metrics to measure success is hard to be defined as well as applied. From old school metrics like CPC and CPM that were an extension of reach and frequency from the TV era to view-through rates, dwell time, and click-to conversion ratio, the list is endless.
So how do you make sense of the jargon books when the media agency throws them at you?
It is important to take a step back and look at your campaign objective that could be to increase sales, generate leads, gain share, build a community, etc. The metrics should reflect the objectives and preferably be easy to understand, consistent, and have a clear link to sales/market share.
I will divide the digital metrics into the following three categories:
1. Brand awareness:
- Impressions (gross/unique)
- Reach and frequency
- Aided and unaided awareness
- Registration rate
- Average depth of interaction
- Average time spent
- Cost: media, Web development, and campaign production
- Value: Direct (coupon redemptions, e-commerce). Indirect (purchase intent surveys, market share analysis)
Since these metrics are mainly for digitally-based media, it’s hard to use them as-is for integrated campaigns. There has been some work done to measure the interaction with the ‘offline’ media through embedded keywords, however that approach is still in its nascent stage. In addition, these metrics don’t provide a reliable impact of when the interaction/engagement would translate into sales.
At my company, we do a lot of targeted email marketing to consumers who wear glasses and would like to try contact lenses. Due to the targeted nature of the medium, we get up to 30 to 35 percent open rates for these eDMs. From an open rate standpoint this is considered very high, but my next question is “so what?” What does it mean for our business? What is the optimal level of spend?
These questions become even more serious in businesses like ours where there is an intermediary between the consumers and us. Contact lenses being a medical device are dispensed by optometrists. If optometrists don’t see new people walking into their door as a result of the campaign, the whole effort is a waste. Therefore, at times our customers and sales team do not see a direct correlation between our investment in eDMs and generating new leads.
There is a strong need for the development of a ‘reliable’ leading indicator to forecast the impact of the campaign on sales. Marketers need to work closely with media agencies to develop and validate a regression-based model for their respective categories. This metric will serve to convince key stakeholders about the value of the investment behind these channels.
The metric should reflect the following key elements:
- Lead-time between engagement and sales.
- Degree of correlation between the variables.
- Be statistically robust over a period of time.
Most media agencies have sophisticated econometric modeling tools to develop the metric. A co-developed metric can drive both the client and agency towards the common goal.
Let me conclude by saying there is no silver bullet as far as digital/integrated metrics are concerned. It’s not surprising that we still haven’t cracked how to measure the effectiveness of TV advertising after so many years. We have always said that 50 percent of advertising works, hard to know which part. The clearer the link that we can establish between our digital marketing campaigns and sales, the closer we would be to taking marketing from unjustifiable operating expense to a measurable investment.