Why You Need Pay-for-Performance Analytics
It's rare to find a company that suggests to its clients that it be paid on performance - but wouldn't it be nice if that were the standard?
Does your full-service agency get paid regardless of campaign performance?
Chances are, they do.
Maybe they get paid for how many “impressions” your (their) campaign gets. And maybe they get paid on how many “click-throughs.”
None of this is enough, and it fails to hold them accountable to the promise of analytics, because analytics is supposed to be a closed performance-enhancement loop. Analytics isn’t just a check-mark on the road to nowhere. It’s supposed to measure campaign performance, identify what needs improvement, and measure the improvement. And if it’s linked properly to your other business data, it ought to be able to show the return on investment (ROI) of the entire effort.
But ROI has become something of a lost concept in analytics, especially where the full-service agency is concerned.
Too often — in nearly every case I know of — there is a near-total disconnect between what the agency purports to measure, and then what they propose to do about what they found. And it’s a rare case where there’s any real effort put into actually learning from what happened — learning, and then doing. And then proving it.
A long time ago, everyone seemed to agree that if you owned the whole cycle, you ought to be responsible for it. To wit:
- Decide what you want to measure
- Deploy the measurement technology
- Review results
- Make changes based on review
- Measure again for improvement
Some analytics specialists don’t say they do all of these things: many just do the measuring itself (which is much harder to do properly than many might imagine at the enterprise level). But many marketing companies and agencies actually own the whole cycle. And yet you don’t hear about this simple improvement cycle.
Never mind the notion they might be paid on performance. There would be too many losers in that game, and the battles could turn ugly. Nobody wants ugly. They’re happier with mediocrity.
That’s why it was a real pleasure to run into a marketing company that actually proposes to its clients that they be paid on performance. I can’t say who they are, nor even what vertical they’re in. But suffice it to say that, over lunch the other day, I heard about a team that actually takes ownership of the cycle, and sends in a nice little bill once they prove that their efforts, once measured, showed a genuine uplift in conversions. I nearly dropped my fork. It had been years since I’d heard anyone actually say they can do this. That they actually do it, and get paid for it.
It’s risky. It means you have to be good at what you do on the creative side. And you need to be good enough at measurement to withstand an audit. None of this is easy. And it isn’t just about deploying some A/B tests and pointing to mere popularity as proof of the concept. The testing company does not own creative. My lunch companion does not run an analytics agency, nor an A/B testing company, but a full-service agency creating campaigns in a very specialized market. And this company offers a program where they get paid for doing the whole job, and doing it well.
Don’t expect this to happen unless you can own the whole cycle: from KPI development, through measurement, through creative, through measurement again. But if the agency you hired owns all this, perhaps you should begin to wonder what’s keeping them from telling you they want you to pay them a premium — but only once they can prove that what they did actually achieved a measurable result.
Why are you spending money on measurable media if you have no shot at actually improving your marketing?
