Yet to date, very few brands are using attribution to measure and optimize online spend. Despite the universal need for better metrics, most still rely on click-through rates, cost per click and direct cost per action to measure display media. Greg Papaleoni, who develops analytics and insights for Yahoo!, sums it up well: "While full-funnel attribution is the future of digital media measurement -- it should be the present. Advertisers who embrace it will enjoy a massive advantage over their competition."
While adoption has been slow to date, it is accelerating due to the convergence of several factors. Borrowing from Michael Porter's "Five Forces" model for analyzing industries, here is my take on the five forces that are driving digital media attribution:
1. Continuing shift of media budgets from traditional to digital
While total U.S. media spend will grow only 3% in 2011, digital spend will grow 14%, surpassing newspapers as the No. 2 medium. Accounting for almost 30% of daily media consumption, Digital spend will continue to outpace all other channels for the foreseeable future.
2.Resurgence of display advertising
Display media spend will grow 14% in 2011, outpacing 10.5% growth in paid search. While there are many underlying reasons (growing social, video and mobile consumption, better targeting, real-time bidding, richer formats, etc.), the resurgence of display is driven by two primary factors:
*The maturing of search: There are only so many searches every day, and most marketers have maxed out their paid search efforts. For the big advertisers, there are no more keywords to buy. Incremental dollars will have to go elsewhere. Display is the obvious choice.
*The return of branding: During lean times, online dollars focused on harvesting existing demand (i.e. search). But as the economy recovers, brand-building is once again a strategic priority. In the digital arena, display media offers the most efficient and scalable way to create demand for your brand.
3. Increasing focus on accountability
While budgets may have loosened, the focus on results has not. Consequently, marketers are keeping a close eye on ROI. With the ever-increasing need to produce measureable results, brands now require branding plus performance. To measure brand-building media, we must measure engagement, not clicks.
4. Evolution of Web architecture
Forays by IBM and Oracle signal a new wave of convergence between IT and Marketing. As the IT behemoths push marketing-technology solutions, CIOs are becoming attentive to the needs of the marketing department. The deployment of data management and universal tagging platforms set the stage for new measurement tools to be deployed across the digital infrastructure.
5. The emergence of better attribution solutions
While initial tools were expensive and limited in scope, a new breed of point-solutions (including Encore) are emerging, offering more effective, flexible and affordable insights. For a very small investment, advertisers can now have a more holistic view of performance of each media channel, vendor, format, placement and keyword. Such insights are enabling advertisers to optimize media budgets, yielding 20-40% gains in ROAS with a direct ROI of 100% to 2,000%.
As the media evolves, so must the manner in which we measure it. The rising tide of digital spend requires better metrics for measuring engagement throughout the funnel. The emergence of new solutions, bolstered by growing support from IT, is paving the way for attribution to become a must-have for marketers of all sizes.
Matt Miller, senior vice president, strategy and analytics at Performics, agrees: "Attribution is one of the top priorities for our advertisers. Our focus on attribution will only increase as advertisers implement strategies to maximize ROI across all channels."