• by John Nardone , Op-Ed Contributor, June 22, 2006

I recently attended aegis media group’s global meeting, where I had the pleasure to spend time with colleagues from all over the world, representing every imaginable marketing specialty. I spent time with professionals who specialize in traditional media planning and buying; direct, digital, and buzz marketing; sports marketing and sponsorship; “extreme outdoor”; branded content; experiential marketing; and dozens of other disciplines too numerous to mention.

On one hand, I was pleased to find that virtually all of them were deeply committed to measuring the effectiveness of their programs. On the other hand, I was disappointed to find that we have not yet addressed our clients’ need to advance beyond silos of measurement to a more integrated and holistic view.

In supporting my clients, I typically interact with various agencies within the holding companies Publicis, WPP, IPG, and Omnicom. To some extent, each wants to use measurement as proof that its efforts are “working” for clients. Each wants to justify more budget and higher fees. But the very nature of agency holding companies and their independent specialty assets makes it impossible for agencies to lead the development of integrated measurement structures. And so they fail to provide the clarity of a common set of metrics, and instead contribute to confusion and conflict within client organizations.

Imagine the scenario: The general agency establishes traditional media programs using key performance indicators such as awareness and attribute ratings among the general target audience. The digital agency sets up programs using key performance indicators such as clicks, searches, Web site visits, interactions, and downloads. The sports marketing/sponsorship agency uses measures such as brand association and loyalty.

All the measures are different, and none speaks to the ultimate goal: sales. Clients are left to sort through it all to properly allocate budgets and evaluate performance.

Now, I have heard agency people say that their goal was not immediate sales, but rather long-term brand equity, and you can’t measure that. To that I say: bullshit. If your program is not producing sales in the short term, it will not produce them in the long term. And you can measure changes in brand equity, and associate that equity with future sales. So no more of that excuse, please.

Agencies must realize that all of the measures that are not sales (or leads) are not true performance measures but diagnostic measures. They are useful and important. They give an indication of why a program is or is not impacting sales, but they cannot and should not stand alone as justification for any particular budget or program investment.

Once clients realize that their agencies are not in a position to design or drive a coherent measurement structure based on sales, they will have no choice but to do this work themselves, or hire a specialist consultant to do it for them. They must design a framework for measuring sales on a common basis across all programs, and then be able to relate those sales to the specialized diagnostic measures relevant to each individual marketing program type. Then they must instruct all of their partners on how to contribute to the metrics and how to use them to manage their programs.

Clearly, the burden of this job falls on the clients, but agencies can help lighten the load. First, agencies must stop confusing diagnostics with performance measures, and should never use any metric not closely tied to sales as a budget justification. Second, agencies must do a better job at maintaining clients’ data and histories. Sloppy record-keeping costs clients time, money, and frustration when they attempt return-on-investment modeling programs. Finally, agencies must become advocates of sales- or ROI-based measures, not roadblocks to them.

The result can be a win for agencies as well as clients. A common metric framework actually makes it easier for agency groups to work together by setting a common standard of success and a consistent basis for budget allocations. More importantly, a sales-based framework allows agencies to justify their contribution to the business and their fees. When the agency’s work is effective, this will be apparent and quantified. But when the agency’s work is not contributing to the company’s bottom line, it will be exposed, and there will be an opportunity for course correction.

John Nardone is chief client officer for Marketing Management Analysis. (john.nardone@mma.com)