Commentary

Proxy Metric Ghettos

The digital marketing industry has insidiously trained itself to believe in marketing stories painted through the lens of proxy metrics. To a degree this is no different than any other medium. On the other hand, our digital world is rife with metrics and reports and it's easy to be overwhelmed and miss the forest for the trees. You can wallpaper your entire office with some online advertising reports. Impressions, reach, frequency, clicks, engagement, brand measures -- and for direct marketers, even conversions and revenue -- don't tell the story of how an investment performed against actual business objectives.

What Really Matters

What a business needs to understand is how digital investments impact the marketplace - in other words, the marginal contribution to the business. This is true for brand marketers as well as direct marketers of every flavor, ecommerce or otherwise. Of course, for direct marketers the linear and closed loop nature of the beast makes it far easier to measure the actual contribution to the bottom line. For brand marketers looking to move a multichannel marketplace, it's a more complex and multi-staged measurement that includes correlating proxy metrics to shifts in their market.

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Marketers, Time to Claim Responsibility

Large marketers and agencies have been trying to nail econometric media mix modeling for years. It's not a perfect science. It's often logistically challenging and expensive. Many clients opt to wing it, even with spends in the tens of millions of dollars.

However, all marketing service professionals and client-side marketing departments should be cognizant of the underlying business objectives and be proactive about developing ways to get as close to the measurement of marketplace impact as possible. This takes creative thinking, a financial investment, and an executive-level commitment beyond the intersection of "We know that we need to invest in digital" and "some of these metrics look good even if I don't understand what they mean for the business." Truth be told, often people are just too busy to take the time to dig deeper.

Agencies, Drive Us Forward, Please

Very rarely does an agency proactively take the time to develop ways to bridge proxy metrics to actual business results, particularly if this is not being asked of them. We all need to develop a historic benchmarking and econometric modeling mindset.  Make a commitment to research, analytics and modeling in an effort to truly measure impact. We preach the unique attributes of the medium -- targetability, relevancy, engagement, accountability -- but often miss the bigger picture in the process. These are of course powerful and valuable attributes.

But let's face it: Digital media has been in a decade-long chicken and egg situation. It's difficult to measure the marketplace impact of a small percentage of media allocation, and marketers won't increase digital budgets significantly until the marketplace impact can be measured, even directionally.

Most brand marketers rely on their agencies for the strategic framework surrounding the allocation, management, and measurement of their digital investments. If agencies don't explore creative approaches to working more closely with the clients, measurement programs will never move past their current state of stasis in the proxy metric ghetto.

Take the First Step

So the next time you look at your online advertising reports, ask yourself, how can I begin to bridge the gap between these proxy metrics and my business objectives? It's never too late to start the process, and it won't happen overnight.

What challenges are you facing justifying your digital investments to upper management? Have you made inroads in measuring the overall impact of digital investments on your business? Chime in below in the comments, or hit me on Twitter @jasonheller.

5 comments about "Proxy Metric Ghettos".
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  1. Bruce May from Bizperity, June 14, 2011 at 12:27 p.m.


    You really hit the nail on the head with this post. The days when agencies could promote the value of brand advertising with proxy metrics are gone. The connection to real business objectives is key to establishing real ROI regardless of the campaign goals which, as you say, often stop with proxy metrics. Thanks for bringing this issue out into the open.

  2. George Michie from Rimm-Kaufman Group, June 14, 2011 at 12:54 p.m.

    Brilliant stuff, Jason. Too often the agencies in charge of the media spend aren't really interested in the actual impact on the business, they're just interested in justifying more spend. I'm also alarmed at the poor quality of 'research studies' published on these topics. Too often these sponsored studies are nothing more than marketing collateral with data carefully selected to suggest spending more money. I don't fault the agencies who sponsor the study, but do wish the research firms would ask harder questions and insist on valid testing methodology.

  3. Jason Heller from AGILITi, June 14, 2011 at 1:51 p.m.

    Thanks for chiming in.

    I was moderating a panel last week where I asked a senior level representative from a major agency about tying to business objectives and she said, "we're responsible for buying the media and understanding who it reaches, not what happens after that". To a degree, as a media agency, she was right, but it is this mode of thinking that holds us back.

  4. Tom Cunniff from Combe Incorporated, June 22, 2011 at 1:48 p.m.

    For most brands, digital is about 10% of the total spend. Trying to measure its impact is like asking how a ceiling fan impacts wind velocity in a hurricane. We know it does *something*, but we can't say exactly what it is.

    The idea of demonstrating "real ROI" is a trap, because it forces us to measure events: CTRs, downloads, conversions, Facebook "likes", etc. These are all direct marketing metrics that do not acknowledge the reality that brand-building is created over time. It's a process, not an event.

    Most big brands would be better served if we simply stopped trying to measure every click and looked at overall brand metrics over time. I'm not anti-data, but I reject the idea that more data is always a good thing.

    More here: http://www.mediabizbloggers.com/tom-cunniff/Marketings-Red-Sock-Problem---Tom-Cunniff.html

  5. Steve Latham from Encore Media Metrics, June 29, 2011 at 8:37 p.m.

    Insightful piece Jason. While you'll never find the perfect solution, you can show business impact via market testing. In my former agency (I sold it before launching Encore) we had a great case study in which our client (retailer) gave us their print budget to re-allocate to digital for 1 month in 1 of their 4 major markets. Results were compelling: the test market had a 15% lift in in-store sales vs. the 3 control markets (which all showed same month-to-month change). Moreover, 90% of customers cited "Internet" as the means by which they heard about the sale. Is it possible that there were other factors driving the lift in sales? Sure. But is it fair to say Digital was the primary reason? Definitely.

    Hope this helps!

    @stevelatham

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