Commentary
If The Economy Goes Back South, What Happens To Metrics?
- by Bill Wise , August 23, 2011
Accountable advertising wins. When budgets get tight, purse strings get tighter -- and everyone makes more demands on advertising accountability. And so a thin silver lining of a soft economy is that it forces marketing organizations to push their analytics practices forward, which ultimately leads to more intelligent marketing. It's also a nice upside for online marketers and direct marketers, the two marketing segments perceived to be the most accountable, which tend to fare well when the economy goes south and the demand for precise metrics goes up.
Engagement metrics lose. Savvy marketers know that a whole universe of engagement, across many different touchpoints, leads up to a purchase. Which means there's a whole lot to measure -- from the direct point of sale, to the brand impact of an outdoor ad. Unfortunately, a lot of C-levels outside of the marketing suite don't understand the complexity of the media mix. And of lot of those same C-levels are the ones called in to scrutinize marketing budgets during lean times. They'll look for immediate correlations between sales and marketing, which means a lot more pressure to look at direct attributions at the expense of more subtle metrics, like the view- through. (My suggestion? If you're a CMO reading this, reach out to your CFO as soon as possible to educate him or her on analytics best practices -- so you can keep control of the course of your marketing measurement.)
Engagement metrics win. Kellogg School of Management professor Andrew Razeghi argues that in bad times, it's critical to deepen existing customer ties. "Use this time to get closer to your customers...and show them what's possible," Razeghi explains: holding on to customers through the downturn means holding on to your best source of revenue to hold you over, and emerging with a strong customer base once regular consumer spending returns. On the advertising front, that could translate into heavy engagement efforts (especially engagement driven by retargeting), coupled with strict accountability standards for engagement activity. And so a lot of smart companies would be likely to increase engagement efforts -- while looking to think smarter about how to make that engagement more accountable -- if the economy goes sour.
Stronger TV metrics. Through all the ups and downs of recent years, TV seems to be the one medium that just won't go away. That shouldn't come as a surprise: at the end of the day, TV is where the viewers are. But, again, all efforts are held to great scrutiny when times are rough. And so if times are lean, expect a flurry of attention aimed at on next-generation TV technologies that make TV more accountable -- like TRA, which marries TV viewership with purchase activity; or Canoe Ventures, which enables direct marketing interactions through TV the screen. We can also expect more pressure on the popular metrics providers to push ahead on the next phase of TV metrics (like more precise numbers on time-shifted viewing) as TV spending is coupled with a demand for more accountability.
Social media influence. Justas advertisers want to be on TV, even in bad times -- because that's where the eyeballs are -- a lot of advertisers want to stay on social media, regardless of the economy, because that's where the digital eyeballs are. Not to mention that social channels are built for viral marketing, making them particularly attractive when everyone is looking to stretch their dollars further. The upshot is that advertisers are likely to spend a lot of energy on social media -- on both paid and earned media. I see particular promise in metrics that measure the ripple effects of influence (like Crowdtap's brand influence ) -- which help advertisers find exactly where to get the best bang for their buck.
What am I missing? Unfortunately, we have a lot of collective experience with the impacts of a soft economy on the metrics business. What metrics changes did you see taking place in '08? How do you think the fallout will be different if we fall back into bad times? Post below, and/or tweet your comments to me -- I'm @billwise.
Bill,
I think your article is completely on target, and on a few different dimensions. eMarketer released a great report last year (“Measuring Video Ads: Metrics for Brand Marketers”) that highlighted the importance for advertisers and publishers of distinguishing between “progress metrics” (various measurements of engagement) and “performance metrics” (Brand Lift against the primary marketing objective, and ultimately sales). The brand marketers we work with definitely tend to focus on the latter, particularly when budgets shrink - in ‘08, we saw a much greater focus on accountability around performance metrics amongst both the publishers and advertisers we work with, who use our technology to measure and optimize Brand Lift. If we fall back into bad times, I think we’ll see an even heavier focus on metrics and accountability then we did a few years ago – advertisers have become more sophisticated over the last few years and are demanding more from their partners, not less.