Measurement is key to unlock progress. But what is it, exactly?
Did you see the breathtaking first images of the James Webb Space Telescope? No doubt they’re going to inspire a new generation of scientists to, in Captain Kirk’s words, “boldly go where no man has gone before.”
To the naked eye, stars are just blobs in the sky. But then a radical new instrument comes along and the most distant and impenetrable objects come sharply into focus. Measurement is the key that unlocks progress, whether it happens at the second Lagrange point (where the James Webb telescope orbits) or in more earthbound projects like budget allocation for a new marketing campaign.
The stakes are high: Worldwide ad spending reached $775 billion in 2021 and is expected to grow by 8.4% in 2022—on pace with pre-pandemic growth rates. But where should that money be spent? Record inflation continues to test consumers’ loyalty to brands and retailers, and according to McKinsey, their behavior is harder to predict today than at the height of the pandemic.
Now more than ever, brands need to understand their customers, optimize their campaigns, and justify where and when to spend their growing media budgets. And on the other side of the ledger, media companies need to understand and monetize their rapidly changing audiences too. Without fast, clear and unbiased measurement, marketers, like astronomers, are left staring in the dark.
But what is measurement, exactly?
Most marketers understand that they need to measure the impact of their marketing investments. After all, what can’t be measured can’t be managed, as the saying goes. But too many see measurement as a byproduct of their marketing activity, not as an integral part of their operating workflow. They end up installing the wrong tools, collecting the wrong data, and producing KPIs with no clear relation to the company’s business outcomes.
The third-party cookie is partly to blame. For nearly two decades, despite its shortcomings, the cookie gave marketers some semblance of cross-channel measurement, and many lost sight of the big picture: that marketing effectiveness should cut across all channels, not just digital channels, and that a brand’s success on one channel means very little if it comes at the expense of other channels. A million impressions on TV and a million impressions on Google might be great on their own, but not so great if they happen to be for the same people. And they don’t have the same value either if they occur at different points in the customer journey.
But now that cookies and other third-party identifiers are on their last leg—with tech companies Apple, Google, and Mozilla leading the charge—marketers have a unique opportunity to reinvent measurement. It’s going to require a disciplined approach:
- A focus on people, not channels
- Holistic metrics aligned with business outcomes
- An experimentation mindset in the marketing department
- A tighter integration of measurement into the marketing workflow
A focus on people, not channels
Customer-centricity isn’t a new paradigm. Though the concept wasn’t formalized until fairly recently, the idea of understanding the customer, anticipating their needs, and building a long-term relationship with them has been around for a long time. The challenge was always to do it at scale.
Modern tools (like CDPs, loyalty platforms and other martech innovations) have opened that door, but for most organizations, customer-centricity is still little more than a tagline. And they approach measurement the same way they approach campaign activation: channel by channel, using different partners and different metrics. That needs to change.
Holistic metrics aligned with business outcomes
Digital channels have been a boon to data-starved marketers, but every new channel comes with its own ‘data exhaust’ and reporting idiosyncrasies. New consumer behavior shouldn’t be ignored, of course, but in measurement as in marketing in general, more choice isn’t necessarily a good thing. KPIs like gross rating points (GRP), click-through rates (CTR), listen-through rates (LTR), daily active users (DAU) and other channel-specific metrics are of very limited value to the omnichannel marketer. Even something as simple as impressions can mean very different things on CBS, YouTube, Amazon or TikTok.
There are two key priorities for marketers here: to sync up the metrics they’re using across all the channels they’re working with, so that important campaign objectives like reach and frequency may be properly calculated; and to align those metrics to business outcomes, like sales, visits, leads or new applications. Advertising works, but it doesn't mean that it gets a free pass: its impact on the bottom line needs to be proven anew every time a campaign is running.
An experimentation mindset in the marketing department
Marketers have many tools at their disposal today to produce world-class cross-channel measurement: multi-touch attribution (MTA) for granular person-level analysis; marketing mix modeling (MMM) for aggregate market forecasts and budget allocation; and many types of modern survey techniques to understand brand awareness, purchase intent, shifts in attitude and other data points that are hard to capture with behavioral data.
But MTA models are often complex and limited to addressable channels, MMM requires steady markets (far from a guarantee in the current environment), and surveys are hard to do well and connect to actual consumer behavior. In that context, another technique has been growing in popularity: incrementality testing.
It goes back to the roots of scientific experimentation: building a sample that’s statistically representative, setting up test and control groups, exposing the test group to a creative element (ideally on one isolated channel), and measuring the uplift from that exposure against the control. InfoSum client Deliveroo used that measurement technique recently to test a new TV campaign on Channel 4 in the UK. They were able to control for the effect of prior brand exposure, on Channel 4 and elsewhere, as well as people’s natural propensity to use the service, and determined that the new campaign lifted customer acquisition by 20%. ROI and return on ad spend (ROAS) were only a quick calculation away.
A tighter integration of measurement into the marketing workflow
Running experiments is one thing, but they won’t be much help if you don’t have a process in place to incorporate their results into your workflow. This could be for long-term planning or for short-term tactical adjustments to a campaign while it’s still in-flight. A company that brings measurement into its marketing workflow can start to build a virtuous cycle where in-market insights inform better decisions every step of the way, and lead to more advanced experiments that lead to even better insights.
Where does this leave us?
Many marketers are anxious about the current environment: privacy regulations, media fragmentation, and ID deprecation are straining their ability to understand consumer behavior at a time when they can ill-afford to give an inch to their competitors. But it’s no time to recoil or take wild gambles with your marketing budget. Instead, take this opportunity to build a more robust measurement framework, and use it to instill a test-and-learn culture at your company.
Measurement is at the heart of what we do at InfoSum. We don’t have a space telescope, but we have the next best thing. Please get in touch with us and we’ll help you get started on your journey to the stars.