02 December 2009

"Oh -- were we supposed to prove the results of what we did?"

Measurement and accountability are favorite topics of mine because they are the keys to the future of our business. Technology now permits us to know a lot more about the results of what we do.

Even so, it seems many executives don’t want to know the results. Perhaps they don’t trust the mysterious black box marketing mix analyses that impugned their efforts in the past. Perhaps the idea of understanding an algorithm (or even spelling the word) is intimidating or boring. Or maybe it’s just a lack of familiarity with the methods old and new we can all use to figure out what worked and what didn’t.

We’d all better get familiar fast. Even if we provide the smartest strategy and the greatest creative, it won’t mean much without analytics. As described in the short history of advertising, there are plenty of consultants who are willing to fill the void.

The good news is that we have a lot of options for measurement. Here are just three, plucked from the news this week alone.

1. It’s possible to measure TV advertising’s effect.

Let’s start with some fuzzy math. Or, in the words of Lucas Donat, “fuzzy analytics”. Donat wrote this week about a method of measuring TV advertising’s effect on sales. It’s very simple math: establish a baseline that estimates what sales would be if you did not advertise for the time period in question. What’s the baseline? That's the fuzzy part. You are making a 21st Century dart throw, a guesstimate. Why not? You have to start somewhere. As Donat explains, you must attend to this model over time and learn its rhythms, constantly measuring your actual sales curve to understand the marketplace effect.

This is very old-school, but it is absolutely acceptable math. Years ago when I worked on McDonald’s we used this model every single month to understand whether Two Big Macs for $2 was driving a sufficient lift in transactions to justify the lower average check we expected from the discount. Step one, under the tutelage of McStatistician Larry Knodle, was to establish a baseline. We treated these monthly case studies very seriously, and referred back to them for the planning of each new program. You’ve never known accountability, by the way, until you’ve explained store sales and profit to a committee of QSR franchisees.

2. David Ogilvy’s “secret weapon” should now be standard equipment.

I didn't mention that Lucas “here’s-how-to-measure-TV” Donat is actually a direct marketing guru, and one imagines he is well-schooled and experienced in all of the measurement tools of that trade. Draftfcb, my employer, is the result of a merger between an ad agency and the world’s premier direct marketing agency. I love the way my colleagues from the former Draft think about measurement; it’s a product of decades measuring their work in direct marketing. Before the merger, direct marketing was something I only read about. A great example was “Ogilvy on Advertising”, David Oglivy’s 1983 survey of the craft, which included a chapter titled “Direct mail, my first love and secret weapon”. It’s either quaint or prophetic that in just the third paragraph he mentions “computers” as a major advancement in the discipline.

On that note, I highly recommend this article in DMNews that summarizes how direct marketing has been transformed in the past 30 years by technology. It is a wonderful, concise retelling of the ways direct marketing has come in to its own. There are lots of quotes from bold-faced names in the industry. Howard Draft remembers the 1980s as a time when "we started to play around with quantitative media analysis." A quote from Lester Wunderman says it all: “The science of data has really built our business.” Interestingly, the article never mentions the words “measurement” or “accountability”.

3. Isn’t Digital supposed to be measurable?

This morning there was an article about IRI, Dynamic Logic, ComScore and X+1 teaming up to offer “CPGConnects”, which would go beyond the marketing mix analyses mentioned above. (The article helpfully notes that MMAs are “CPG’s ROI of choice”.) This new venture would analyze consumer purchase data that could be used to plan more effective online campaigns. Part of the news here is that CPGConnects would tie purchase data to consumer segments such as loyalists and switchers, and see how these individual segments respond. An intriguing example was the diagnosis of a packaged-goods brand campaign that attributed sales lift to incremental purchases by existing customers, as opposed to bringing in new buyers.

The article also notes that scale will be a challenge for CPGConnects, as in: most CPG digital campaigns are way smaller than the broadcast advertising budgets. This will change quickly in the next five years as ad messages are delivered digitally (pre-roll, digital OOH, etc.).

I remember reading an interview with Coke CMO Joe Tripodi a few years ago, when he was in the same role at Allstate Insurance, in which he bemoaned the lack of uniform metrics for digital campaigns. It’s true that Dynamic Logic and DART offer different ways to measure what your online campaigns are doing. In my view that’s a good thing, because at this early point in the History of Internet Advertising we need more than one reference point to measure the results of what we do.


  1. Extremely helpful-thanks for this. Question: how do I best determine what proportion of my total spend should be split between offline and online advertising or SEM? Are there best practices or advice you could provide to help make this determination?
    Kevin Counihan

  2. Dear Kevin: Thank you for commenting! Yes, I can offer some advice. (1) Make sure you have a strong consumer insight -- this is obvious but many marketers skip over it. (2) The same insight that fuels your creative should fuel your channel plan -- you work hard to get the right message, you should work just as hard to make sure it gets to the right person at the right place at the right time. (3) Your business objective will drive the allocation of budgets by channel -- a greatly oversimplified example is that a CPG new product launch will depend much more heavily on broadcast media to drive awareness and trial. (4) Budgets are always the reality check. There never seems to be enough money for everything you thought you should do, so be prepared to make compromises. (5) Don't artificially allocate budgets before the above steps. We recently launched a CPG product, but dialed back a bit on TV advertising in order to fund more retail activity than we would normally, based purely on a strong consumer insight we identified at the start of the process.

    Given your job responsibilities, Kevin, my guess is that you depend on a tight intersection of digital, direct and data. Offline advertising -- not just TV, but print and perhaps transit -- may be necessary to make people aware of what the Mass. health care program can do for them. This was true when I worked on a project for the Illinois SCHIP program a few years ago.

    It's a bit hard to summarize all of this in a bit of bloggery, so if you'd like to discuss more, please do feel free to contact me.

    Thanks again for commenting!

  3. Hi. Thanks for your post, it was really useful for me. As I work as an insurance broker I also have to use advertising devices,so a have a team of people who look after that. Of course, we use mainly the Internet as it is much cheaer, but I didn't know that it is so difficult to measure the actual effect. So thanks again, I'm always happy to learn something new.
    Take care,

  4. Dear Lorne:

    Thanks for commenting. You work in the perfect business for what I would call "relationship marketing". That is, you acquire new customers by starting a relationship with them, and only retain them by maintaining that relationship.

    The Internet is not only "cheaper", as you say, but it is more appropriate. For example, Search Engine Marketing can help connect you with people searching for insurance of the kind you sell or in your area. If you are an independent agent, I would encourage you to use professional networking tools like LinkedIn to help find new referrals among your current contacts.

    I travel to Toronto often and really love Canada. Good day, eh!