Why marketers must look to new places to turn data into treasure

A new maturity is emerging in how brands approach online measurement that links activity to revenue.

Certainly it’s a major concern. According to research, it’s top of the list of things for which marketers around the world feel unprepared. And given that digital media is driving this explosion of data, it’s perhaps surprising how little help it is in answering the two key questions from the C-suite: “How much did we spend and what results did we get?”

It’s partly a problem of industry maturity and complexity. A couple of years ago, when the digital marketing industry was trumpeting the fact that it had just overtaken TV in terms of amount spent in the medium, TV advertising promotion body Thinkbox responded by describing the figures as “interesting but meaningless”. The organisation’s argument was that digital marketing covers such a broad spectrum of activities that to bundle them all together is unhelpful, to say the least. And while that argument may have been lost in the celebrations then, it looks highly pertinent now.

Commercial TV is a stable medium. It does one thing – branding – and it does it brilliantly. It’s been doing it in the UK since 1955, so everyone knows how it works, and how it’s measured. They also know the flaws in that measurement system, but since everybody agrees on the system, it forms a level playing field.

Digital isn’t there yet. It does a whole raft of things – direct marketing, branding and customer service among others – each of which requires a different set of metrics. And it changes too frequently, introducing new platforms, new channels and new metrics.

Indeed, it’s arguable that it will never reach stability in same way TV or print has because technological change will keep it in a state of flux. It’s worth remembering that the pillars of the online world haven’t been around very long. Google only sorted out its business model in 2000, Facebook launched in 2004 and YouTube in 2005.

There are suggestions, however, that a new maturity is starting to emerge in how online measurement is approached as companies start to focus more on what people do rather than what they say. Silicon Valley venture capitalist Dave McClure’s idea of “pirate metrics” for start-ups has been influential here, arguing as it does that businesses should concentrate not on what he terms “vanity metrics” – likes, friends and fans – and instead look at acquisition, activation, retention, referral and revenue – factors that make a real difference to a company’s performance. Why are they called pirate metrics? Because they AARRR.

And at a recent social media event I attended, there was much discussion of US companies increasingly trying to jump over online metrics and instead link online activity straight to revenue. Where this isn’t possible, such as for companies that sell through third parties, other well-established techniques such as couponing are increasingly finding favour.

Meanwhile, attribution modelling continues to be the holy grail of companies trying to maximise the efficiency of their marketing spend, and there are a growing number of brands and suppliers trying to solve that problem.

That’s one end of the marketing funnel. But data is equally important at the other end, and it’s here that things are really starting to change as the old alignments of advertiser, agency and publisher are reinvented.

I’ve written before about the view among digital experts in the content industries that, rather than being a disaster, the growth of the internet has created a huge opportunity for them, since for the first time they know exactly who’s buying their products. But it was interesting to hear this view put forward by someone as senior as John Ridding, CEO of the Financial Times, at the FT’s Digital Media conference earlier this month.

Ridding described the pre-internet print era as “the dark ages” when the company knew almost nothing about the readers of its paper. He contrasted that with the situation now, when the FT can charge advertisers a premium because it can prove who is reading what, and what an advertiser’s ROI will be.

What this means for marketers is that they have a new set of partners to help them navigate the mass of consumer data – the media owners themselves. And it means that the role of media agencies has to change from organisations whose business was primarily getting the best deal on bulk buys of media.

So what is the explosion of data going to mean for marketers? It’s certainly going to mean different ways of working, and it may mean recruiting different people into the marketing department. But it also means looking for help in different places and building new partnerships based on different kinds of value exchange.

Michael Nutley is a writer and consultant specialising in interactive media. He can be contacted at michael.nutley@myblueyonder.co.uk

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