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Measurement & Metrics: Time for the Internet to Join the Grown-Up’s Table

There’s a fascinating statistic in an article posted on the BusinessWeek site today.  The cost of advertising on leading Internet sites is nearly the same as advertising on prime time television.

“As ads spew out more data, their value rises. According to Avenue A/Razorfish, a banner on a leading portal, such as Yahoo or MSN, now costs about $500,000 for a day, about the same as a 30-second spot on a hit TV series such as CBS's CSI.”

Online marketing has made it to the big-kids table.  Ten years ago we struggled to get leading marketers to dip their toes into the water and test just a few banner ads.  Now Fortune 500 companies are buying out search keywords, blanketing online sponsorships and substantial portions of their marketing budgets from traditional media into Internet marketing.  Companies like Ford and American Express are reportedly allocated as much as 30% of their total advertising budgets to online media this year. 

To date, these otherwise savvy marketers have been amazingly tolerant of convoluted reporting and difficult-to-calculate ROI.  Now that they’re putting real money online they want to know what they’re getting for it.  And a new group of ad services and web metrics companies are emerging to meet that challenge. 

Many of them come from legacy marketing firms, such as Publicis’s Denuo, Rishad Tobaccowala, Denuo’s Chief Strategist contends that this shift will force greater accountability and a “flight to quality” in online advertising.  He predicts that the top sites will entice consumers with a combination of trust, high quality and smart promotions, similar to the click-and-brick model of supermarket loyalty cards. 

But that doesn’t take into account the thousands and thousands of consumers who are time-shifting themselves out of mass marketing.  These customers are much more likely to be persuaded by a word-of-mouth referral than an ad – on the Internet or anywhere else.  The blogosphere and blog metrics seems like a likely solution to reach these critical and influential users, and to measure their behaviors.  As Steve Rubel notes in his blog today, that’s far from a perfect science. 

“Everyone tries hard to spin data a certain way to make it seem like they're delivering more qualified eyeballs/ears than their competitors. Auditing keeps publishers humble. With social media networks, however, the game is more than just about numbers. It's about reaching influencers. This means that marketers need auditing that goes beyond reach and explores influence metrics.”

One thing is certain, neither medium can stand alone these days, and it’s imperative that traditional or mainstream media learn how to work with new media, and vice versa.  To quote Sam Wannamaker, half of our advertising dollars are wasted.  Only with a collaborative analytics approach will we figure out which half.   

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Advertising, CGM, Marketing, Metrics, Web2.0

Blog Measurement Standards? What Standards?

Steve Rubel made a great comment today about the need for standardization of blog measurement. He describes two recent studies, one by Gallup and one by Pew, which show dramatically different blog readership rates. He rightly asserts that as the blogosphere continues to grow, the need for consistent measurement will intensify. While I agree with him, I would offer two counterpoints to his argument. 

First, “traditional” or “mainstream” media doesn’t exactly have the measurement standardization thing down. Look at the browbeating Nielsen has taken over audience measurement of late. While they’ve been at it a little longer, and we’ve become accustomed to working within their flawed systems, the reality is that mass marketers have limited understanding of audiences for major media outlets and even less ability to actually reach their desired market segments. So it’s not surprising that something as nascent as the blogosphere would be in the early stages of figuring this out. 

Second, and more importantly, the discipline of marketing analytics needs to engage in this conversation. Marketers around the world are eager to find better ways to improve marketing accountability. When marketing analytics began to emerge it was quickly relegated to geek status as one of the tools of direct marketing. It wasn’t sexy and it required time and discipline to implement. But it does something standard market research doesn’t: track transactions and calculate ROI. 

Given the cacophony of conversations in the blogosphere, and the data it generates, marketing analytics is worth a second look. Data mining tools have begun to emerge which yield analysis of context and sentiment, and produce real insights about large volumes of unstructured data. Many of these tools emanate from work of the Intelligence Community, or Informatics, while others derive from search-related products. Today these are the purview of people who got a lot further in calculus than I did. As CGM continues to mature and mainstream, marketers will demand more than trend-spotting and brand impressions from their measurement and research companies. And they’ll want to take matters into their own hands. They’ll become dissatisfied with use of a third party, and want to interact with the information directly. 

Marketing analytics tools need to catch up with the market and find ways to help address Mr. Rubel’s question about standards. After all, in a long tail world, what’s the point of depending on intermediaries to tell you what’s going on? 

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Long Tail Measurement Pew Gallup

Building the Company with Measurement in Mind: Part II

Part II:  No Forklifts Required

Last week’s announcement of the Oracle-Seibel deal provoked some interesting commentary about the reasons for the deal (GMSV), the state of the CRM art, and what marketers really need to run an effective analytics program.  The reaction highlighted the fact that except for huge corporations managing multiple terabytes of data, you don’t need a small army of rocket scientists and a forklift to design and implement a great marketing analytics program.  And Marc Benioff would make that case for the Fortune 500 as well (ZDNet).

The heavy lift is the strategic work:  engraining measurement and analytics into the company DNA.  Once that’s done, designing the work-flow process and implementing the technical infrastructure becomes less time (and cash) consuming.

Follow the money trail.  The work-flow process for your marketing analytics program should be a visual representation of the money flow for your company.  It should reflect all your customer touch-points.  It should consider how you create demand, how you incent trial, how you sell, how you service and how you bill your customers.  Here’s where one of the greatest obstacles for an early-stage company becomes an advantage:  your limited staff.  Small companies have streamlined teams who can develop this kind of process faster and more deftly than large corporations.  In other words, you can assemble the people you need to design this process (sales & marketing, customer service, finance, web site development, IT) around a table at Starbucks, and you might even get it done before you finish your venti lattes.  It will actually take more than a few venti lattes, but you get the point.  In addition to being more efficient, this collaborative (and caffeinated) design process ensures that everyone’s bought into it, and that they understand the importance of their contributions.

Make your program strategy-heavy and implementation-light.  Implementation of this kind of measurement and analysis programs used to be really ugly.  I’ve worked with more than one multi-national corporation that holds its measurement system together with bailing wire and rubber bands, and staffs it with a roomful of analysts.  Fortunately you don’t have to do that.  Emerging growth companies are particularly well-suited to take advantage of new on-demand analytics tools and services.  And with your marketing dashboard reporting and work-flow process in place, you’ve already written most of your technical requirements.

So what should you include in your program?  There are a few essentials:

• Campaign Management:  tracking and analysis of sales & marketing campaigns

• Sales Force/Contact Center Automation: contact management and tracking system for sales/service teams

• Web Analytics:  tracking web site usage and behaviors

Just like the rest of the tech industry, there’s been consolidation among these providers and technologies over the past several years.  The result is a fairly short list of options which will best meet the needs of an early stage company.  Start simple and optimize over time.  It’s easy to be overwhelmed with complexity and to over-design the solution.  Avoid that temptation. 

Be creative about leveraging technology … think of ways you can automate processes rather than depending on human intervention.  (For example, using multiple codes on coupons allows a retail scan and your own campaign tracking.)  Don’t miss a chance to tag important events.  Use promotion codes on every type of prospect or customer interaction. But be aware of limited tolerance for information collection and sensitivity about privacy.  Make the process as transparent as possible for your prospects and customers. 

Most importantly, you should go into this knowing that it will continue to evolve over time.  95% of business plans change in the first two years.  Your company is in a state of rapid evolution.  Your measurement processes and systems need to be just as flexible and adaptive.

Building the Company with Measurement in Mind

Part I: The Strategic Framework

I recently spoke with a friend and former colleague who’s now the CMO of an early stage company.  They just launched the beta of an online/offline service targeted to consumers in their local market.  I asked him how things were going.  He told me that the site was getting a lot of traffic and that calls were coming in but then he sighed a little and said, “To tell you the truth, I really don’t know.  I wished we’d built the company with measurement in mind.”  I was stunned.  This was coming from a seasoned marketer with substantial experience in measurement and analytics and a history of working for some of the top brands in the country.  I started thinking:  what does it take to build measurement into a new company’s DNA?

A successful marketing analytics program has three key elements:  a strategic framework, a work-flow process and a technical infrastructure.   As intimidating as it might sound it’s actually easier to consider this early in company development and build accordingly than it is to retrofit later.  (Just ask your friends who work at Fortune 500 companies about their latest adventures with large-scale Oracle or Seibel implementations.)  And the good news is that as with everything else, technology has evolved and there are now much better, lower cost, less labor-intensive options which are well suited for use by smaller organizations.

To begin the process, you should start by establishing a strategic framework.  The strategic framework sets the guidelines and expectations for the program.  There are two important aspects to this.  The first is a company mindset that measurement is a way of life.  Early in my career I worked for what was then one of the leading telecommunications companies.  At the time we were a hot marketing shop, turning out a huge array of products, promotions and campaigns in record time.  Our typical timeline from conception to market launch was 6 – 8 weeks.  It was common for us to have 150+ call center campaigns or 75+ direct marketing programs at any given moment.  While speed-to-market was our mantra, we didn’t sacrifice analytics. Every single campaign had to go through a business case and meet certain ROI criteria prior to launch.  Measurement and analysis were part of the company DNA. This came from the top down and was drilled into every new hire.  And instead of being a management-imposed barrier, it became a lingua franca for even the newest, youngest employees to converse with our senior executives.  (I can think of a least one freshly-minted MBA who was particularly talented at seeing the story behind the numbers and interpreting that for management.  He’s now a partner at a top venture fund with a strong track record of success.)

The second aspect of the structural framework is a company-wide basis for measurement and analysis:  a marketing dashboard.  Think of this as a snapshot of the company which shows performance against top priorities and goals, and which enables everyone in the organization to have the same understanding of what’s working, and what isn’t.  I’ve seen these used successfully at leading global companies and small, technology-driven nonprofits.  The process is fairly straightforward:  define the top metrics for the company (number of sales, revenue per customer, number of users, conversion rates, etc.), identify the sales, marketing and customer service activities which drive these metrics, and summarize them all in a 1 –2 pp report, using simple graphs and charts to track progress over time.  The report should show a direct link from your business goals and milestones to your sales and marketing programs.  The idea is to telegraph critical information.  This isn’t supposed to be an exhaustive (an exhausting) “Big-Six” style wonky deck.  Don’t try to cram every possible data-point into a group of tiny charts which overwhelm the page.  The challenge is to keep the report simple and succinct.  In a quick read you should be able to understand whether the trend-lines are headed in the right direction and what issues require focus.

Depending on the industry rate of change (things like sales cycle, competitive moves, etc) and the intended audience, this report can be done daily, weekly, monthly or even quarterly.  It provides a mechanism for all levels of management (including your investors and board) to understand the company’s progress, evaluate success and trend early warning signs of problems.  Distributing a distilled version of this throughout the company puts everyone on the same page – literally.  It helps your engineers understand how those apparently unrelated product features actually drive revenue.  And it shows the CFO that it’s not just “marketing alchemy” … there’s a direct correlation between meeting sales and revenue goals and strategically-driven marketing programs.  My experience is that startups attract smart, highly motivated people.  The more they understand the company’s success drivers, the better they’ll be able to contribute to that success. 

I’m sure this seems like fairly practical, even obvious advice.  For anyone who’s been in a sophisticated marketing company this is a standard way of doing business.  And it’s true, it’s not rocket science.  But it may help you  avoid having to hire one to interpret your data down the road.