Nielsen | analytics

Earlier this week, I attended the Digital Media Measurement and Pricing Summit put on by The Strategy Institute and walked away with some real clarity about some realities of online marketing measurement. The conference, which was relatively small (less than 100 attendees) had a top-notch line-up, with presenters and panelists representing senior leadership at first-rate agencies such as Crispin Porter + Bogusky, and Razorfish, major digital-based consumer services such as Facebook and TiVo, major audience measurement services such as comScore and Nielsen, and major brands such as Alberto Culver and Unilever. Of course, having a couple of vocal and engaged attendees from Resource Interactive really helped make the conference a success as well!

I’ll be writing a series of posts with my key takeaways from the conference, as there were a number of distinct themes and some very specific “ahas” that are interrelated but would make for an unduly long post for me to write up all at once, much less for you to read!

The Frustration Gap

One recurring theme both during the panel sessions and my discussions with other attendees is what I’m going to call The Digital Measurement Frustration Gap. Being at an agency, and especially being at an agency with a lot of consumer packaged goods (CPG) clients, I’m constantly being asked to demonstrate the “ROI of digital” or to “quantify the impact of social media.” We do a lot of measurement, and we do it well, and it drives both the efficient and effective use of our clients’ resources…but it’s seldom what is in the mind’s eye of our clients or our internal client services team when they ask us to “show the ROI.” It falls short.

This post is about what I think is going on (with some gross oversimplification) which was an observation that was actively confirmed by both panelists and attendees.

Online Marketing Is Highly Measurable

When the internet arrived, one of the highly touted benefits to marketers was that it was a medium that is so much more measurable than traditional media such as TV, print, and radio. That’s true. Even the earliest web analytics tools provided much more accurate information about visitors to web sites – how many people came, where they came from, what pages they visited, and so on – than television, print, or radio could offer. On a “measurability” spectrum ranging from “not measurable at all” to “perfectly measurable” (and lumping all offline channels together while also lumping all online channels together for the sake of simplicity), offline versus online marketing looks something like this:

Online marketing is wildly more measurable than offline marketing. With marketers viewing the world through their lens of experience – all grounded in the history of offline marketing – the promise of improved measurability is exciting. They know and understand the limitations of measuring the impact of offline marketing. There have been decades of research and methodology development to make measurement of offline marketing as good as it possibly can be, which has led to marketing mix modeling (MMM), the acceptance of GRPs and circulation as a good way to measure reach, and so on. These are still relatively blunt instruments, and they require accepting assumptions of scale: using massive investments in certain campaigns and media and then assessing the revenue lift allows the development of models that work on a much smaller scale.

The High Bar of Expectation

Online (correctly) promised more. Much more. The problem is that “much more” actually wound up setting an expectation of “close to perfect:”

This isn’t a realistic expectation. While online marketing is much more measurable, it’s still marketing – it’s the art and science of influencing the behavior of human beings, who are messy, messy machines. While the adage that it requires, on average, seven exposures to a brand or product before a consumer actually makes a purchase decision may or may not be accurate, it is certainly true that it is rare for a single exposure to a single message in a single marketing tactic to move a significant number of consumers from complete unawareness to purchase.

So, while online marketing is much more measurable than offline marketing, it really shines at measurement of the individual tactic (including tracking of a single consumer across multiple interactions with that tactic, such as a web site). Tracking all of the interactions a consumer has with a brand – both online and offline – that influence their decision to purchase remains very, very difficult. Technically, it’s not really all that complex to do this…if we just go to an Orwellian world where every person’s action is closely tracked and monitored across channels and where that data is provided directly to marketers.

We, as consumers, are not comfortable with that idea (with good reason!). We’re willing to let you remember our login information and even to drop cookies on our computers (in some cases) because we can see that that makes for a better experience the next time we come to your site. But, we shy away from being tracked – and tracked across channels – just so marketers are better equipped to know which of our buttons to push to most effectively influence our behavior. The internet is more measurable…but it’s also a medium where consumers expect a decent level of anonymity and control.

The Frustration Gap

So, compare the expectation of online measurement to the reality, and it’s clear why marketers are frustrated:

Marketers are used to offline measurement capabilities, and they understand the technical mechanics of how consumers take in offline content, so they expect what they get, for the most part.

Online, though, there is a lot more complexity as to what bits and bytes get pushed where and when, and how they can be linked together, as well as how they can be linked to offline activity, to truly measure the impact of digital marketing tactics. And, the emergence and evolution of social media has added a slew of new “interactions with or about the brand” that consumers can have in places that are significantly less measurable than traffic to their web sites.

Consumer packaged goods struggle mightily with this gap. Brad Smallwood, from Facebook, , showed two charts that every digital creative agency and digital media agency gnashes their teeth over on a daily basis:

A chart that shows the dramatic growth in the amount of time that consumers are spending online rather than offline
A chart that shows how digital marketing remains a relatively small part of marketing’s budget

Why, oh why, are brands willing to spend millions of dollars on TV advertising (in a world where a substantial and increasing number of consumers are watching TV through a time-shifting medium such as DVR or TiVo) without batting an eye, but they struggle to justify spending a couple hundred thousand dollars on an online campaign. “Prove to us that we’re going to get a higher return if we spend dollars online than if we spend them on this TV ad,” they say. There’s a comfort level with the status quo – TV advertising “works” both because it’s been in use for half a century and because it’s been “proven” to work through MMM and anecdotes.

So, the frustration gap cuts two ways: traditional marketers are frustrated that online marketing has not delivered the nirvana of perfect ROI calculation, while digital marketers are frustrated that traditional marketers are willing to pour millions of dollars into a medium that everyone agrees is less measureable, while holding online marketing to an impossible standard before loosening the purse strings.

My prediction: the measurement of online will get better at the same time that traditional marketers lower their expectations, which will slowly close the frustration gap. The gap won’t be closed in 2010, and it won’t even close much in 2011 – it’s going to be a multi-year evolution, and, during those years, the capabilities of online and the ways consumers interact with brands and each other will continue to evolve. That evolution will introduce whole new channels that are “more measurable” than what we have today, but that still are not perfectly measurable. We’ll have a whole new frustration gap!

Judah Phillips wrote a post last week laying out why the answer to the question, “Is web analytics hard or easy?” is a resounding “it depends.” It depends, he wrote, on what tools are being used, on how the site being analyzed is built, on the company’s requirements/expectations for analytics, on the skillset of the team doing the analytics, and, finally, on the robustness of the data management processes in place.

One of the comments on the blog came from John Grono of GAP Research, who, while agreeing with the post, pointed out:

You refer to this as “web analytics”. I also know that this is what the common parlance is, but truth be known it is actually “website analytics”. “web” is a truncation of “world wide web” which is the aggregation of billions of websites. These tools do not analyse the “web”, but merely individual nominated “websites” that collectively make up the “web”. I know this is semantics … but we as an industry should get it right.

It’s a valid point. Traditionally, “web analytics” has referred to the analysis of activity that occurs on a company’s web site, rather than on the web as a whole. Increasingly, though, companies are realizing that this is an unduly narrow view:

Search engine marketers (SEO and SEM) have, for years, used various keyword research tools to try to determine what words their target customers are using explicitly off-site in a search engine (although the goal of this research has been to use that information to bring these potential customers onto the company’s site)
Integration with a company’s CRM and/or marketing automation system — to combine information about a customer’s on-site activity with information about their offline interactions with the company — has been kicked around as a must-do for several years; the major web analytics vendors have made substantial headway in this area over the past few years
Of late, analysts and vendors have started looking into the impact of social media and how actions that customers and prospects take online, but not on the company’s web site, play a role in the buying process and generate analyzable data in the process

The “traditional” web analytics vendors (Omniture, Webtrends, and the like) were, I think, a little late realizing that social media monitoring and measurement was going to turn into a big deal. To their credit, they were just getting to the point where their platforms were opening up enough that CRM and data warehouse integration was practical. I don’t have inside information, but my speculation is that they viewed social media monitoring more as an extension of traditional marketing and media research companies that as an adjacency to their core business that they should consider exploring themselves. In some sense, they were right, as Nielsen, J.D. Power and Associates (through acquisition), Dow Jones, and TNS Media Group all rolled out social media monitoring platforms or services fairly early on. But, the door was also opened for a number of upstarts: Biz360, Radian6, Alterian/Techrigy/SM2, Crimson Hexagon, and others whom I’m sure I’ve left off this quick list. The traditional web analytics vendors have since come to the party through partnerships — leveraging the same integration APIs and capabilities that they developed to integrate with their customers’ internal systems to integrate with these so-called listening platforms.

Somewhat fortuitously, a minor hashtag snafu hit Twitter in late July when #wa, which had settled in as the hashtag of choice for web analytics tweets was overrun by a spate of tweets about Washington state. Eric Peterson started a thread to kick around alternatives, and the community settled on #measure, which Eric documented on his blog. I like the change for two reasons (notwithstanding those five precious characters that were lost in the process):

As Eric pointed out, measurement is the foundation of analysis — I agree!
“Web analytics,” which really means “website analytics,” is too narrow for what analysts need to be doing

I had a brief chat with a co-worker on the subject last week, and he told me that he has increasingly been thinking of his work as “digital analytics” rather than “web analytics,” which I liked as well.

It occurred to me that we’re really now facing two fundamental dimensions when it comes to where our customers (and potential customers) are interacting with our brand:

Online or offline — our website, our competitors’ websites, Facebook, blogs, and Twitter are all examples of where relevant digital (online) activities occur, while phone calls, tradeshows, user conferences, and peer discussions are all examples of analog (offline) activities
On-site or off-site — this is a bit of a misnomer, but I haven’t figured out the right words yet. But, it really means that customers can interact with the company directly, or, they can have interactions with the company’s brand through non-company channels

Pictorially, it looks something like this:

I’ve filled in the boxes with broad descriptions of what sort of tools/systems actually collect the data from interactions that happen in each space. My claim is that any analyst who is expecting to deliver meaningful insight for his company needs to understand all four of these quadrants and know how to detect relevant signals that are occuring in them.

What do you think?

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