The analogy of dieting and advertising works on many levels. Both are
multivariate and complex in nature. Dieting also has explicit and measurable
outcomes – weight loss or gain, whereas marketing has sales. Advances in dieting
have deconstructed the powerful role of good and bad carbohydrates, fats and
proteins and importance of different metabolisms. However, amidst all of this
sophistication and breakthrough science, there remains a fundamental metric that
plays a crucial role – the calorie.
Without the calorie, diets are about as useful as the American Food Pyramid.
Without the humble calorie, dieters won’t know how many Doritos they can eat or
the difference between a soda and a milkshake. For Marketing, that fundamental
metric is Reach. There is good reach, and ineffective reach, engaging reach and
passive reach. But without the basic understanding of how a campaign reached the
target audience, brand advertisers simply won’t know what they are buying
online. Before I delve into the arguments, for and against traditional media
metrics for the Web, let’s start by taking a look at who has the dollars and
where those dollars are being spent.
Direct Response advertisers have flocked to the web with promises of measurable
ROI, driven by granular metrics and actionable insights into exactly what’s
working and what isn’t. Search makes up the bulk of the spending, followed by
campaigns across the many ad networks that offer various sorts of
pay-for-performance advertising (e.g. cost-per-click or cost-per-sale). Brand
advertising budgets represent about two-thirds of a $186 Billion advertising
market. Yet, only 5% of their overall marketing budgets are spent on the Web.
With the proliferation of broadband penetration, and growing ubiquity of the Web
at work and at home, the Internet garners one third of today’s consumer share of
media consumption. With all of the data available on the web and ample
opportunity to engage consumers on the web, why aren’t the biggest advertisers
in the world like Coca Cola, Proctor & Gamble, General Motors and Target
spending more than a tiny fraction of their massive budgets online?
The Argument Against
I’ve been on many panels over the years debating whether the industry should
embrace traditional media metrics like Reach, Frequency and GRP. Arguments that
we should eschew traditional media metrics for the web usually come in three
flavors:
· Arrogance: This camp vehemently believes “we’re better than traditional”. This
argument is based on the belief that metrics like target reach and frequency are
obsolete metrics that are too abstract from the engagement and ROI that
advertisers are really after. These are often folks who make a living from
selling Online as a direct response channel. They think “branding” is mostly
mythology and if you can’t tie an ad to a sale, it’s a waste of time.
· Ignorance: “I don’t know what a GRP is [and thus I don’t like it]”. You would
be shocked at how few online marketers, do not know how GRPs are calculated nor
how they are used. Most of folks in digital don’t have traditional media
experience where GRPs are the currency. Many digital agency experts similarly
lack traditional media expertise. This is also why you find publishers brag
about how concentrated their sites are for a given demographic, with no mention
of how the target demo across the entire U.S. will be reached by your campaign.
· Fear: “I’m scared Online GRPs are more expensive than Television GRPs”. This
is the most rational argument of the three, but also very shortsighted. If
Online GRPs look unfavorable compared to Offline GRPs (which in some cases it
will), then our media is probably over-priced and that’s something we need to
address not ignore.
Getting in the Door
Digital folks snicker when they hear advertisers make statements like “TV
works”. Turns out, TV does work and there is plenty of quantitative proof that
TV advertising drives sales. As much as digital marketers love to carry the ROI
torch, what they don’t realize is that traditional marketers live and die by the
same sword. They just do it in a different and arguably better way. The science
of Media Mix Modeling (a.k.a. Econometric Modeling) has been around for decades
and is the gold standard for analysis of how marketing investments impact SALES.
The inputs into these models are reach, frequency and GRPs across different
marketing channels. Those variables are used to predict sales (typically through
regression modeling). These are sophisticated models that take into account
seasonality, macro-economic variables, pricing, competitive spend levels,
geography, and typically leverage several years of advertising and sales data.
Every major advertising agency has a division (usually very profitable one at
that!) dedicated to this research. And the results are channel mix
recommendations for the largest advertising budgets in the world (e.g. P&G,
Unilever, Coca Cola, Microsoft, etc.). Guess who’s left out in the cold from all
this great ROI analysis, holding a bag of click-through rates that barely
register above zero?
The debate comes down to whether you want to beat them or join them. Naysayers
lament that media mix modeling doesn’t provide real-time reporting, and is based
on small samples of panel data. Both are fair and blatant issues, but they miss
the point. Let’s not forget that great brands aren’t built in a day, and the
vast majority of sales still occur in an actual store.
Patty Wakeling, an industry veteran who leads Unilever’s Global Media Insights
Group, recently reminded me that in today’s retail environment, the choice
between the branded versus the generic option are separated by less than an inch
on the shelf. It was a sobering reminder of the power of branding, and why so
many companies are willing to spend so much to build their brand equity.
The good news is that we can join the party, and even better, we can be the life
of the party. We know the web can deliver scalable and impactful reach – we just
haven’t proven it yet in a standardized and easily repeatable way. That’s
coming, and the first of a lot more research from the Institute – The Planner’s
Digital Dilemma - speaks to how.
But before we get there, we need to take a hard look at ourselves and let go of
our cultural hang-ups and short-sighted fears. Every channel has its strengths
and weaknesses, but at the end of the day, marketers want digital marketing to
work in concert with their offline advertising. And success has to be total
sales, not just online sales. Any hope to unlock the two-thirds of dollars spent
on traditional media needs to start with the fundamental metrics of all brand
advertising: Reach, Frequency and Gross Rating Points.
If it makes you feel any better, just remember, it’s the start – not the
end-game. Everything else we do still matters and creates opportunities that
will revolutionize advertising. But let’s start with the basics so we can at
least get through the door. I have a feeling we’ll find an empty seat at the
table
.