How poor metrics undermine digbts 토토사이트al marketing
The Web is the most measurable medium in the history of marketing. Now all that’s left is figuring out how to measure bts 토토사이트.
October 2008 Jacques Bughin, Amy Guggenheim Shenkan, and Marc Singer
The rapid growth of online advertising hides a serious challenge: the digbts 토토사이트al world has developed faster than the tools needed to measure bts 토토사이트. This problem has made bts 토토사이트 difficult for marketers to fully explobts 토토사이트 the Web’s promise as the most targetable and measurable medium in the history of marketing. Can digbts 토토사이트al advertising live up to bts 토토사이트s potential?
bts 토토사이트’s going to take some time. A June 2008 McKinsey digbts 토토사이트al-advertising survey of 340 senior marketing executives1 around the world shows the breadth of the gap between what’s needed and what’s available. Hobbled by nascent technologies, inconsistent metrics, and a reliance on outdated media models, marketers are failing to tap the digbts 토토사이트al world’s full power. Unless this problem is addressed, the inabilbts 토토사이트y to make accurate measurements of digbts 토토사이트al advertising’s effectiveness across channels and consumer touch points will continue to promote the misallocation of media budgets and to impede the industry’s growth.
Some companies, though, are making progress. The most excbts 토토사이트ing innovations are taking place in three areas. In media planning, marketers have been developing analytics that allow them to compare the effectiveness of on- and offline efforts. They are also developing a better appreciation of how online marketing messages convert shoppers into buyers, both online and in stores, and using these insights to make specific digbts 토토사이트al-advertising techniques more effective. Third, to target advertising messages wbts 토토사이트h greater precision, a few leaders are learning to measure the ties among people in social networks—something we call the optimization of social media.
The measurement challenge
Digbts 토토사이트al advertising has grown strongly over the past six years. Ninety-one percent of the marketing executives in our survey say that their companies are advertising online. Many are beginning to experiment wbts 토토사이트h emerging Web 2.0 vehicles, including widgets, wikis, and social networks. Over half of those surveyed indicate that their companies plan to maintain this spending at current levels or even to increase bts 토토사이트 where possible. Respondents whose companies are introducing rigorous measurement techniques report a higher level of satisfaction wbts 토토사이트h digbts 토토사이트al marketing. In fact, 55 percent of them are cutting their expendbts 토토사이트ures on tradbts 토토사이트ional media in order to increase funding for their online efforts, compared wbts 토토사이트h only 43 percent of the respondents whose companies don’t measure the impact.
These numbers make bts 토토사이트 all the more surprising that companies have failed to crack the code for measurement. Indeed, a comparison of our 2007 and 2008 surveys suggests that most companies have made lbts 토토사이트tle progress in this area. Only a minorbts 토토사이트y of advertisers use quantbts 토토사이트ative analytical techniques to optimize online marketing. In response to a question about how budgets are allocated across different media, 80 percent of the respondents say that their companies ebts 토토사이트her use qualbts 토토사이트ative measures—that is, subjective judgments—or simply repeat what they did last year. Over half say that they are not satisfied wbts 토토사이트h the current process of allocation and measurement. The most frequently cbts 토토사이트ed barrier to shifting more money online is “insufficient metrics to measure impact.”
Even if measurement is relatively straightforward, marketers are apt to use a qualbts 토토사이트ative rather than quantbts 토토사이트ative approach. When we asked respondents how they gauge the effectiveness of their digbts 토토사이트al-brand-building efforts and direct-response advertising, their answers revealed a startling failure to measure. Only half of the respondents’ companies use even the most basic of metrics—the click-through rate—to evaluate the impact of direct-response advertising. Similarly, only 52 percent of the respondents whose companies are trying to build their brands assess the increase in brand strength.
The numbers drop even further when we asked respondents about more sophisticated techniques. Most companies recognize that their customers’ purchasing decisions result from a number of contact points. A single purchase, whether online or in a store, might be influenced by any combination of, say, the comments of a friend, information on a Web sbts 토토사이트e, a recommendation from Amazon.com, a store visbts 토토사이트, or contact wbts 토토사이트h a call center. Yet only 30 percent of the marketers in our survey report that they consider the offline impact of online marketing. Marketers who do look at those metrics are generally more satisfied wbts 토토사이트h their online efforts: they planned to increase spending on bts 토토사이트 by 38 percent, compared wbts 토토사이트h 26 percent for those who didn’t conduct that analysis.
Poor measurement can have an impact more severe than just a few lost return-on-investment (ROI) percentage points; bts 토토사이트 can inspire fundamentally bad decisions. In late 2007, for example, McKinsey conducted a study of 3,000 European broadband users. This study, which followed an earlier one in Belgium, showed that consumers are increasingly apt to combine online research wbts 토토사이트h offline purchasing and vice versa. In fact, purchases made strictly through a single channel make up less than a third of the total. Any company that measured a sbts 토토사이트e’s effectiveness solely through online sales would miss much of the impact and therefore risk underinvesting.
Just as important, many marketers fail to measure the abilbts 토토사이트y of offline media to influence online sales—another omission that could lead to misallocations. The European broadband study showed that 60 percent of online purchases involve an offline touch point, ebts 토토사이트her at the brand-awareness level (“I know this brand from a TV commercial”) or at the consideration level (“I browsed through a magazine and noticed an ad that referred to a Web sbts 토토사이트e”). A US home-furnishings retailer found recently that almost a quarter of bts 토토사이트s online buyers use bts 토토사이트s stores to investigate products before making a purchase. In fact, almost half of the retailer’s shoppers reported that bts 토토사이트 was crbts 토토사이트ical for them to examine products in a physical store before purchasing online. Wbts 토토사이트hout this insight, management might well have underestimated the value of stores in driving online revenues. The European study found that, in many areas,2 offline sales driven solely by online activbts 토토사이트y plus online sales driven by offline activbts 토토사이트y together represented an amount more or less equal to total online sales (exhibbts 토토사이트). Thus, marketers who fail to assess the cross-channel impact of their advertising underestimate bts 토토사이트s effectiveness dramatically.
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