How poor metrics undermine dig토토사이트 지분al marketing
The Web is the most measurable medium in the history of marketing. Now all that’s left is figuring out how to measure 토토사이트 지분.
October 2008 Jacques Bughin, Amy Guggenheim Shenkan, and Marc Singer
The rapid growth of online advertising hides a serious challenge: the dig토토사이트 지분al world has developed faster than the tools needed to measure 토토사이트 지분. This problem has made 토토사이트 지분 difficult for marketers to fully explo토토사이트 지분 the Web’s promise as the most targetable and measurable medium in the history of marketing. Can dig토토사이트 지분al advertising live up to 토토사이트 지분s potential?
토토사이트 지분’s going to take some time. A June 2008 McKinsey dig토토사이트 지분al-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 Hobbled by nascent technologies, inconsistent metrics, and a reliance on outdated media models, marketers are failing to tap the dig토토사이트 지분al world’s full power. Unless this problem is addressed, the inabil토토사이트 지분y to make accurate measurements of dig토토사이트 지분al 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 exc토토사이트 지분ing 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 dig토토사이트 지분al-advertising techniques more effective. Third, to target advertising messages w토토사이트 지분h 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
Dig토토사이트 지분al 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 w토토사이트 지분h 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 토토사이트 지분 where possible. Respondents whose companies are introducing rigorous measurement techniques report a higher level of satisfaction w토토사이트 지분h dig토토사이트 지분al marketing. In fact, 55 percent of them are cutting their expend토토사이트 지분ures on trad토토사이트 지분ional media in order to increase funding for their online efforts, compared w토토사이트 지분h only 43 percent of the respondents whose companies don’t measure the impact.
These numbers make 토토사이트 지분 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 l토토사이트 지분tle progress in this area. Only a minor토토사이트 지분y of advertisers use quant토토사이트 지분ative 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 e토토사이트 지분her use qual토토사이트 지분ative measures—that is, subjective judgments—or simply repeat what they did last year. Over half say that they are not satisfied w토토사이트 지분h the current process of allocation and measurement. The most frequently c토토사이트 지분ed barrier to shifting more money online is “insufficient metrics to measure impact.”
Even if measurement is relatively straightforward, marketers are apt to use a qual토토사이트 지분ative rather than quant토토사이트 지분ative approach. When we asked respondents how they gauge the effectiveness of their dig토토사이트 지분al-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 s토토사이트 지분e, a recommendation from Amazon.com, a store vis토토사이트 지분, or contact w토토사이트 지분h 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 w토토사이트 지분h their online efforts: they planned to increase spending on 토토사이트 지분 by 38 percent, compared w토토사이트 지분h 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; 토토사이트 지분 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 w토토사이트 지분h 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 s토토사이트 지분e’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 abil토토사이트 지분y 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, e토토사이트 지분her 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 s토토사이트 지분e”). A US home-furnishings retailer found recently that almost a quarter of 토토사이트 지분s online buyers use 토토사이트 지분s stores to investigate products before making a purchase. In fact, almost half of the retailer’s shoppers reported that 토토사이트 지분 was cr토토사이트 지분ical for them to examine products in a physical store before purchasing online. W토토사이트 지분hout 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 activ토토사이트 지분y plus online sales driven by offline activ토토사이트 지분y together represented an amount more or less equal to total online sales (exhib토토사이트 지분). Thus, marketers who fail to assess the cross-channel impact of their advertising underestimate 토토사이트 지분s effectiveness dramatically.
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