Defining success by the right metrics: The case of Bixi

By most accounts, Bixi — Montreal’s much-loved bike-sharing service — is a runaway success.

It has thousands of impassioned riders who use it to get around for 7 months a year. It has boosted cycling culture and encouraged more bike lanes and safety measures to be put in place. It has gotten otherwise inactive people exercising more. It frees up road and transit capacity, it’s good for our health, it’s good for the environment, and — for a time — it was good for our city’s image. The bike’s designs won awards and were sold and adopted in a dozen other cities around the world. For a time, Bixi was Montreal’s darling.

Ah, but here’s the rub: It’s not making money.

In fact, it was bleeding so much cash and had racked up so much debt that it had to file for bankruptcy and get taken over by the city.

And that is a very, very big problem for Bixi. So big, in fact, that you merely have to mention the word “Bixi” to just about anyone, and the first thing they’ll say in response is “they’re in financial trouble, aren’t they?”

The thing is, those folks aren’t wrong. Bixi isn’t profitable. But does that mean it’s not successful?

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The trouble with estimates

By its very nature, estimation is a game of unknowns. When we make projections for budgets, revenue or returns, we base them on a series of wobbly assumptions. Each assumption in itself might be somewhat reasonable, but the more of them we put together, the shakier the foundation is on which we build our estimate… and the more likely the estimate is to collapse in a heap.

The fact that we base so much of our decision-making on these estimates ought to be worrisome, when we consider how they’re actually built in the first place.

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A portfolio approach to digital planning

How much money should you be allocating to each channel in your marketing mix?

One simple answer is that you should calculate the ROI of each channel and then shift your budget from the less profitable channels into the more profitable ones. But, even leaving aside various challenges with measuring ROI across a multitude of digital and offline channels, this approach is problematic even assuming you could get accurate numbers. It fails to take all sorts of factors into account, such as the value of emerging channels versus established ones, the difference between awareness marketing and lead generation, and the impact of one channel on another to create a sum greater than its parts.

But the opposite approach — not measuring at all, but simply planning budgets by instinct or by what “feels” right, is even worse. If you have no idea how your various tactics are performing, then you’re flying blind. And as demonstrating ROI becomes increasingly important for marketers, there’s no way that such a laissez-faire way of planning is going to work for very long.

It occurs to me that we need a different approach — one that takes a holistic view of multiple channels and tactics, and drives towards a common goal, but which allows for different performance objectives for each tactic.

Such an approach exists. Our friends in the financial planning industry have been using it for years. They call it portfolio planning.

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Sex, Drugs and Monkeys: Lessons from the Cannes Lions

Last Monday, I went with a group of colleagues to Cinéma du Parc to watch the screening of the 57th annual Cannes Lions Film Festival.

I’ve been spending my hard-earned cash on the privilege of watching advertisements for a number of years now. Invariably, there are some brilliant ads, some so-so ads, and some ads that – as they say in the military – induce genuine whiskey-tango-foxtrot moments. Purely from an entertainment standpoint, the show was well worth the price of the $7 ticket.

But to us marketers, the Lions offer more than just a fun night out. Here are some lessons from Cannes that we can apply to our work every day:

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Why does digital measurement lag behind traditional?

In digital marketing, we like to claim that we have a huge measurement advantage over traditional marketing. After all, we can measure everything, right? Every click, every interaction, every tracking parameter, every bounce, every goal conversion. The technology that we have takes the guesswork out of measurement and allows us an unprecedented amount of insight into exactly how each and every person is interacting with our brand.

The traditional marketers are at a disadvantage, or so the theory goes. The television and broadcast guys parrot the value of eyeballs and impressions, but can only guess wildly at what impact all those impressions actually have on sales. Even the direct marketing guys – the traditional measurement gurus – have to add codes to their pieces, and even then, they only have data for the small percentage that come back. They make sweeping generalizations about things like demographics, geographics, pass-along rates, and more, in lieu of more solid data. They run expensive market research surveys to try to correlate the data. Measurement in traditional marketing has always been a bit like decorating a grain of rice with a paint roller – effective, but not very precise.

Digital marketing ought to be better at measurement. Miles better. Instead, however, we're still lagging behind. According to eMarketer, as recently as last year, 50% of marketers cited "achieving measurable ROI on my marketing efforts" as their leading priority, but only 16% were measuring ROI for their social media efforts. When asked to describe in one word how they felt about online measurement, the words that marketing professionals came up with most frequently were "confused", "nascent", and "stalled".

Clearly, the potential for measurement in digital is enormous, but we have a way to go before we get there. There's a gap, in other words, that exists between the vision and the reality.

Here are a few reasons why this might be so:

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