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:
The creativity gap
The digital space is full of people who are willing to think extremely creatively. They throw out the old paradigms and replace them with new, and not-yet-imagined visions of the future.
But the creativity around measurement has been disturbingly lacking. We still harp on the old standbys – click-throughs, impressions, page views – even though these models bear very little relationship to the true value of these digital tactics. We're stuck in an endless loop of trying to take what worked for traditional measurement and apply it to digital, instead of being willing to think about digital measurement in a new and creative way.
Stuck in this thinking box, it's no wonder that we can't seem to get a good grasp on measurement in digital. The simple truth is, we're measuring the wrong things.
The maturity gap
Most of the digital channels we're using to market today didn't exist last decade, or even last year (sometimes even last quarter) – versus television, radio and print, which have been around – and measurable - for decades. They've had time to develop elaborate measurement models, and perfect them through trial and error and tons of validation against years of data. In other words, we're better at measuring traditional advertising because those channels have been around longer.
This isn't a problem that will resolve itself with time, either. The rate of change in digital is much faster than in traditional. The television industry has changed in the past fifty years, sure, but not nearly at the same pace as the digital space. The channel and product life cycles are exponentially faster. With emerging media and channels, we're stuck in an endless catch-up loop. By the time we receive enough reliable data to validate models for one channel, the market has moved onto something new.
The specificity gap
What we call digital isn't a single channel at all, but a large melee of different spaces and tactics – each with its own measurement requirements. An ROI model calculated for banner ads will have limited applicability to mobile applications, for instance. And calculating the value of a Facebook fan is not the same as calculating the value of a Twitter follower. Digital marketers are confronted with a dizzying array of toolsets that all measure different things in different ways, and that change constantly, making investment and training in new tools prohibitively scary.
In contrast, the measurement models that the traditional guys have perfected over time have the advantage of specificity, which means that they really only have to measure one thing really well. Those channels are few in number, fairly consistent over time, and don't suffer from the problem that exists in digital of trying to apply blanket terminology to a highly fragmented space. And they have a limited number of toolsets, the investment in which can be amortized over time.
The budget gap
Traditional advertising has generally been the province of the big budget – for production, for media, and for measurement. If you're spending millions on a television spot, it makes sense to invest the extra money into doing the research – test audiences, ratings, focus groups, and more. Direct marketing, for its part, has perfected the A/B test, and it's generally understood that big investments on testing will pay off during a rollout phase. If you're spending the big bucks anyway, you can afford to measure properly.
Digital marketing, in contrast, started off as a guerrilla tactic. Companies found that it was cheaper to simply roll out something new – even if it failed – than to spend a lot of money testing it out beforehand. Even today, far too many companies expect digital to be the low-budget way to make money. "Social media is free, right?" is a mentality that is shifting, but slowly. Up until recently, digital only made up a small percentage of the average company's marketing budget, so there was less money to play with. Given the low budgets, and the low barriers to entry for many digital tactics, it was hard to convince companies to spend money on research, testing and measurement.
The good news is, this gap is closing. According to a report by eConsultancy earlier this year, companies are shifting spending from traditional to digital channels in a big way, taking it firmly out of guerrilla territory and into the major leagues. But of course, the flip side to this is that as the budgets get bigger, the pressure to demonstrate ROI will only intensify.
The ideology gap
This one may be the toughest one to overcome. There's a mentality out there – held by a lot of very smart people – that digital marketing should not be about the ROI. That Social Media is arguably not measurable. That it's handicapping the potential of digital to think of it that way. That we aren't simply launching old-style advertising campaigns using shiny new technology, but that we're shifting our thinking so dramatically that the rules of measurement no longer apply.
Pardon my French, but bullshit.
Now, it's true that we can't think of ROI in the same way for digital as we do for traditional. There's no way that we'll ever be able to claim a direct one-to-one relationship between digital marketing investment and widget sales – the implications are too far-reaching for that. (But then, that's also true of traditional advertising.) And sometimes jumping into something brand-new – even before it has had a chance to demonstrate its potential – can yield early adopter value that may pay off, or not. Sometimes, especially in new and rapidly-changing spaces, you have to be willing to take a leap of faith, and to understand that just because you can't see it yet, doesn't mean the value isn't there.
But to claim that any business will continue to spend large amounts of money without being able to demonstrate value and return? That's just nonsense. Every marketing manager on the planet knows that the bottom line is what matters at the end of the day, and ROI isn't going away anytime soon just because we've shifted from picas to pixels. Instead of ignoring value, we simply need to get better at defining it.
Closing the gap
So, with all these challenges to digital marketing measurement, how do we start to close the gap? Like with most things, the first step is admitting you have a problem. With more than half of companies claiming to be using social media without a strategy, and only 61% of those that do have a strategy claiming to be measuring social media ROI, there's obviously a lot of room for growth.
As more companies begin to understand the value in having a digital marketing strategy that establishes a measurement framework, I think we'll start to see the emergence of more measurement models, more validation, and more advancement in thinking about digital as a channel that needs to prove its worth – and pull its weight.
Intuitively, even companies who aren't measuring as well as they could understand the value of digital marketing. Imagine the potential we can realize once the value is more clearly demonstrable.