Thursday, March 24, 2011

OMMA Metrics Conference: Online Ads Must Prove Real Value To Succeed

I took a break from my usual obsessions yesterday to attend the New York edition of MediaPost’s OMMA Metrics and Measurement conference. It was a good chance to dive into this particular sector of the marketing analytics universe. (Another version of the program will be presented in San Francisco in July; the company also live streams a free Webcast. You can also download selected presentations from yesterday.)

If there was an overriding theme to the event, it was frustration that online advertising isn’t attracting as much money as it should. There was more than a little ”TV-envy”: the feeling that TV gets more advertising because buying is based on simple, widely-accepted audience measures. Some speakers argued for duplicating this situation, by removing some middlemen and creating standard online audience measures.

Others pointed to a deeper issue: that online marketers can’t measure the value of their efforts in terms of revenue or brand metrics like awareness and preference. In this view, TV buyers accept simple measures like Gross Rating Points because these measures have proven over time to correlate with real business results. Media mix modeling has more recently confirmed this. But except for direct response, online media can’t show the same relationship. This forces online marketers to report endless (but never complete) data about who saw what and how they acted, in the hopes that piling on enough details will somehow make advertisers happy. It never does.

This is the online version of the old joke about the drunk who loses his keys in the alley but looks for them under the streetlamp “because the light is better”. Moral of story: no volume of irrelevant data can substitute for the information you really need.

In the case of online advertising, the dark alley is the connections between ad placements and final business results. Several speakers touched on parts of this. IBM’s Yuchun Lee gave an opening keynote that highlighted the pervasive influence of online information over all customer activities, not just online purchases. Adometry’s Steve O’Brien explicitly stated that attribution must measure the incremental impact of each marketing effort on final results (although I think he limited this to online results). ForeSee Results’ Larry Freed stressed the need to trace all online and offline behaviors to understand their true role in final outcomes. Others cited studies where careful measurement found that indirect results showed online to be much more powerful than direct attribution alone.

Yesterday’s speakers also raised the problem of scalability: that is, being able to duplicate and expand on success. This is one area where TV envy makes sense, because it’s easy to add more Gross Rating Points and be reasonably sure of getting the expected results. Online ad buying is more like buying print ads or mailing lists: you may have some sense of the audience demographics, but the only way to really know how it will perform is to run a test. But this isn't a measurement problem: simple, standard measures that hide true audience differences are only going to be unreliable predictors of actual results. What’s really needed are better testing methods to predict as quickly and cheaply as possible how each new audience will perform. The trick is you’re not just looking at immediate response, but all of those indirect effects that are so tricky to capture in the first place. Now you have to predict them in advance as well as measure them after the fact.

Nobody said it would be easy.

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