Archive for the ‘metrics’ Category

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The agency billing model is broke

July 7, 2010

Agencies typically bill their clients by the hours they spend, not by the results they deliver. What’s wrong with this model?

We’re ultimately in the business of selling stuff. Billing hours for making things doesn’t necessarily mean we’re selling more stuff. So why are clients content to pay their agencies by the number of hours they work? And why are agencies content to bill by the hour if they’re confident they can sell more stuff more efficiently then their competitors?

Our industry is notoriously bad at connecting the dots between a marketing communications activity and a sale. John Wannamaker was famously quoted as saying “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.” After 100 years we’re only slightly more equipped to answer that question.

Agencies and brand marketers work on the premise that marketing communications can create awareness, brand favorability, and purchase intent. Each of these can be measured to some degree through consumer surveys, but drawing a direct line to a sale is difficult.

Most marketers also have many marketing activities running simultaneously, so quantifying exactly what parts of their marcom is working can be a challenge. Marketers are also faced with deciphering what factors are driving the effectiveness of any given activity: The creative? The media? The tactics?

Over the past few decades we’ve made some progress in cracking the code of marcom ROI, but many of these techniques are extremely expensive or based on anecdotal evidence. Marketing ROI has yet to become a quantifiable science.

Should agencies throw up their hands and continue to bill by the hour? Not necessarily.

In the digital marketing world we can readily measure engagement. Here are few examples of rudimentary engagement metrics:

Comments, posts, reviews, retweets, likes/follows, email opt-ins, downloads, uploads, subscribing (email, RSS, podcasts, video series, etc.), links to, embeds/installs, user-initiated plays/replays, favorites/ratings, social bookmarks, page views, clicks, game plays, time spent, poll participation, entries (contests, sweepstakes, etc.), coupon prints, and product demos.

Marketing researchers are getting a better handle how different types of engagement impact purchase behavior. And although we’re still years away from quantifying the exact value of a particular engagement activity, we have enough evidence to begin associating a value to an engagement.

I propose agencies involved in digital marketing efforts begin developing engagement models and attempt to associate a dollar value to each activity. If nothing else, brand marketers will have a better benchmark for measuring success, and who knows, agencies might end up with a better model for billing clients.

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Defining & Measuring Engagement – A Holy Grail? (part IV)

September 4, 2008

The 5 C’s of Engagement
Fundamentally, engagement is a state of deeply occupied attention. This may or may not include active elements of involvement and participation. For example, I might find a video highly engaging, although watching is pretty much a passive experience. Playing games, creating digital art, and messaging friends are good examples of active engagement.

I categorize digital engagements/experiences by 5 Cs

• Captivation
• Conversation
• Collaboration
• Creation
• Commerce

Captivation is often a passive form of engagement: watching videos, listening to music, or viewing images. It’s important to understand there is a strong qualitative factor that separates apathetic media consumption from captivation. This is one reason I feel ‘time spent’ is an inadequate measure of true engagement. Ten minutes of exposure to second-rate content doesn’t carry twice the weight of a compelling experience lasting five minutes. I also consider single-player games, demonstrations, and e-learning applications interactive platforms for captivation.


Conversation is a highly interactive form of engagement and a fundamental characteristic of social media. Posting, commenting, and messaging are means for users to engage others in opinions and ideas. From a brand marketer’s perspective, conversations are a powerful force that can drive product awareness, consideration and affinity. Like captivation, conversations that are entertaining, emotional, or otherwise provide value are more engaging than conversations that don’t.

Collaboration through wikis, multi-player games, and work applications are other examples of engagement. Brands have only scratched the surface in building collaborative experiences that let consumers not only interact with each other, but with a brand in creating something interesting.

Creation is a form of engagement that encompasses two separate activities: making and sharing. Digital toys, drawing and music applications are just a few examples of platforms that allow users to make their own creations. Product customization and visualization features also fall into this category. Media sharing platforms that allow users to post and share images, video, and digital documents overlap the creation and conversation experience.

Commerce might be the most powerful form of engagement. The seemingly prosaic process of shopping and purchasing is often one of the most memorable interactions we ever have with a brand. Likewise, the experiential factors of seeking product information, quotes, and customer service have a critical impact on conversion and affinity.

Next time: Are all engagements created equal?

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Defining & Measuring Engagement – A Holy Grail? (part II)

August 28, 2008

Publishers and advertisers view engagement differently
Advertising supported publishers and corporate/brand site managers have always used web analytics to measure basic forms of user engagement, e.g. number of visitors, page views, time spent, etc. These measures also provide publishers with immediate feedback on traffic levels, and ultimately, the trend of available impressions that could be sold.

 

As Internet users began spending more time with high bandwidth content and Web 2.0 applications, publishers soon realized revenue models based on pages served wasn’t such a great idea. Some even theorized users of this content might be more valuable to advertisers.

 

Advertisers already knew rich media outperformed standard banner ads in both branding effectiveness and CTRs, so it was easy to conclude that high bandwidth content and social media experiences would provide similar value.

 

Many managers of brand sites and interactive marketing researchers successfully identified correlations between site metrics such as repeat visits, time spent, and page views and brand metrics. Unfortunately the traffic on most brand sites is relatively small, thus difficult to move the needle in a big way. Brand marketers are increasingly dependant on high traffic publishers and ad networks to connect with new consumers.

 

The wall between advertisement and publisher content is high on most ad supported sites, as it should be. However, banner blindness is now an unspoken truth and the primary goal for most online advertisers today is to simply get a user’s attention.

 

In many ways, advertisers and publishers compete for attention – this is nothing new, but if a publisher is successful in growing highly engaged users, doesn’t that engagement come at the expense of the advertiser?

 

Advertisers are primarily interested in getting consumers to engage with their brand, not in increasing ad exposures to users who are engaged in doing something else. Too often brand engagement is peripheral to the engagement experience.

 

Next time: What is “engagement” anyway?

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Defining & Measuring Engagement – A Holy Grail? (part I)

August 27, 2008

I’ve written a long diatribe on our industry’s attempts to define and measure engagement. I’ll post my thoughts here in bite-sized chunks over the coming weeks.

Engagement is still a hot topic in the interactive marketing community, even after years trying to define, measure, and monetize it. I want to take a closer look at the challenges we’ve faced and even offer some suggestions.

Advertising media is most often valuated and purchased using ‘exposure metrics’ like GRPs, impressions, and time spent. Although brand marketers have been long frustrated to translate audience exposure into a real ROI, these metrics have become both familiar and grudgingly accepted yardsticks of media value.

By the early 90’s most of us believed the experiential nature of interactive media could offer far more value to advertisers than simply exposing consumers to a commercial message. In the years since, broadband penetration and the explosion of user generated content increased our interest in packaging engagement as a metric.

The barriers we face
After much discussion and debate, we still find ourselves unable to address these key challenges:

  • Engagement means something different to ad supported publishers, brand site managers, and advertisers
  • Too many activities can be considered “engagement”
  • The value of engagement is highly dependant on qualitative factors

Next time: Publishers and advertisers view engagement differently