Measurement | The Definitive Guide to Media Metrics that Matter
Translate your business goals into media metrics that allow you to measure and enhance campaigns
To be blunt, if you know that 50% of your marketing is working, but you don’t know which 50%, it’s not because marketing is difficult, it’s because you haven’t set up your metrics properly!
I remember being sat in front of one of my favourite FMCG Marketing Directors a few years back, and she was quite sharp:
“I didn’t wake up this morning saying to myself ‘I must have more Gross Ratings Points’; I woke up thinking I’ve got to sell more shampoo.
“You’re selling me reach and frequency, but I need to know how that’s going to make my sales number move, and it’s your job to join the dots.
“I want to know about the quality of your communication, the value of the customers, the impact that you’ll have and the decisions that you’ll change”
It was a fair point and I was suitably humbled, but I was so used to trading in GRPs that I had simply forgotten that marketing had a sales job to do, and it was down to me to show the connection.
I was stumped, I hadn’t done my homework, and if I’m honest I just went back to the ad agency and let them do the work.
Mapping the Outcomes
Now I call that situation ‘If then what?’
Whatever side of the table you’re sat on – either in a marketing department or as a solutions architect – there’s a lot more competition for investment, so we need quantitative ways to differentiate them.
‘If’ we do one thing, ‘then what’ will happen?
Marketing needs a seat at the boardroom table and will only get it if it can draw a connection between marketing investment and business outcomes.
We need to map our metrics from communications to retail, define expectations at each stage, and prove that we can deliver results.
A Considered Approach
If you’ve ever spoken to someone who runs a business, they’ll tell you the only metric that doesn’t lie is your bank balance.
This is true for marketing too. You’ll know when you’ve spent your budget, and you’ll know when you’ve made the sales, but everything in between can get a bit vague.
Bad marketers use this as an excuse to duck the issue, but great marketers understand the idea of ‘proxy’ data.
Proxy data can’t give you an absolute figure of what is happening at each stage, there are many things you’ll never know, but it can give you an idea of relative performance.
We’ll address it later, but while the metrics you set won’t be perfect, if you’ve done it right, then all your data will be ‘wrong in the same way’ – the relative proportions will be a good steer on ‘real-life’ activity – and that means you can use it as a guide to overall performance.
If you have a little knowledge of marketing, then you’ll be familiar with the Marketing Funnel.
The basic presumption is that if a certain number of potential customers are aware of your product, then a proportion of those will take an interest. A proportion of those will explore their options, and some of those will finally buy from you.
Map those figures vertically and you’ve got a funnel of ever decreasing numbers.
Critics quite rightly point out that consumers are not linear, they will stop and start, get diverted and lose interest, but that doesn’t undermine the overall picture.
Marketing is ‘live’. Unless you are working in a new start-up there will be potential customers out there currently existing at every stage of that journey.
The trick is that this applies to all activities you do – so for that reason, performance marketing metrics are usually run to compare activities that are running simultaneously. The existing conditions will be the same for all activities, so all the measurements will be ‘wrong in the same way’.
Bearing that in mind, the marketing funnel will give you the most systematic way of measuring business outcomes.
It means that we need to track customer progress down the funnel by tracking their interactions with your brand, and typically that means tracking their engagement with your digital presence.
We need to focus in three areas:
- Input metrics
- Funnel Metrics
- Output Metrics
A Sense Check on Creative Issues
‘The Medium is the Message’ is a well-known catchphrase in marketing. It recognises that the media choice has a strong influence on how you communicate. There’s clearly a world of difference between a 30 second TV commercial and a short comment on a social media platform.
This means that performance metrics are always testing a combination of these factors. They can only compare either medium or message separately if you ‘fix’ one of them.
For example, you may choose to differentiate between two TV executions, or two tweets, but if you compare a 30 second commercial with a tweet, you are in fact comparing the medium AND the message, not just the message in isolation.
Bear that in mind as you draw up your test.
Input metrics (what you invested in to make this activity happen) are the easiest metrics to cover:
- How many people saw the activity
- How often they saw it
- How much it cost
Those three factors give you a ready estimate on the cost of each encounter (or impact).
The challenge with input metrics like these (what price did I buy at) is that they get confused with output metrics (what success did I have).
But that’s not right at all.
We know input metrics are easy to measure and easy to compare, and they attract the attention of number crunchers. This means they get confused with output metrics (such as customer value), and after a good negotiation it can make a media trader look like a good businessperson.
Many media organisations will invest time and energy in extending the audience reach and reducing the cost. They’ll present it as a ‘win’.
It means many marketers will consider the job finished once they got a good price for the audience they wanted.
But in isolation, and as a metric for marketing success, this figure is useless. Investing money in reaching huge audiences with an unknown customer opportunity is a wasted investment.
It’s not how much it costs to communicate with an audience that matters, it’s how much they are worth in sales.
Whilst input metrics can tell you the reach of your message, the next stage is to identify how it affects behaviour. Four classic metrics mark the top stage of the funnel:
Those four factors offer a loose measure of how people have reacted to the message.
But an emotional reaction to content is often a poor guide to sales. How people think is not always a good judge of how they act. To judge behaviour, we need to create an incentive within the message to act, and then test it.
Make the incentive a transaction: inspire customers to do ‘this’ to get ‘that’.
Whilst not all potential customers will act on an incentive, those that do will provide a good relative measure of the impact of marketing activity on those who do not respond, so the key is to make that act a measurable one.
In a digital environment, whether it’s mobile or other online activity, offer potential customers a clear benefit to interact.
That gives us the next useful set of metrics, all on a digital platform:
- Visits (anonymous)
- Registration (identified)
- Enrolment (engaged)
Those three metrics offer a graduated measurement of increased customer commitment.
Effective marketers frequently set up Customer Relationship Management platforms with exactly that progression in mind, and it pays huge dividends.
This observation from Angeli Beltran, Director of CARE at Mead Johnson Nutrition China demonstrates the scale of the opportunity:
"At MJN we see a 3x uplift in Customer Lifetime Value (CLV) from customers enrolled with our CRM platform compared with those that are not. We quite literally get three times the return. That's why we invest so heavily in mid-funnel activity like relevant content, customer events and social media. It pays."
The final set of funnel metrics are all a measure of that commitment:
- Time with brand (interest)
- Content consumption (preference)
- Sharing (advocacy)
- Contribution (investment)
Those four metrics offer a graduated measurement of customer involvement.
The importance of these factors lies in a new opportunity to set thresholds and define customer segments, for example consumers, sharers or advocates.
They should also give you significant pause for thought in how your entire marketing investment is being allocated: too much at the top of the funnel will lead to poor engagement rates, boosting your middle funnel activity will increase your chances of getting a return on your investment.
As with the cost of communication (how much it costs to reach an audience with a specific message in a specific medium) you can now calculate the cost of engagement (how much it costs to secure a consumer to a specific segment).
Where Input and Funnel metrics give you the opportunity to measure the cost of customer acquisition by audience segment, Output metrics are about calculating value:
- Purchase size
- Purchase value
- Purchase frequency
- Customer lifetime
- Customer profitability
- Customer lifetime value
The first five factors are all necessary to define customer lifetime value – and it’s that value that you finally compare with the cost of acquisition to decide whether your marketing activity was useful or not.
For the detail on calculating Customer Lifetime Value you can visit here.
And that is the real benefit of full funnel marketing metrics.
Focus your marketing investment on those activities and segments that deliver the greatest return on investment (not the lowest cost of reach) – and take that data to the boardroom and present it with pride.
Effective marketing metrics are about changing your entire attitude to marketing investment.
They both rationalise your investment at the top of the funnel and remind you how much investment you need to make further down the funnel to engage and transact:
- Identify business outcomes
- Understand your funnel
- Calculate your cost of reach
- Provide customer incentives to explore further
- Create a platform for engagement
- Integrate with retail
- Measure every stage
- Calculate efficiency
- Act on the insights
- Communicate business outcomes
It’s a fast track to marketing success
When it comes to the original point with my FMCG client, I clearly missed the opportunity.
By selling input metrics, I delegated the funnel insights to third parties whose objectives might differ with my own.
It clearly benefits marketers and solution architects alike to understand both how many customers they can reach, and how efficiently they can deliver not just media, but business outcomes.
I never made the same mistake again.
There’s no time like the present.
If you haven’t considered, or don’t know your funnel, work it out.
Use existing data or forecast the outcomes of activity and make the calculations.
Use those decisions to guide the next investment you’re involved in!