Posts Tagged ‘Five Forces’

The Five Forces Driving Attribution: Media Measurement Comes of Age

May 27th, 2011

Advertisers are (finally) looking beyond the last click.  Here is an overview of the Five Forces that are driving adoption (also published by MediaPost in May 2011)

It’s been 3 years since measurement buzzwords “attribution” and “engagement mapping” emerged with great anticipation and excitement in online advertising.  The idea of looking across digital channels and beyond the last click to measure media throughout the funnel was thought to be the holy grail in online marketing.  Recognizing that “last-click wins” is insufficient for measuring the brand-building attributes of display media, brands, agencies and media vendors saw Attribution as the next big thing in digital advertising.

Yet as we entered 2011, very few marketers were using Attribution to measure and optimize online media spend.  Despite the universal desire for better measurement, most were still using old metrics (click-through rates, cost per click and direct cost per action) to analyze paid media.  Greg Papaleoni, who develops Analytics and Insights for Yahoo! Advertising Solutions, sums it up well: “While Full Funnel Attribution is the future of the ever-evolving digital media measurement landscape – it should be the present.  Those advertisers who embrace and implement this logic, methodology and technology sooner rather than later will enjoy a massive advantage over their competition.”

While adoption has been slow to date, this is changing quickly due to the convergence of numerous factors.  Borrowing on Michael Porter’s “Five Forces” model for analyzing industries, here is my take on the Five Forces that are driving digital media attribution (author note – I received permission from Professor Porter to adopt his model to this category):

1. The continuing shift of media budgets from traditional to digital.

While total U.S. media spend will grow only 3% in 2011, digital spend will grow 14%, surpassing Newspaper as the #2 medium.  Accounting for almost 30% of daily media consumption, Digital spend will continue to outpace all other channels for the foreseeable future.

2. The resurgence of display advertising

Per eMarketer, Display media spend will grow 14% in 2011, outpacing 10.5% growth in paid search.  While there are many reasons behind the growth (consumption of social, video and mobile content, better targeting capabilities, real-time bidding, richer formats, etc.) I believe the resurgence of display is driven by two primary factors:

  • The maturing of search: There are only so many searches every day, and most marketers have optimized their paid search efforts.  For the big advertisers, there are no more keywords to buy.  As one search exec was recently quoted “paid search inventory is maxed out.” Incremental dollars will have to go elsewhere.  Display is the obvious choice.
  • The return of branding:  As the economy recovers, marketers are re-investing in their brands.  During lean times, online dollars focused on harvesting existing demand (via search).  But with the improving economy, brand-building is once again a strategic priority.  In the digital realm, display media offers the most efficient, effective and scalable way to create awareness, consideration and preference for brands, products and services.

3. Increasing focus on accountability

While marketing budgets may have loosened, the focus on results has not.  As a result, marketers are keeping a very close eye on ROI from “brand-building” media.  With the ever-increasing need to show ROI, brands now want branding plus performance.  To properly measure brand-building media, we need to measure engagement, not clicks.

4. Evolution of web architecture

Recent forays by IBM and Oracle into the marketing arena signal a new wave in convergence of IT and Marketing.  As the IT behemoths push technology-based marketing solutions, CIOs are becoming more attentive to the needs of the marketing department.  The deployment of Data Management and Universal Tagging Platforms enable advanced analytics and media measurement that were off-limits to marketers in the past.  With this roadblock removed, the stage is set for new measurement tools to be deployed across their digital infrastructure.

5. The emergence of better Attribution solutions.

While early Attribution solutions were expensive and limited in capabilities (e.g. couldn’t attribute credit for organic conversions), a new breed of point-solution vendors (including my company Encore Media Metrics), are now offering more effective, flexible and affordable solutions.  For a very modest investment (as low as 1-2% of media spend), advertisers can now have a much more holistic and accurate view into the performance of each channel, vendor, format, placement and keyword.  These insights are enabling advertisers to optimize media budgets, yielding 20-40% gains in revenue.  The immediate return on investment in Attribution solutions may exceed 1-20x (100%-2,000%).

The Five Forces Driving Attribution are illustrated below:

Five Forces Driving Attribution

As our business objectives change, so must the manner in which we measure results.  As dollars continue to flow into digital, brands and their agencies must use more efficient, accurate and effective metrics for measuring media throughout the funnel.  The emergence of more advanced and affordable Attribution solutions, supported by growing support from IT departments is paving the way for Attribution to become a foundational component within the digital marketing ecosystem.

Matt Miller, SVP of Strategy & Analytics at Performics, agrees, stating “Attribution is one of the top priorities for us and our advertisers.  Focus on attribution will only increase as advertisers build and implement strategies to maximize ROI across all digital channels.”

As always, comments are encouraged. And please feel free to share!

Steve Latham (@stevelatham)

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