6-reasons why digital agencies fail to demonstrate marketing ROI

IAB reportsmonkey selfie portrait Internet advertising revenues increased 17% in FY2013 to $43B. Internet advertising surpassed all Television (Broadcast + Cable). Agencies have followed the money, added digital capabilities to their respective portfolios. The spirit is strong; the flesh much less so. And it shows up in client frustration, as in this quote that encapsulates the problem- “Digital is a better chance to measure, but when we point out our results are poor the agency blames it on everything else but them“. The root cause can be traced to capability gaps in results measurement.

Julie Fleischer, Director of content strategy & integration at Kraft foods in the Forbes magazine attributed her company’s success to a single-minded objective– “We measure the same things as most other companies: Traffic/Viewership and engagement. But the most important thing is… attributable sales growth“. That’s a rich, layered comment and instructive for the industry.

Here are six capabilities agencies need to have in place to ensure they can deliver results (and demonstrably so). Alternately, if you’re a marketer looking for a new agency, use this as a check list to vet your shortlist. Not having these in place means they are flying blind.

  1. Look beyond last click attribution. Last click attribution shortchanges efforts to build genuine long-term brand affinity in favor of cash-heavy initiatives to buy clicks. Clicks are a cost, not sales. Clicks also attribute revenues to the last channel in the shopping process.
  2. Measure marketing impact as revenue lift (and not as web sales). Focus on the incremental revenues realized through the media activity – and not the direct channel sales. I will illustrate with an example from our marketing intelligence platform on measuring the incremental revenue impact. The chart below shows the web sales for an e-retailer and the lift delivered by two digital channels — email and Facebook. The true revenue impact of each channel is significant, but claiming every web sale for these channels would have been foolish.

revenue attribution cross channel resized 600

  1. Respect for consumer privacy. Hounding the consumer to divulge his/her digital identity treads on dangerous territory. Consumers are being more vocal on their privacy concerns and brands risk backlash if pushing digital tracking aggressively. My main point is that this is not necessary and the numbers are misleading (See #1, #2). An over-reliance on display channels and DMP’s is counterproductive.
  2. Don’t blindly trust channel reports. Giving control of measurement to the channels like Facebook or Google is dangerous. Each channel has a vested interest in owning the Ad Spend and the reports should be interpreted with a grain of salt. An ad agency would be ill-advised to use cherry picked metrics from an industry report to sell an initiative. Bad karma. You’ll just lose credibility when the numbers dont show up.
  3. Allocate content development budget based on ROI. Content is king – but what content? Say you’re the brand manager for a juice and you are considering a social promotion. How to build the content strategy? Should it be “how-to’s” on youtube or images on Pinterest or recipes on Facebook? Have measures in place to guide content development spend.
  4. Quantify the worth of the social followers. Consumer engagement by way of shares, likes and comments compounds the brand engagement through the social network. So a solid social engagement strategy is worth its weight in gold… but not all social followers are equal. Have measures on the revenues attributed to social engagement. The case study below shows how.

What's social engagement worth? A Case Study in Revenue Attribution

What did you think of the list? If you have thoughts on the above or your own suggestions, add your comment below.

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