One thing that is interesting in the on-going digital marketing metrics/engagement debate is that marketers expect a much higher correlation between digital marketing activities and confirmed sales than they do in any of the ‘offline’ media.
The interactive industry certainly made its own bed here. It has long touted itself as the only ‘accountable’ medium, and highlighted the fact that everything can be counted, tracked + analysed etc. It used this as the basis for talking up the value of advertising inventory in the online environment, but the very same arguments are now being used to dramatically erode the value of digital advertising inventory.
The reality is that there will only be a direct correlation between viewing an ad/offer and a sale in a small percentage of cases.
The consumer purchase cycle generally proceeds as follows:
awareness –> consideration –> intent –> purchase –> use
In most cases, it is very difficult for an online marketer to know where the consumer sits within that cycle at the time they see their ad. If your ad is the mechanism that puts a consumer into ‘awareness’ mode (as is the case where seeing an advertisement for a cruise makes the consumer think ‘Ah, I think I need a holiday’), then you’re not going to be able to draw a direct correlation between the ad view and revenue. Many months may elapse between the initial ad view and the final purchase. But without that ad view, there may be no prospects of a sale at all.
Online marketers seem to want to have their cake and eat it too. They only want to pay for performance, but they want the broadest possible reach at little or no cost (unless there is a confirmed buy). This ignores the fact that at any time a large percentage of viewers won’t actually be at the ‘purchase’ end of the cycle.
(It also ignores the fact that there are a range of other factors that need to be present to achieve a sale, including quality of advertising elements, attractiveness of offer, user-friendliness of purchase mechanism, brand, past experience, and myriad others…but that’s a discussion for another day).
Marketers must make the investment requited to move their target consumers through the purchase cycle, rather than expect their media partners to give them a free ride until the consumer is ready to buy.
The online industry (and content publishers in particular) certainly needs to remain an active participant in the evolving discussions around developing a new ‘engagement model’ and related metrics for digital advertising. However, it also needs to become more proactive in rebutting some of the implicit assumptions underlying advertiser’s increasing insistence that advertising inventory buys be struck on a cost-per-acquisition or similar performance-related basis.
Certainly there is a time and place for CPA-type agreements – such as where the marketer has already stimulated demand by an appropriate investment in online/offline campaigns designed to move customers through the purchase cycle. Nonetheless, the growing expectation that most, if not all digital campaigns should be structured on this basis is clearly unsustainable.