Thanks to the courageous leadership of folks like P&G’s Marc Pritchard and Unilever’s Keith Weed, it is increasingly becoming unacceptable in our industry to sanction waste. The infamous John Wanamaker complaint about not having a clue about which half of one’s ad budget is actually working can no longer be tacitly shrugged off as an acceptable way of transacting in our business. The accountability locomotive has left the station and there is no turning back. Either hop on, get run over, or move by the wayside.
The cross-pollination in recent years between the adtech and martech sectors, marked by big moves from the likes of Oracle and Adobe, herald the likelihood that omnichannel measurement and attribution models will likely get a big boost in the coming years. I predict that last-click attribution will indeed finally become a relic of the past. With the ability for granularity expanding and sharpening, the possibility to create more accurate and sophisticated assessments of consumer journeys is very real.
It is time to tear down the walls of complacency that have held back the marketing world for decades.
Major advances in location technology, as well as the enablement genius of AI (specifically, machine learning), will now make it possible for our industry to revolutionize our accountability and effectiveness models. In fact, I predict that there will be a gradual but overwhelming shift in how our industry will define marketing success and thereby transform the currencies with which we will transact.
The end of CPM: causation over correlation
The bedrock of advertising measurement currency that has dominated the analog and digital generations has been the cost-per-thousand (CPM) standard. Recently, I-COM, the Global forum for marketing data and measurement, launched its Incrementality Council exploratory working group, with the goal of convincing the industry that correlation should no longer be the acceptable standard of judging advertising effectiveness. Instead, I-COM argues that correlation should be transplanted by direct causation as the standard by which the marketplace transacts.
Allow me to illuminate this concept within the context of a causation-based measurement design for a multichannel ad campaign. In a traditional CPM-based model, a retail marketer would be satisfied with hitting the goal of a pre-set number of total store visits with the assumption that each part of the media mix — radio, TV, and banners, along with location-based mobile ads — each had a correlative effect on driving shoppers to stores. The fact that the design didn’t account for direct causation by channel was accepted because we didn’t have the technology or inspiration to measure with such granularity.
With the advances in location technology and the increasingly algorithmic virtuosity fueling our industry, we can now create measurement design that will actually firmly establish direct causation. We now have the ability to distinguish between footfall traffic that is organic (those who came to a particular store location without the encouragement of a targeted ad) versus that which is incremental (those directly targeted and served the ad). And we can measure this in real time. Then, based on the consumer behavioral insights gleaned, we can optimize the media plan, also in real time. This focus on incremental measurement could be the new KPI of retailers, replacing CPM.
And for any skeptics who think the notion of incremental ad measurement and optimization is a fad without staying power, one needs to look no further than the likes of Wal-Mart, Amazon, and Netflix, who have invested sizably in these new systems, according to I-Com.
This new shift in prioritizing causation over correlation as the standard of measurement is truly exciting. If this keeps up, pretty soon the old Wanamaker phrase will have to be updated to something along the lines of “All my advertising works. And now I know what works best.”
Nicolas Rieul is chief strategy and marketing officer of S4M