Marketers Need New Measurements for the Digital Era

Advertisers can gain access to audiences through a variety of tried-and-true economic models, including cost-per-thousand impressions, pay-per-view, subscription, sponsorship or underwriting, and revenue sharing or “points.”

But as technology and social media conspire to redefine what users want to see and how they choose to view it, those opportunities increase exponentially. Digital platforms enable consumer participation, and that participation will continue to expand and change the ways content (and advertising) is monetized.

That’s not to say the dominant monetization models will disappear. Rather, the expanded opportunities to distribute – and therefore monetize – content will provide additional revenue streams and layers of complexity.

Consider some of the following examples:

• Revver and Federated Media (among others) share advertising revenue with all content creators, enticing some of the best existing and emerging talents to distribute through them.
• WSJ.com and other subscriber-paid content sites will offer sponsored access to content, either to the general public for a short period of time or to a subset of the population, based on the guidelines of the sponsoring advertiser.
• Pay-per-call model translates an established model (pay-per-click) from an online response to an offline response – inbound phone calls.
• New technologies are enabling “plinking,” or product linking – embedding product links within video streams, making elements of a video into potential response channels for viewers interested in learning more about what they see.
• Business 2.0 is beginning to compensate its writers based on the number of readers a writer’s blog can garner. (More readers translates to more advertising impressions to sell.)
• Auctions and real-time bidding are no longer considered new, but applying such cost models to traditional media vehicles is. Google’s foray into traditional media serves to bring digital thinking to the traditional media space.

But all the new combinations of content and cost are only half the story. As the business models and monetization of content and its distribution evolve, so too must the ability to assign a value to the audience connections they enable.

Is a view worth a certain CPM? Is one click more valuable than another? Should we be willing to pay on a sliding scale? And who sets the scale?

Wannamaker’s famous 50% is shrinking. Better technology, better research and better analytical models are providing ever-greater insight into the value of communications plans and their impact on business. Marketers who can overcome internal hurdles (organizational structure, data aggregation, legacy systems) and external ones (cross-channel purchase options, integrated marketing and measurement) can derive greater insight toward maximizing or optimizing their investment. Leverage the data in order to leverage the dollars.

Although this evolution will not immediately replace existing cost structures, it will bring additional opportunities and complexity for advertisers to contend with, at least initially. For the near-term, defining and applying the right measurements will be crucial to determining the success of experiments in costs and distribution methods. Finding ways to move beyond oversimplified click-based conversions on one end of the measurement spectrum and brand-oriented recall and awareness scores on the other will help define the new Web economy.

The focus of these new evaluations will be the ability to better quantify the business impact of brand messaging (number of customers migrated closer to purchase) and better qualify acquisition efforts (are certain behaviors worth more, and can their value be tied to actual advertising costs in real time?)

One element that plays a significant role in media evaluation is scale. As the old one-too-many distribution model of mass media continues fragmenting, and greater use of control impacts message delivery (creating a new many-to-many distribution model), the need grows to aggregate reach and compliment exposure through digital channels.

With the rise of social media and the opportunity for people to more easily communicate with and influence others, concepts like word-of-mouth marketing and viral marketing, leveraging user-generated content and brand advocates and ambassadors become viable tools for building reach in the new online economy.

Dave Friedman, president of the central region for Avenue A | Razorfish, is a monthly contributor to Chief Marketer. Contact him at [email protected].