By Mike Dodds, Ogilvyone Worldwide, campaignlive.co.uk, Friday, 06 October 2006 12:00AM
Why is it that when you embrace something new, you always seem to forget the good things about the past? In the rush towards digital, it seems we have allowed ourselves to forget a few basics (particularly direct marketing basics).
Of course, a fair few chapters of the direct marketing rulebook needed to be rewritten for the digital age. For instance, it's probably fair to say that an obsessive emphasis on efficiency (as opposed to effectiveness) and super-tight targeting is not as crucial in the digital world as it was (or is) in the pricier world of direct mail.
But, for every chapter that needs to be rewritten, a few more need to be re-read. And the section that perhaps repays the most careful re-reading is the one entitled "measurement".
Think about it: increasingly, marketing departments are coming under pressure from the board and the rest of the company to demonstrate their worth. Direct marketing used to be the one division that could afford to be smug here. Is this still true?
Everyone else agrees it's no longer enough to fall back on traditional, intermediate measures of success - prompted awareness, stated purchase intention, etc. No-one else at the boardroom table is allowed to justify their presence purely by using abstract nouns. Unless we can point to our own contribution to the bottom line, we can hardly bemoan the fact that marketers (and by extension their agencies) aren't taken as seriously as they'd like.
As agencies, we are always complaining we are not paid in proportion to the value of the ideas we supply. But if anyone asked us to demonstrate what our ideas were truly worth, we probably would have no way of answering. The Google chairman, Eric Schmidt, claimed that marketing is "the last bastion of unaccountable corporate spend in America". It is, in many ways, a fair comment.
In a fragmenting world, marketers need a more rigorous approach - one that treats marketing not as "spend" but as the investment it really is. Is this so different from those measurement principles we all committed to tablets of stone in the early mail order- and charity-led days of this industry? I don't think so.
However, marketers, and by association their agency partners, don't seem to be making the most of their abilities to measure rigorously.
Perhaps this explains the huge gap between the percentage of time people are spending online and the marketing pounds allocated to this medium. Or the fact US car-makers increased their marketing expenditures per car during the 90s as advertising became less effective and their collective market share declined.
Don't get me wrong: some elements of the chapter on measurement need to be rewritten. For example, there is a need for consistent, independent, cross-channel metrics. Hence, when we pursue return on investment we should not mean individual channel ROI. I have yet to meet a senior marketer who is impressed when we say "We got 20,000 responses" or "The click-through rate was 1.2 per cent when the industry average was 0.85 per cent."
What I'm talking about is a holistic view of ROI that can create a coherent overview of a company's entire marketing outlay, at a time of splintering audiences and media. It's no longer acceptable to understand the performance of just one channel or discipline. In a world where we are seeing simultaneous fragmentation of media and distribution channels, we need to be able to understand the relative performance of a whole marketing mix and to reformulate it accordingly.
Once you have achieved a certain rigour in the business of measurement, you need to be just as rigorous in ensuring you are measuring the right things. Which brings me to the next chapter in need of re-reading - the chapter on testing.
In an insanely complex, fragmented world, a sensible (and, if you like, Darwinian) approach to experimentation and testing is probably the best. Yet all too often, testing - once a vital part of DM - is considered unviable within our compressed timescales, or is dropped at the last minute to reduce cost or enable more audiences to be targeted.
Google can get a new product to market in two weeks. If it's popular it gets more money. If it's not, it is ditched. That's a form of testing and we should do more of it. In fact, digital channels do enable you to do more of this, more often and quicker than before. You no longer have to wait for the mailing to drop and the responses to come in and be analysed. It is instantaneous. So why are we not doing more of it?
McKinsey suggests in McKinsey Quarterly that: "Twenty per cent to 25 per cent of (marketing) spending should finance well-structured experiments." The management consultancy adds that: "Marketers who skimp on experimentation may get overtaken by changing media patterns or be forced to assume large risks by rolling the dice on unproven programmes when markets shift." In the brave new digital world, experimentation is often the only way to go because best practice is often unique practice.
So how else do you learn the distinction between best practice and established practice? How else do you learn that you can launch a new drinks brand solely on an online community (as Sprite did) or find out that you don't need to pay Rupert Murdoch to get people to watch your ads (as BMW did) or uncover what's making people want broadband (as BT did).
Remember (to return to Darwin), in the dinosaur age, mammals were simply an experiment. As we look forward to the future, let's get back to some of DM's fundamentals, measurement and testing in particular. The sooner we can demonstrate our actual value rather than our perceived value, the sooner we can help our clients prove their worth and our worth.
Those who find the answer and can whole-heartedly prove their contribution to a client will inherit the earth. Or, if not the earth, most of the gold.
- Mike Dodds is the managing director of OgilvyOne Worldwide.
This article was first published on campaignlive.co.uk