Trying to build a brand marketing campaign without traditional target reach and Gross Rating Points (GRP) estimates is like trying to diet without the concept of calories. The analogy of dieting and advertising works on many levels. Both are multivariate and complex in nature. Dieting also has explicit and measurable outcomes – weight loss or gain, whereas marketing has sales. Advances in dieting have deconstructed the powerful role of good and bad carbohydrates, fats and proteins and importance of different metabolisms. However, amidst all of this sophistication and breakthrough science, there remains a fundamental metric that plays a crucial role – the calorie.
Without the calorie, diets are about as useful as the American Food Pyramid. Without the humble calorie, dieters won’t know how many Doritos they can eat or the difference between a soda and a milkshake. For Marketing, that fundamental metric is Reach. There is good reach, and ineffective reach, engaging reach and passive reach. But without the basic understanding of how a campaign reached the target audience, brand advertisers simply won’t know what they are buying online. Before I delve into the arguments, for and against traditional media metrics for the Web, let’s start by taking a look at who has the dollars and where those dollars are being spent.
Direct Response advertisers have flocked to the web with promises of measurable ROI, driven by granular metrics and actionable insights into exactly what’s working and what isn’t. Search makes up the bulk of the spending, followed by campaigns across the many ad networks that offer various sorts of pay-for-performance advertising (e.g. cost-per-click or cost-per-sale). Brand advertising budgets represent about two-thirds of a $186 Billion advertising market. Yet, only 5% of their overall marketing budgets are spent on the Web.
With the proliferation of broadband penetration, and growing ubiquity of the Web at work and at home, the Internet garners one third of today’s consumer share of media consumption. With all of the data available on the web and ample opportunity to engage consumers on the web, why aren’t the biggest advertisers in the world like Coca Cola, Proctor & Gamble, General Motors and Target spending more than a tiny fraction of their massive budgets online?
The Argument Against
I’ve been on many panels over the years debating whether the industry should embrace traditional media metrics like Reach, Frequency and GRP. Arguments that we should eschew traditional media metrics for the web usually come in three flavors:
· Arrogance: This camp vehemently believes “we’re better than traditional”. This argument is based on the belief that metrics like target reach and frequency are obsolete metrics that are too abstract from the engagement and ROI that advertisers are really after. These are often folks who make a living from selling Online as a direct response channel. They think “branding” is mostly mythology and if you can’t tie an ad to a sale, it’s a waste of time.
· Ignorance: “I don’t know what a GRP is [and thus I don’t like it]”. You would be shocked at how few online marketers, do not know how GRPs are calculated nor how they are used. Most of folks in digital don’t have traditional media experience where GRPs are the currency. Many digital agency experts similarly lack traditional media expertise. This is also why you find publishers brag about how concentrated their sites are for a given demographic, with no mention of how the target demo across the entire U.S. will be reached by your campaign.
· Fear: “I’m scared Online GRPs are more expensive than Television GRPs”. This is the most rational argument of the three, but also very shortsighted. If Online GRPs look unfavorable compared to Offline GRPs (which in some cases it will), then our media is probably over-priced and that’s something we need to address not ignore.
Getting in the Door
Digital folks snicker when they hear advertisers make statements like “TV works”. Turns out, TV does work and there is plenty of quantitative proof that TV advertising drives sales. As much as digital marketers love to carry the ROI torch, what they don’t realize is that traditional marketers live and die by the same sword. They just do it in a different and arguably better way. The science of Media Mix Modeling (a.k.a. Econometric Modeling) has been around for decades and is the gold standard for analysis of how marketing investments impact SALES. The inputs into these models are reach, frequency and GRPs across different marketing channels. Those variables are used to predict sales (typically through regression modeling). These are sophisticated models that take into account seasonality, macro-economic variables, pricing, competitive spend levels, geography, and typically leverage several years of advertising and sales data. Every major advertising agency has a division (usually very profitable one at that!) dedicated to this research. And the results are channel mix recommendations for the largest advertising budgets in the world (e.g. P&G, Unilever, Coca Cola, Microsoft, etc.). Guess who’s left out in the cold from all this great ROI analysis, holding a bag of click-through rates that barely register above zero?
The debate comes down to whether you want to beat them or join them. Naysayers lament that media mix modeling doesn’t provide real-time reporting, and is based on small samples of panel data. Both are fair and blatant issues, but they miss the point. Let’s not forget that great brands aren’t built in a day, and the vast majority of sales still occur in an actual store.
Patty Wakeling, an industry veteran who leads Unilever’s Global Media Insights Group, recently reminded me that in today’s retail environment, the choice between the branded versus the generic option are separated by less than an inch on the shelf. It was a sobering reminder of the power of branding, and why so many companies are willing to spend so much to build their brand equity.
The good news is that we can join the party, and even better, we can be the life of the party. We know the web can deliver scalable and impactful reach – we just haven’t proven it yet in a standardized and easily repeatable way. That’s coming, and the first of a lot more research from the Institute – The Planner’s Digital Dilemma - speaks to how.
But before we get there, we need to take a hard look at ourselves and let go of our cultural hang-ups and short-sighted fears. Every channel has its strengths and weaknesses, but at the end of the day, marketers want digital marketing to work in concert with their offline advertising. And success has to be total sales, not just online sales. Any hope to unlock the two-thirds of dollars spent on traditional media needs to start with the fundamental metrics of all brand advertising: Reach, Frequency and Gross Rating Points.
If it makes you feel any better, just remember, it’s the start – not the end-game. Everything else we do still matters and creates opportunities that will revolutionize advertising. But let’s start with the basics so we can at least get through the door. I have a feeling we’ll find an empty seat at the table…