Metrics Marketers Love Most Are Usually The Wrong Ones, ANA Study Finds

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Marketers love their key performance indicators, but they’re mostly looking at the wrong ones, according to a new study by the Association of National Advertisers.

Indeed, of the five KPIs the ANA identified as most used by marketers, only one—return on investment (ROI), aka return on advertising spending (ROAS)—ranks among the five most important.

Yet marketers still spend lots of time worried about those other four—CPM (cost per thousand), CPC (cost per click), unique reach and site visits. This is despite their agencies or market researchers for years telling them to look elsewhere, because those numbers often don’t reveal much and may do more harm than good. Now the marketers’ own trade body is taking a stab at pushing that rock up the hill.

Take CPC, a number much loved because it’s easily counted. Studies dating back more than a decade show clicks on digital ads are close to meaningless, because they don’t correlate to sales, sometimes not even among direct-response advertisers. And yet many marketers persist in closely watching the measure.

CPC and CPMs are closely related, and marketers trying to drive down both in digital media are almost surely doing more harm than good by fueling more ad fraud, says fraud researcher Augustine Fou. “Bots click more,” he says. “Humans don’t click much at all. Bot CPCs are always lower than human CPCs; and CPMs on fake sites are always lower than CPMs on real publishers’ sites, because fake sites steal all their content and therefor can afford to sell ads at any CPM and still be profitable.”

There are far better things for marketers to watch, the ANA finds.

Besides ROI and ROAS, these include so-called “exposed ROAS” (which measures ad spending and brand sales or perception lift using only valid measured exposures as a base), brand safety metrics, customer lifetime value and conversion.

The ANA also identified new or emerging KPIs, all of which focus either on measurement quality or outcomes and reflect a shift from buying media to buying audiences, according to the group. Those KPIs include data source quality and (closely related) targeting information quality in addition to the five previously identified “most important” KPIs.

The study was conducted by the ANA’s Media Leadership Growth Council among its members, with 93 survey respondents in January and February from that group, and the ANA Digital & Social Media Committee. Heads of the Advertising Research Foundation and Media Rating Council also weighed in on the results in qualitative research.

“Our industry has struggled to provide clear guidance on how to link the media metrics to the outcomes that matter most to our C-suite,” said Charlie Chappell, VP of media at The Hershey Company in a statement. “This report is an important step to bridge that gap.”

Outcome-based KPIs—such as sales and conversions—are becoming more important relative to output KPIs including audience reach, according to the report. The growth of direct-to-consumer advertisers and performance marketing, combined with C-suite demands to drive measurable results, has fostered that change.

Unique reach, while it remains important to marketers, is getting harder to measure as digital and cross-platform campaigns grow in importance, according to the ANA. Moves by Apple and Google to shut down data sharing across the open web in various ways are among factors that will make it impossible to measure unique reach precisely, though the ANA said trying to find a way to deliver unique reach measurement remains an objective for the group.

Credit: Ad Age

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