Cymfony's Influence 2.0

Is engagement devolving into old metrics?

A new study by OMD shows that their definition of "engagement" increases ad ROI by 15 - 20%. But their definition rests on old measures like media time spent and ad copy testing. Is this good news or bad news?

Engagement began life three years ago as the new metric meant to replace the old standby of GRPs, reach, frequency, etc. which are failing to answer senior exec's real questions about marketing effectiveness. In the ARF's initial model, engagement looks far different that past models.

As reported in Ad Age, though, OMD's model looks surprisingly traditional. Here's the description of OMD's model:

"OMD used its proprietary engagement measure, an index that factors in such things as how often people say they watch a show, to measure media engagement. The agency used copy-test results measuring primarily how much people like ads to measure advertising engagement."

Self-reported media consumption data...copy-test likability measures. Advertisers have been using these data forever.

The slightly new twist is throwing all of this into a market mix model which revealed that media engagement had 3 times the impact of media weight, while ad engagement had 8 times the impact. This gives a more quantitative way of using what has historically been gut-feel hunches about how to build a campaign. (With Mike Hess and Huw Griffiths, both pioneers in market mix models, building the models these findings have high credibility.)

I could make the case that this is good news: marketers haven't been so far off for the past 50 years, they have been using the right variables in their decisions. Now there is a more disciplined way of using these data points to make better decisions.

But I can't help but feel that there must be something more to engagement than a mash-up of 50-year old approaches. Will marketers decide this is good enough, and thus take the wind out of the sails of the ARF's ongoing work to create a new metric? What do you think?

Social Media Forecast: Looks a lot like online advertising 1994 - 2000

Mediaweek, citing an eMarketer report, states, "User-generated content on the Web is set to rapidly shift from a budding consumer trend to a serious business over the next five years." For those of us who have watched the adoption of online advertising, we are seeing history repeat itself.

This eMarketer report states that UCG sites will earn $1 billion in ad revenues this year, and $4.3 billion by 2011. Mediaweek goes on to state, "Plus, users have shown no indication that creating their own Web content for others to consume is a passing fad, found eMarketer. By 2011, the researcher estimates there will be 95 million Web users creating content online, up from 64 million last year."

The analogy to Web 1.0 online advertising is this: 1994 is usually cited as the birth of online advertising, and in 1997, the medium's fourth year, the IAB reported $900 million in ad revenue. Arguably, 2005 was the first year of social media, so 2007, the third year of its existence, will see $1 billion. Very similar growth curve. Online advertising hit $4 billion in 1999, its sixth year; UGC will hit this landmark in its 7th year. Since UGC growth isn't being propelled by a bubble that was starting to inflate in 1999, the curve again looks similar.

At the same time eMarketer also published an article "UGC not Critical for Many Marketers" in which only 12% of survey respondents said UGC was "very important" to their marketing efforts. The top reasons according to eMarketer "lack of clear ROI was often named as an objection. Other reasons listed included "management doesn't embrace it yet," "we simply haven't given it enough priority to consider it at this point" and "we've had difficulty in getting the establishment to understand it."

Nonetheless, over 40% are either using it already or considering it for next year. emarketer explains, "respondents understood the benefits of using UGC. A third of respondents said UGC was cost-efficient compared with traditional marketing and advertising, and 31% said it was useful because the credibility of traditional advertising and marketing was declining."

This is really deja vu for me: I wrote the following in an October 2001 Forrester Report titled "Online Advertising Retrenches":

"Marketers wrestle with opposing forces that alternatively urge them forward and hold them back from adopting Web site display advertising. They sense the Web's potential but recoil from the risks of being a pioneer and so wait for proven metrics and ad formats to appear."

In a nutshell, consumer media consumption habits are changing faster than marketers can learn and adapt. But year by year, from dipping a toe in the water, to pilot tests, to full adoption, the shift is on an inexorable course. The only question is whether the shift will be faster or slower than the prognosicators think.

I have an obvious bias, but my money is on it growing faster. Being a former prognosicator, here is how I would think about it:

1. There is no VC-fueled dotcom spending here, so the growth is unlikely to be interrupted for 3 years as happend to online advertising.
2. Senior marketing executives and industry observers like Bob Garfield have woken up to the reality that the age of mass marketing is in decline and they no longer need to be convinced to move beyond the tried-and-true tactics of the past. Traditional advertising spending is slowing and "below-the line" (I've always hated that phrase) on CRM, interactive, direct mail, etc. is growing.
3. Social media represents a bigger change than online advertising was. Banners were another format to push messages through; blogs and social networks require a much more dynamic relationship with consumers.

IMHO, the biggest drag on the growth of online ads in the '90's was lack of urgency because marketers still had total confidence in TV and mass marketing. Without that comfort, marketers will be much more willing to invest in the necessary learning to add new social media tools to their marketing arsenal.