The Performance Imperative

“The Sell Sider” is a column written by the sell side of the digital media community.

Today’s column is written by Chris Kane, founder at Jounce Media.

Marketers love innovation. They love breakthrough design and taking creative risks. They love emerging channels and experimental formats.

CFOs do not. CFOs love efficient deployment of capital. They love quantifiable business outcomes and proven return on investment. CFOs hate unmeasurable marketing.

In this tug-of-war between CMO and CFO, the CFO is winning. Advancements in measurement and attribution have made it possible for the CFO to demand proven returns from media investments. Like any other business investment, marketing is now being held accountable to achieving financial returns.

The trouble with this performance imperative is that money moves toward the most measurable channels, not necessarily toward the best investments. There are some media investments that are provably good, and marketers correctly allocate budget there. There are also some media investments that are provably bad, and marketers correctly pull money away. But there is an enormous pool of inventory for which performance is largely unknown, and this creates risks for both ad buyers and sellers.

The rubber-meets-the-road outcome of the performance imperative is that marketers are instrumenting their campaigns with a wide range of measurement systems. Publishers are finding that campaigns are being tagged with viewability trackers and audience verification tools. They are being asked to generate impression logs for multitouch attribution models and closed-loop measurement analysis. While this introduces new burdens for the publisher, it ideally helps the marketer justify ongoing media investments.

The measurement reality, however, is that many marketers do a poor job of assessing their media investments. They look at last-touch attribution results and understate the value of upper-funnel marketing. They insist on unrealistic click-through rates and unintentionally reward ad fraud. They neglect to investigate cross-channel conversion paths and incorrectly conclude that mobile advertising is ineffective.

In the face of burdensome instrumentation and flawed analytics, forward-thinking media companies are proactively providing measurement solutions to their customers. They are conducting controlled-lift experiments to demonstrate the incremental contribution of media investments. They are providing independent third-party verification of inventory quality and audience fidelity. Some are even making contractual commitments to delivering business outcomes. These publishers are arming their customers with evidence that they are making ROI-positive media investments.

Equally, some media companies are imposing barriers to measurement. They see the performance imperative as a threat and insist that marketing is an art, not a science. These companies are swimming upstream, and they should feel deep anxiety about the stability of their revenue. In a classic moment of candor, Mel Karmazin, the former CEO of Viacom, told Google’s executive team, “Advertisers don’t know what works and what doesn’t. That’s a great model.” That used to be a great model, but the days of unmeasurable media are quickly coming to a close. It is now the job of publishers to prove performance, and that starts with opening their inventory to measurement.

The performance imperative does not mean that classic brand marketing will come to a sudden halt. Marketers will continue to buy billboards and sponsor bowl games. And they’ll continue to work with digital publishers that restrict measurement. But at the margins, these unquantifiable investments are becoming harder to justify. When a CMO’s budget grows, it will be allocated to the most proven media channels. When marketing budgets are cut, the unmeasurable initiatives will be the first to go.

Publishers, make your inventory measurable. The risks of being a performance blind spot are too great.

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This post was syndicated from Ad Exchanger.