McKinsey Paper - How poor metrics undermine digital marketing

Just finished reading it - Good News - nothing really that the London Measurement Campers don't know already. Bad news - we still all don't know how the metrics really work, its just we are in very good company - this was a survey of 340 European companies.

Some nuggets - a useful chart on cross channel selling media between online and offline media by category - confirms what many of us suspected re which channels are most amenable:



Also, see what I've put in italics:

The rapid growth of online advertising hides a serious challenge: the digital world has developed faster than the tools needed to measure it. This problem has made it difficult for marketers to fully exploit the Web’s promise as the most targetable and measurable medium in the history of marketing. Can digital advertising live up to its potential?

It’s going to take some time. A June 2008 McKinsey digital-advertising survey of 340 senior marketing executives1 around the world shows the breadth of the gap between what’s needed and what’s available. Hobbled by nascent technologies, inconsistent metrics, and a reliance on outdated media models, marketers are failing to tap the digital world’s full power. Unless this problem is addressed, the inability to make accurate measurements of digital advertising’s effectiveness across channels and consumer touch points will continue to promote the misallocation of media budgets and to impede the industry’s growth.

And for you Measurementcampers reading, some other confirmation of stuff we've discussed:

As for allocating ad budgets, leading marketers are now using metrics that permit comparisons between offline and digital spending. One marketer—a home-furnishings rent-to-own chain—used a method called RCQ (for reach, cost, and quality) to optimize its allocation of spending among ad vehicles. This metric, combining rigorous analytics with systematically applied judgment, measures the number of people each ad vehicle reaches and the cost of reaching them by vehicle. It also includes a quality factor based on changes in engagement, attitudes, and behavior. The RCQ analysis showed that the chain spent too much on its workhorse vehicles, such as direct mail, and too little on television infomercials (which convey more information) and online ads (which can be targeted more precisely).

But...

Although a majority of companies still have a long way to go, some marketers have made rigorous measurement a priority. As one participant stated in a recent McKinsey online discussion among marketers using sophisticated analytics: “If we can’t measure it, essentially, we don’t do it.”

The explanation for the lag between the attention online and the spend online is clear, this is a big survey group - and with the decline in the overall Ad spend this could play to the Online world's advantage - we just have to mind our RCQ's......