The third generation of online marketing measurement

Jeremi Karnell, CMO & Founder | One To One Interactive
June 30, 2003

As the economy continues to put downward pressure on corporate marketing budgets, there is an increased focus on the performance of Internet marketing campaigns that attract and retain visitors. However, this task of measurement is more complicated than it appears on the surface.

Data for most integrated online marketing campaigns today is simultaneously collected and reported by media properties, 3rd party ad-servers, 4th party ad-servers (rich media, mobile media, ITV, etc.), search engines, e-mail transmission vendors, affiliate networks, web site log files, CRM and commerce platforms. Furthermore, those same campaigns will undoubtedly contain a mix of compensation models for the selected marketing opportunities, running the gamut from Cost Per Thousand (CPM), Cost Per Click (CPC), Cost Per Lead (CPL), and Cost Per Acquisition (CPA) opportunities. If you are beginning to think that the above situation is complex, layer in the fact that these campaigns require weekly to real-time analysis and optimization.

As the interactive marketing landscape continues to become more complex, corporate marketers will seek innovative "Next Generation" measurement solutions that will not only simplify reconciliation of integrated initiatives, but also consolidate reporting views as well as comply with industry guidelines and standards. Taking a brief look back at the historical evolution of online measurement will help us understand where this new generation of solutions may take us.

In The Beginning: First Generation Solutions (1990-1994)

Prodigy introduced the first "real" online marketing opportunities to corporate marketers in 1990, adopting online advertising revenue as a source of income only a decade after being founded by IBM and Sears. In the next four years, the commercial advent of the Internet brought 25 million users online, thus marking the start of the "Internet Bubble." 1994 in particular was a historic year for online marketing, for it was during that year that Netscape and Yahoo! were unveiled, and Hotwired teamed up with AT&T and Zima to introduce the first Internet Ad Banners.

As online advertising increased in popularity, site (publisher)-side ad servers emerged as a way to provide advertisers with consistent ad serving, inventory management, and basic reporting on impressions and clicks from their online marketing. During this time, the onus fell on the corporate marketer or agency managing the campaign to traffic all relevant creative to each of the individual media properties that were part of the buy. The publisher then would manage the serving of the ad through its site and monitor campaign performance via the site-side ad server. If a marketer was running ads across 10 different sites, it could expect to receive 10 different monthly reports in 10 vastly different formats. These reports would normally be combined and edited in Excel and then analyzed for optimization and reconciliation.

During this same time corporate marketers who were interested in understanding the traffic that came to their primarily static, "brochure-ware" sites would begin to see inexpensive software from Sane Solutions and WebTrends. These solutions were usually log file or network sniffer-based and mainly measured server "hits" to infer visitor behavior. Although they may have been useful for measuring server traffic at the time, they were vastly inadequate for providing real visitor- and marketing-centric analytics across complex the web topologies typical of major enterprises.

The Bubble: Second Generation Solutions (1995-2001)

As the online advertising industry matured, it became clear that although site-side ad servers performed well for publishers, they were not very friendly to corporate marketers or agencies that ran campaigns across multiple publishers. Enter the 3rd party ad-server. Acting as the middleware between marketers and the thousands of websites that launched during this period, 3rd party ad-servers addressed the market demand for more robust campaign trafficking, reporting and analysis tools to manage online marketing efforts. In addition, there existed a central web-based interface where an online campaign's performance could be analyzed daily, and easily optimized regardless of how many sites were part of the campaign. Lastly, 3rd party ad servers and a new generation of web site measurement solution providers brought "tagging" web pages and collecting information via single pixel GIFs to the mainstream, allowing their customers to track beyond impressions and clicks to post-click actions resulting in lead or commerce activity.

As with any economic boom resulting from a technologic revolution, rapid innovation ensued: new advertising units were introduced, some requiring their own proprietary 4th party ad-servers to function properly. New marketing channels were opened up via e-mail, affiliate networks, search engines, iTV, and mobile devices — most requiring their own management and reporting systems. Furthermore, pricing models began to grow more complex as each new channel and technology layered its own Cost-Per-X into the overall cost of a program. Ironically, the proliferation of ad-servers and technologies put marketers back into the same position of having to collect reports from multiple data sources (this time primarily through intermediaries instead of publishers), manually reconcile the numbers, and publish the reports in ... you guessed it: Excel.

During this same period, Customer Relationship Management (CRM) and Marketing Automation Solutions became the new "must haves" on many corporate budget sheets. Vendors like e.Piphany, Protagona, Broadvision, and Cognos all launched products and services that cut across web sites, e-mail, call centers, and traditional direct response campaigns for multi-channel campaign management and reporting. These systems made a step function improvement in how companies were able to measure the behaviors of their known customers and better define where they fell in the purchasing cycle, allowing for more targeted and synchronized communications. However, they fell short in their ability to make the same impact with anonymous, prospective customers resulting from online promotional and advertising initiatives. Marketers were still faced with managing disparate and unconnected sources of direct and attitudinal marketing data to measure their online programs.

The Future: Third Generation Solutions (2002-?)

The burst of the dot-com bubble created widespread economic uncertainty, which also left many people wondering whether the Internet's potential as a key business technology had been exaggerated. As a global economic recession began to take hold, the online channel and the technologies that were spawned to support it, began to suffer badly in ensuing corporate budget wars for scarce marketing dollars. The lexicon of the 'Net, once revered as the language of a new era, became its scarlet letter. Executives began to see the varying and often contradictory definitions and lack of measurement industry standards as a risk.

To address growing criticism and concerns, PricewaterhouseCoopers (PwC) and the Interactive Advertising Bureau (IAB) introduced the first-ever guidelines for interactive audience measurement on January 15, 2002. The guidelines identify and define five key metrics in the measurement process — ad impressions, clicks, visits, "unique" measurements (browsers, visitors and users), and page impressions. They also pointed to site-side data disclosure as being integral to accurate measurement and reporting of interactive advertising data. Although this move was criticized by some in the industry as too little, too late, it was heralded by most as a step in the right direction.

To further meet evolving demands on marketing accountability, technology firms such as CentrPort introduced the Third Generation of online measurement platforms. Wedging themselves between existing corporate CRM platforms and 3rd/4th Party Ad Server Systems, CentrPort's solution acts as a central node where all online marketing data may be funneled. They even went as far as integrating their software with DoubleClick, considered today to be the largest 3rd party ad server globally. On June 16, 2003 CentrPort also became the first analytical marketing solution to gain accreditation for the PwC/IAB measurement guidelines.

Third Generation online measurement platforms may provide the following features and services (not an exhaustive list):

• Secure automation and aggregation of reporting from multiple unstructured data sources
• Tracking and segmentation of anonymous prospects and current customers based on their behavior across multiple channels (Online Advertising, E-Mail, Web, Affiliate Networks, Call Center, Direct Mail, etc.)
• Easy access to and exploration of campaign results via a single online interface
• A rules-based engine to dynamically generate messages for both anonymous prospects and current customers based on responses to marketing efforts
• ASP deployment and licensing models, negating the need to purchase and install expensive hardware/software at the marketer's location. The ASP model also allows the system to be accessed and shared across multiple divisions and by multiple agency vendors.
• Certification based on Industry Measurement Guidelines

Conclusion

There should be no doubt that we are approaching marketing data overload. The deluge of consumer and product data that will be made available through advanced mobile devices, RFID tags, iTV set top boxes, and intelligent point of sale systems will only make the corporate marketer's job more complex. Third Generation measurement platforms give us a glimpse into how future measurement solutions may operate. The most promising trend is technology that releases marketers from having to manually compile data from a quickly growing list of multiple, dispersant data systems. This frees up valuable time, which may be spent on understanding customer behavior and linking cause and effect of their cross channel marketing programs… skills that will only grow more critical to the enterprise as time marches on.

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