Understanding what works is the best investment in a downturn

Amazon.com’s decision to end commission payments to affiliates who drive traffic directly through paid search is a good example of what brands should be doing during the recession. Analysing all channels in depth, even those which are traditionally accepted as the most efficient and strongest performing and understanding what’s really driving incremental sales is one of the most valuable exercises any advertiser can perform. It will go further than any other activity to ensure the business emerges leaner, fitter and stronger than the competition when those fabled green shoots of recovery inevitably appear.

In Amazon’s case it’s about understanding whether their affiliates are symbiotic and therefore driving incremental sales against the companies own direct PPC campaign or whether they’re parasitic and simply an unnecessary middle man in the process. This should be the yardstick for any affiliate program. Does it add incremental sales and is it a positive experience from a brand and a user’s point of view?

Understanding this question requires accurate tracking and de-duplication of sales across all digital channels, combined with the resource to analyse this data so it can be used to inform the strategy going forward. This all sounds pretty obvious doesn’t it? But it’s amazing how many advertisers with very large digital budgets don’t have such a process in place.

Forty percent of companies surveyed in a recent industry wide poll by a tracking company said between 11% and 20% of commissions paid to affiliates were duplicate payments. Almost 20% said that between 21% and 30% were duplicated. Bearing in mind companies tend to play down the extent of these issues we can assume it’s regularly higher than this. Of course it’s not just an affiliate issue. There is overlap between all digital channels but especially between all ‘search sourced’ media – PPC, SEO, affiliate and aggregators. Many online marketing managers I speak to are aware that this is an issue but rely on the ad serving based tracking solutions from their media agency to do a job they’re not designed to do. But there is a lack of technical understanding as to what exactly is missing and how easy it can be to resolve.

In the exciting and fast moving world of digital marketing it’s easy to overlook the fundamentals. There’s always something new to consider as part of the digital strategy, whether that’s mobile, video or social media. But in these challenging times, investing in understanding what really works, before doing anything else, is the strategy which will deliver the greatest return, especially as we move into a world where brands with the most effective data driven strategy will be the outright winners.

Lack of FMCG advertising online is a failure of strategy not measurement

In typical British fashion, we don't like to spend too much time focusing on good news - even in the midst of the global downturny crunchy thing we're currently going through.

Reports in the press last week around the release of the IAB Pricewaterhouse Coopers report into online advertising contained some pretty amazing news for the digital industry. Online advertising increased by a whopping 17.1% last year to 3.3bn, taking its share of UK ad spend to 19.2%. Wow! Considering all that went on last year that's really rather impressive.

However our trusty Brit hacks were quick to point out that it's not all good news because the digital industry has failed to rise to the challenge of attracting FMCG advertisers, with this sector dropping to its lowest proportion of total online ad spend since 2004.

What struck me as most remarkable about this news was the fact that this ‘worrying trend' is apparently due to the lack of robust measurement in the digital industry.

Now it's worth spending a moment to just to repeat that sentence to yourself again. Thought so. It still doesn't make any sense does it?

I even tried pinching myself but that didn't work either.

FMCG advertisers from McDonalds to P&G to Coca Cola would apparently invest more money online if only it were more measurable and there were calls for a common planning currency to enable advertisers to compare this channel with more ‘established' mediums such as TV and press.

If all this were released on the 1^st April it would frankly be much easier to swallow. But unfortunately it's not a playful April Fool and the fact is that we have a situation where what's accurate and meaningful is being ignored at the expense of what is established and accepted.

Of course, measuring the direct effect of any channel in the nebulous world of brand advertising is a challenge. But if any channel has a chance of cracking it, its digital.

Building brands is about making connections, influencing and communicating with a mass audience. And in terms of audience, its search and social media that are the driving forces behind the growth of digital and its much more a failure of strategy at FMCG advertisers than a lack of metrics and accountability in the digital industry that mean these areas are not being better exploited as an integral part of brand advertising campaigns.

There needs to be a greater understanding that success for FMCG advertisers in the digital channel is not about waiting for the search results page to include more video or display formats or about waiting for Twitter or Facebook to develop a new killer display advertising tool. Even less is it about waiting for some new metric or common planning currency to translate accurate data into statistically meaningless data.

After all how ‘robust' is measuring the fact that a few TVs are switched on in a small percentage of people's houses or the concept that a magazine has a ‘pass on rate' which conveniently multiplies its actual readership - compared to an environment where user behaviour (or at least that of their machine) can be accurately tracked and analysed over a period of time?

FMCG advertisers tend to be the most siloed when it comes to their approach to planning a campaign. An ad agency makes the ads, a web agency builds the site and a PR agency gets some coverage. Success for brands in digital requires these siloes to be smashed down and true integration to exist between PR, SEO, social media and the wider above the line advertising.

Until this happens, FMCG advertisers will revert to type and fall back on their familiar and comfortable strategies, perhaps even more so now with rates tumbling in TV and press. A few companies will emerge to lead the way and they will reap the rewards and establish their brands more cost effectively than ever before while their competitors rest on their laurels waiting for the magic metrics train that never comes.