Are You Measuring and Analyzing or Flying Blind?

Blinders are good in appropriate contexts In September 2009 digital advertising overtook all other channels (including TV) in the United Kingdom [more here]. In October 2009 McKinsey stressed the importance of online retailing in the U.S., forecasting that by the year 2011 online sales will account for over 45% of all US retail sales [more here]. In December of the same year eMarketer forecasted a 5.5% U.S. online advertising spending increase (after a -4.6% drop in 2009).

A recent study conducted jointly by Bloomberg BusinessWeek Research Services and Coremetrics confirmed the online advertising industry growth in the U.S., but also made an interesting (and worrying) observation. The company’s Chief Strategy Officer, John Squire, pointed out that while being “aware of the value online marketing provides,” and spending more on their online marketing, “many [business leaders] are not sure they are utilizing it effectively.” Coremetrics writes:

While spending on online marketing efforts has increased, most marketers lack confidence that they are using the right metrics to gauge marketing success and value. When asked how they would evaluate marketing success at the end of 2009, nearly half (47%) said “meeting our key performance indicators.” However, well over half of marketers (62%) claim they are not confident they are tracking the right metrics for online marketing performance — a significant discrepancy.

This is an alarming observation; an the study also points out that in addition to the 62% of online marketers that are not sure they are using the right measurement tools and techniques, 41% of marketers have problems interpreting marketing data.

Per this particular research, in 2010 the online ad spending will increase by close to 70%, but can we really afford to fly blind?

Affiliate marketing spending is also increasing, and per Forrester Research we are going to see an increase both this year, and beyond:

US Affiliate Marketing Spending 2007 to 2014

What metrics are you using to judge of your affiliate program’s performance, and do you know how to read all of the affiliate marketing metrics that speak to the effectiveness of your efforts?

Not too long ago I suggested 5 KPIs to use: (i) affiliate recruited, (ii) activity index, (iii) activation, (iv) traffic, (v) sales volume. Of course, there are also such key metrics as (vi) conversion rate, (vii) EPC, (viii) fraud-based reversals, (ix) impressions, and hits, (x) average order value, and net profit after affiliate (and other) marketing expenses are subtracted. What else are you (or should we be) tracking and measuring?

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