Michael Delaney: Five observations on the state of measurement in New Zealand

Michael Delaney (pictured above), general manager – digital at Hearts & Science, reflects on the evolving challenges and opportunities in marketing measurement, as highlighted at the recent IAB MeasureUp event. Drawing parallels between the cross-channel complexity faced by marketers in the 1960s and today’s digital landscape, Delaney explores how tools like marketing mix modelling (MMM) are resurging to meet the demand for better understanding consumer behavior.

 

In the 1960s, marketers wrestled with the emerging phenomenon of consumers choosing where to spend their time, freely able to access everything from transistor radios, television and newspapers.

Sound familiar? Facing their own cross-channel cross-device landscape, marketers actively looked to improve their understanding of consumer behaviour through campaign measurement techniques like Day-After-Recall and the earliest forms of the recently resurgent marketing mix modelling (MMMs).

This same need to improve our ways of understanding consumer behaviour resounded at last week’s IAB MeasureUp event – refreshingly reminding us that the fundamental challenge of marketing measurement hasn’t changed much over the last 60 years.

The event itself – the largest marketing and media measurement conference of it’s kind in Australia & New Zealand – was a complete sell-out, and a local signal of a larger industry focus of measurement solutions, part driven by privacy regulation changes and part by marketing decision-making uncertainty magnified by COVID.

Topics ranged from what’s signal and what’s noise, the concept of unified marketing measurement and even how “synthetic data” can be applied to better understand customer behaviour when viewing advertising.

Although a mouthwatering agenda of thought-provoking discussion on topics and techniques, it highlighted the need to step back and consider some of the strategic implications from the current measurement moment we’re in.

Are we actually clear about what marketing measurement means?

At it’s core, the goal of marketing measurement is about reducing the uncertainty of understanding incredibly complex consumer behaviour.

Whether a decision or action is taken off the back of this depends on the role measurement plays in the organisation.

Has the role of measurement been clearly defined in the organisation?

Do we want measurement to inform us vs. base marketing decisions on?

Do we want to measure what we did last year but slightly better?

Clearly defining the role measurement plays in an organisation will help identify the different techniques and tools needed to support – instead of ‘tails-wagging-dogs’ or the shinier part our industry can sometimes celebrate.

The right tools and techniques also depend greatly on each company’s needs. For example, two brands might both want to know their return on investment (ROI) by media channel. But if one only needs this information yearly, while the other needs it monthly, their needs will naturally differ leading to traditional marketing mix modelling in some cases or a hybrid AI-powered MMM combined with advanced digital attribution in others.

Are we keeping our expectations in check?

The recent explosion of marketing measurement ‘products’ and sophisticated techniques has created more opportunities and a lower barrier to entry for marketers looking to better measure. As an industry we love to laud this explosion of solutions too (particularly in Australia). We just need to be careful this greater business focus, marketing investment and solution choice doesn’t cloud our expectations of what measurement can realistically provide stakeholders.

Like TV recall surveys in the 60s, all measurement techniques today are imperfect. Less imperfect than before due to tech innovations like machine learning modelling and AI, but still imperfect in understanding the behaviour of people. And that’s okay.

The practice of marketing measurement is about using a selection of relevant but imperfect techniques to directionally support better decision-making, moving with the twists and turns of business quickly in the process. Unless, of course, the brand is seeking to build the perfect model or approach and isn’t concerned about the time and cost involved.

Measurement is not a practice of providing absolute certainty to marketers or the business, and no level of investment today will be able to provide this. As more business investment continues to rightly flow into marketing measurement, setting these expectations early and defining the limits of what is and isn’t possible to stakeholders is key.

The Marketing Mix Modelling headache for Marketers today

You don’t need to spend a long time on Google to find news articles as recently as 5 years ago touting the death of Econometric Modelling/MMMs towards a future of individual level measurement (now firmly past).

Although this useful technique has been around for 70+ years, it’s resurgence today presents a new kind of marketing practitioner challenge, driven by an explosion of MMM options for marketers to consider. Everything from self-service platforms, open-source options from Meta, Google and PyMC and highly bespoke services from deep measurement specialists are now available.

It’s a very exciting time for our industry because of this, but facing these options, marketers need to be able to navigate and evaluate a wide range of cost, methodology and service options that will provide varying levels of usefulness, again depending on the role measurement plays for the business.

But if we play a ‘What If?’ scenario on the direction of travel based on this explosion of MMM solutions, then a future world of competitive table-stakes measurement emerges as the tide rises and more brands access econometric techniques.

The quality of these will of course vary, but if brands are currently evaluating MMMs for their business it’s worth considering what their USP for this model would be that’s better than their competitors. Equally important too is whether the marketing team has clear governance around how the results of MMM will be used to optimise marketing efforts – another often overlooked type of competitive advantage for a business when done correctly.

Discussing such strategic considerations upfront should help set a pathway towards the most effective measurement approach for brands to take. Taking these strategic musings aside, it’s such a rich moment for measurement within our industry and genuinely exciting to see it coming to the fore in New Zealand.