Why Are Ad Tracking Systems Still Running On A Formula That Doesn't Work?


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In the May, 2012 CMO Survey from Duke’s Fuqua School of Business, there was a startling revelation:  62.8% of marketing managers are not using available or requested marketing analytics. That doesn’t sound very smart, but sometimes surveys don’t reveal why.  It could very well be that data requested takes them weeks to receive, yet decisions need to be made now.

In the spirit of digging deeper, here’s another survey:  are marketers smarter than the average car wash guy?

It bears some background.  There was a time at your local car wash when you simply handed the tip to the guy who had the wash rag in his hand and opened the driver-side door for you. 

But what about the two guys who vacuumed your car?  Or the wheel guy who quickly circumferenced your car, brushing black grime off your wheels before the car went into the wash?  Or the two other guys wiping the inside and outside of your car under the burning sun?  They get no tip. None.

Sooner than later the car wash guys from the beginning of the car wash to the end demand their share of the tips, igniting a Donnybrook of a fight. 

Here’s where you’re about to discover if you’re smarter than a car wash guy…especially with Internet advertising.

The peacemaker comes along and realises the problem:  Six guys work their butts off, one takes the tips, and he’s facing a mutiny because his workers go unrewarded. It dawns on him that this is exactly what’s been happening for years. 

This, too, is exactly what’s been happening in Internet advertising–for years.  It’s called last ad attribution, where the very last ad (just like that car wash guy) is the lone recipient for the reward of ad tracking.  The last ad at the end takes the reward for others’ hard work. 

So advertisers look at the conversion “winner,” and subsequently cut the others.  As each month goes by with more and more budgets, advertisers affirm a system rooted in flawed media.  So are you a peacemaker, or the one who keeps rewarding one guy for an entire team’s work?

One media source doesn’t translate into a conversion, just as one guy doesn’t clean the entire car at the car wash.  According to 3 years of data from C3 metrics, only 3% of the time is there one media source in a conversion.  97% of the time in Internet advertising, attributed performance shows many players getting the consumer down the path.  Certain media (digital, TV, print) stimulate consumers in the beginning, and other media help move consumers along the path, getting the consumer through the sales funnel.

Take this example from one of our clients in the automotive listing category.  45% of conversions for this client came after 10 or more digital marketing events. This is a mix of display, social, search, retargeting and TV – a team of ads that are all working together towards the conversion at the bottom of the funnel.  

So why are ad tracking systems still operating on a woefully flawed formula where just one media stimulus takes the reward for it all?  Those systems were developed 15 years ago and are ancient (the Spice Girls were popular then).  A lot has changed:  retargeting has arrived, YouTube arrived, Facebook arrived, Twitter arrived, rich media arrived, affiliate, search, and email marketing are now commonplace.  But legacy systems die hard.  Unless attribution modelling (whether simple or sophisticated) is used to determine performance of your media, legacy systems essentially tell you that no purchase funnel exists, even though the concept of a purchase funnel was invented in 1898 by E. Lewis.

The funnel does exist.  Each industry will vary.  For an advertiser spending tens of millions in TV and little online, the average number digital marketing events in its funnel is seven.  For another advertiser spending millions online and little on TV, the average number of digital marketing events in their funnel is 16.  For another advertiser in a high-consideration purchase, like the example above, the average number of digital marketing events in their funnel is 31.  Only 3% of the time is there just one.  Saying no funnel exists is fiction.

Don’t dress like a Spice Girl stuck in the ’90s:  start measuring your media with modern day attribution modelling vs. last ad.  When your CMO surveys you, will you be smarter than a car wash guy?   

Mark Hughes is CEO of C3 Metrics

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