Accountability and ROI are buzzwords you hear from most people in marketing but the degree of interest tends to vary according to discipline. Despite the great work in the IPA Effectiveness awards most people in advertising are quite disconnected from accountability; but increasingly econometric modeling is being used to identify the effect of advertising.
There is an interesting article in Businessweek on how Math is starting to have a profound effect on digital advertising, as people start to mine the data to see how campaigns can be improved. Obviously Google and Overture are the prime examples of this - all the data can be analysed and a campaign reduced - essentially - to an equation; spending a dollar on adwords generates X dollars of sales.
In email marketing too, there is a huge amount of data generated and the ability to learn how to constantly improve performance is key - we're doing lots of this in our work with Halifax ShareDealing. Its good old fashioned DM, but done in real time with the ability to dig into the real detail.
Bill Gates has also seen the light and has announced a lab in China to develop learnings in this area that will help them compete better with Google. As the press release states the aim is;
providing advertisers with rich targeting capabilities based on audience intelligence information while giving consumers a more relevant online experience.
And another article on this topic points out the number of advertising related patents applied for by Microsoft in 2005.
As targeting capability improves ( and is used by advertisers - currently you can be very precise in targetting online but most advertisers go for quicker -and cheaper- network buys) the ROI on online advertising will improve. And there are companies like MMA (and some of the smarter management consultants) who are actively helping advertisers understand how their marketing works.
We think this is really interesting area - as advertisers become better able to measure the effect of their marketing will the "experts" - the Agencies - step up and develop expertise to keep their place at the table? Smart media agencies will, but what about creative agencies?
We believe that it's crucial that agencies understand how marketing is measured and use their expertise to make their work more effective. Google and Microsoft etc are going to be really influential in the future of marketing and we're not sure Agencies get this.
But a huge upside of this new world order is the possibility of developing a new business models. Just as affiliates only get paid when an agreed action takes place - a sale or an application - will Agencies with confidence in their abilities move to more success based remuneration?
We're doing more and more of this, and it's of great interest to lots of clients - its potentially a win win for all parties.