Close ☰
Menu ☰

More on metrics

Posted on: Friday 1st of April 2011

 

Aristotle said the natural state of matter is rest, so he had to explain motion: with the concept of the Prime Mover. Newton said the natural state of matter is motion, and explained rest in terms of friction. They both looked at exactly the same evidence and drew opposite conclusions.

 

I think we’ve got a similar problem in marketing metrics. Marketers have been on a long and fruitless wild goose chase – the quest for ‘evidence’ that they are changing consumer behaviour; for evidence of their role as the Prime Mover of markets. We can stay on this quest forever but we won’t get far. The Prime Mover does not exist. So evidence of his work does not exist.

 

I outlined the beginnings of an alternative way of looking at marketing metrics in my recent Marketing magazine article on the end of retailer power. In it, I suggest that there is an underlying ‘gravitational force’ that determines which marketing initiatives work and which don’t. This gravitational force is the degree to which it improves the individual’s rather than the organisation’s metrics.

 

Individuals’ quest to improve their metrics is Newtonian rather than Aristotleian: it’s the natural state of market motion. There are two crucial points to note here :

 

  1. 1. personal metrics are multi-dimensional. They relate to how well I spend or invest incommensurate personal assets such as my money, my time, my attention, my emotions etc. We are always making trade offs between one and the other, and there are common ‘signatures’ or patterns: when our main goals are instrumental versus emotional; or our top priority is saving time versus saving money, etc.
  2. 2. personal metrics relate to the person’s life and not to any particular product or organisation: the two rarely overlap perfectly. So therefore, understanding the value of a product in isolation can be misleading. Personal metrics relate to achieving desired outcomes in our lives. Usually this involves sourcing and integrating many different inputs – products and services.

 

So, for the individual, value is not defined entirely by a product’s attributes. It’s defined by the individual’s goal, the attributes of different inputs to this goal, the costs of making decisions about both the goal, its implementation and its necessary inputs, and the cost of acquiring and integrating these inputs to achieve this goal.

 

Markets change and move as people change their goals, or how best to achieve these goals. In other words, the Prime Mover of markets is individuals’ quest to improve their personal metrics – personal ROI. Marketing works when it helps people do this. It’s ignored when it doesn’t. It’s got very little if anything to do with marketers’ ability to change consumer attitudes or behaviours.

 

I aired the second leg of my metrics rethink at WARC’s Measuring Advertising Performance conference this week. My talk (available free here for registered users) boiled down to three things.

 

First, most of the evidence collected to demonstrate marketing ‘effectiveness’ is not evidence of what we think it is. It’s not marketers changing consumer attitudes and behaviours. It’s something else: the degree to which marketers have tapped into, or aligned to, individuals’ unchanging quest to improve their own personal metrics (as above).

 

Second, advertising is a product like any other. It’s picked up and used to the degree that it’s valued by the user. Understanding advertising in this way – as a product that needs to be designed with the user’s rather than the producer’s purposes in mind – is completely different to understanding advertising as a ‘stimulus’ which ‘causes’ a ‘response’.

 

Third, our current narcissistic approach to advertising metrics both reflects the Prime Mover misattribution and renders alternative explanations invisible. Ad effectiveness metrics are narcissistic because they only measure the costs and benefits of one side of the equation: what it costs the advertiser and what benefits the advertiser gets from it. The consumer’s costs and benefits – consumer value – do not enter this particular equation. This renders it insoluble.

 

Behavioural Economics

 

I also talked about behavioural economic effects which complicate matters. For example, awareness is an involuntary act. You can’t decide to become unaware of something that you have been made aware of. Awareness breeds familiarity, and familiarity breeds ‘liking’: we are instinctively suspicious of things we are not familiar with.

 

For this reason there is a definite, largely unchanging layer of advertising effects which have nothing to do with advertising’s value to the user and which are indeed a sort of cause-and-effect mechanism. But (at the risk of labouring the point) this mechanism is not advertising ‘changing’ the consumer; it’s advertising tapping into the unchanging manifestations of the hard-wiring of the human brain.

 

To understand advertising effectiveness we therefore need to understand both these aspects: ‘involuntary’ BE-style effects and ‘voluntary’ effects of consumers using advertising as just another information product. It’s a bit like Newton. To understand the movement of bodies we need to understand both the nature of motion and friction.

 

Alan Mitchell