The drawbacks of performance-based metrics
Christoph Schuh is CMO of Tomorrow Focus AG, one of Germany's leading digital content providers. Tomorrow Focus is the largest supplier of German-language content on the web. As a media owner, someone whose income is based on selling advertising, Schuh can see issues with performance-based advertising.
"The danger in buying performance is that it ignores the value of repeated exposure and of time-delayed responses," he says. "I think performance buying to a single-response dimension will become insufficient; we need to develop behavioral targeting."
Notice that Schuh is not opposed to performance-based advertising. He simply wants to see performance assessment become more sophisticated.
One of the most common problems encountered when dealing with performance-based advertising is disagreement between the advertiser and the publisher over the numbers. Web metrics systems are still fairly primitive, and the web analytics community has yet to establish clear procedures for measurement. As a result, advertiser and publisher systems can often disagree about exactly how many people have been delivered.
"Currently, ad people don't understand the metrics," says Schuh. "This makes resolving disputes extremely difficult."
Addressing this issue requires training advertising sales people in web analytics so they have a language in which to communicate and so they understand what it is their web analytics systems are telling them.
In addition, resolving discrepancies between the advertiser's and the publisher's numbers usually involves a technical conversation about how the data is processed on both systems. The field of web analytics lacks standards, and the few standards that do exist are rarely implemented consistently within analytics software. If both systems are measuring the same thing in the same way, the numbers will match to within a few percentage points.
But discrepancies occur because the two systems are measuring things differently or using the same terms for different things. If the respective technicians explain to each other what their systems are measuring, and how, it is usually possible to adjust the numbers to match. This requires that advertising and marketing people have access to their web analytics technicians, and have the training to be able to communicate with them.
Much of this can be avoided if the methodology for performance assessment is agreed upon before the deal is signed. Once again, this requires that sales staff have sufficient training to participate in such conversations, and that, where necessary, they can call on their technicians for assistance.
The publisher dilemma
As a publisher, performance-based advertising represents both an opportunity and a threat. As Christoph Schuh says, "You have to understand your website better than your client… You have to understand the behavior of your readers in the conversion funnel… You need an ecommerce unit within your editorial team."
Once, the editorial focus was purely on producing content that would appeal to a large swath of the population -- appeal to enough readers and the advertisers would follow. In the early days of the internet, we thought this was all we needed to do. Jim Barksdale, president and CEO of Netscape until the company merged with AOL, said in 1995: "Don't worry about how to earn money online. Simply get a big enough audience and the money will come to you."
This was true for a while, but advertisers are wising up. They're not interested in mere numbers; they want behavior. This presents publishers with a dilemma. We all know you can't make money selling content to readers -- they won't pay for it. The presence of huge quantities of free information on the web has devalued the perceived value of all information in the eyes of the online community.
The main way to make money as a content publisher at present, then, is via advertising. If advertisers become completely focused on performance, editors become confronted with the need to design content in order to get the acquisitions their advertisers want. Should editors, then, write to make sales, or do they write to gather audience and hope the sales just happen because they got the right audience?
In the long term, the future surely belongs to those who can develop content that attracts an audience and, at the same time, frame that content in a manner that encourages the behavior advertisers want.
Brandt Dainow is an independent web analytics consultant and the CEO of ThinkMetrics. Read full bio.