VideoDo a quick search on the video website www.youtube.com and you can find a 54-second clip starring a BMW. It's not just any BMW. This one is equipped with state-of-the-art infrared technology that improves a driver's night vision. In the 24 hours after the video first appeared on YouTube last summer, it was downloaded 63,000 times; by the autumn, that number was nearly 200,000. That's pretty good considering that the €46.6 billion German car maker never intended the clip to be a mass market ad—it had been produced for the corporate website and, unbeknownst to BMW, a car enthusiast got hold of it and uploaded it on YouTube. The accidental success shows how consumers are changing the face of marketing, says Jörg Reimann, head of marketing innovations at BMW.
But the car maker is no stranger to that phenomenon. In 2001, it set up a dedicated team around 12 specialists to focus on innovation, "so that BMW stays ahead of the curve" in terms of tapping into unconventional media that can affect brand awareness and customer loyalty, says Reimann. One benefit has been 2.5m video downloads from its website, like the one featuring an interview with head designer Chris Bangle. Then there are the video podcast pilots. A series of week-long podcasts at recent auto shows in Frankfurt, Detroit and Geneva were a surprise hit attracting more than 400,000 subscribers (so-called "RSS feeds") from all around the world—in fact, about a third came from Japan, an audience that the marketing planners hadn't even expected to reach.
The challenge for Reimann: is there an ROI or other metric that'll show whether the investments in video clips, podcasts and the like are contributing to BMW's bottom line? Not yet, he says. As "new media" marketing booms—the amount of money companies have spent on internet advertising alone has nearly tripled, from €7.3 billion in 2001 to €20.5 billion in 2006, according to investment bank Piper Jaffray—Reimann says the metrics capable of measuring its business impact haven't had a chance to catch up. "It's not so easy at the moment," he says. "The measurements we use for classic media [such as broadcast television] don't work for most of the new media."
Other marketers agree that it's becoming tougher. Getting a grip on marketing's effectiveness has always been a tough task for them, but now it's even harder as the popularity of traditional monolithic mass media are quickly giving way to proliferating alternative media. The greater the number of channels, the greater the number of metrics needed to monitor them.
It doesn't help much that the old metrics are generally flawed. Market share, customer satisfaction, audience cost-of-reach, brand awareness, all are useful, but marketing experts say none shows how an entire chain of marketing events eventually leads to a sale or new business. "Even if [an ad] reached its intended viewers or readers and improved their awareness of the product, these results have little relevance if they don't ultimately put cash in the company's coffers," write Roy Young, vice president of development at online publisher MarketingProfs, and his co-authors, Allen Weiss and David Stewart, in Marketing Champions (John Wiley & Sons, 2006).
And even cutting-edge metrics don't do the trick with the type of marketing that's coming Reimann's way. Consider econometrics. Still in early development, it's a blend of mathematical statistics, consumer behaviour theory and business results to develop analytical modelling around marketing activities. "We try to use history to look forward," says Tom Lloyd, EU director of analytics for Kraft, a $34 billion (€25.7 billion) US consumer goods firm. But because of its reliance on historical data, the use of econometrics is limited and, of course, it can't be applied to new media. "Often [the impact of new media] can be small in scale and they do call for a different approach. It's something we're talking about aggressively."
The new media conundrum is part of a wider frustration for marketers trying to justify marketing spend with hard numbers that "demonstrate that they're skilled in not only the art, but also the science" of their profession, observes Richard Ingleton, a partner with Accenture's marketing science unit. Unsurprisingly, a global survey of nearly 800 marketing professionals by US consultancy Lenskold Group and MarketingProfs earlier this year found 42% of respondents are "a long way from where they should be" in terms of measuring financial returns.
Many marketers are juggling a mishmash of metrics. In a recent paper—"Boosting returns on marketing investment"—McKinsey consultants cite one company's struggle to get a grip on its marketing returns. While consumer behaviour studies were able to show that it was neglecting brand awareness not spending enough on advertising, the company was still unclear about which channels to invest in and the real costs of various media.
So it now has a portfolio of metrics that can be applied to each marketing investment: the first set of metrics (using what's called the "funnel method") helps it study historical data in order to understand where its message will have the greatest impact in the future; the second set ("brand driver analysis") determines which type of message resonates with which type of customer; and the third set ("reach-cost-quality methodology") identifies the cost/quality tradeoffs between various campaigns. Still early in its development, the new metrics package is "imperfect," McKinsey consultants concede. But it's a start.
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