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From Survival to Success:
        Honing the Practice
 of Online Marketing Measurement
        in a Time of Change
Chart 1
Background and                                                      Study Demographics
Methodology                                                Titles
Bloomberg BusinessWeek Research Services
launched a research program in September
2009 to determine the attitudes and opinions of
marketing executives and managers with regard                          Managers
                                                                                          Executives
                                                                         44%
to the current online marketing landscape, the                                               56%
future of online marketing, and the use and value
of online marketing tools.

This white paper, “From Survival to Success:
Honing the Practice of Online Marketing
                                                           Annual Revenue
Measurement in a Time of Change,” reviews a
portion of the research and provides analysis                                            $100M -
                                                                                         $249.9M
and insights on the topic of online marketing                                              13%
measurement. It is the first of two white papers                                                 $250M -
                                                                       $2 billion+               $499.9M
intended to facilitate sharing the most important                         42%                      13%
insights from the research. As part of a wider
                                                                                               $500M -
research program, more data and insights will be
                                                                                               $999.9M
available through webinars and videos at this Web                                    $1B -       14%
                                                                                     $1.9B
site: www.coremetricsBW.com                                                          13%

This research program is an online survey of               Country
marketing executives and managers at leading
large companies. Overall, a total of 361 senior
marketing executives in the U.S. and the U.K.
were surveyed in September and October 2009                               U.K.
                                                                                               U.S.
(see Chart 1). For more information about the                             42%
                                                                                               58%
contributors to this research program, please visit:
www.coremetricsBW.com

This research project was funded by a grant
from Coremetrics and was written by Bloomberg              Industry
BusinessWeek Research Services. The editorial
                                                           Financial Services                                  30%
department    of   Bloomberg     BusinessWeek
was not involved in this project. For more                     Technology/
                                                            Communications                                     29%
information about this project, please contact
samuel_gager@businessweek.com.                             Consumer Staples/
                                                                                                         24%
                                                               Discretionary

                                                            Media/Publishing                   17%




Prepared by Bloomberg BusinessWeek
Research Services for Coremetrics                      1
The Current Marketing                                 what’s not and get the best return. Doing so has
                                                          meant that managers and executives have relied
    Landscape: The Push                                   on—and demanded—the use of sophisticated
    for More Rigorous                                     tools to measure the effectiveness of each

    Online Measurement                                    marketing dollar. Return on investment and “what
                                                          works” have been the mantra.
    The continued growth of digital marketing
    reflects the desire within many businesses to
                                                          The Strength of Online Marketing:
    more precisely target and measure the results
                                                          Seeing Businesses through their
    of marketing investments. Online marketing
                                                          Darkest Hour
    measurement has come into its own for a reason:       As the global economic crisis subsides and
    In 2009, marketers across the globe had to hunker     corporate leaders look forward to more prosperous
    down and extract value as best as possible.           times, online marketing is emerging as a survivor
                                                          from the wreckage. This is mainly due to its ability
    It used to be that marketing was far less a science
                                                          to prove value through data—compared to offline
    than an art, with corporate budgets allocated to
                                                          marketing options, which aren’t as information-
    those who were perhaps better at convincing
                                                          rich. 2010 is shaping up to be the year that
    than justifying. No longer is this the case. The
                                                          online marketing builds on what it delivered
    rise of online marketing and its attendant stream
                                                          to organizations in their darkest hour—turning
    of quantifiable information has fast replaced
                                                          measurement for survival into measurement for
    the “finger-in-the-wind” method of managing
                                                          success.
    marketing.

    Today’s marketers appear to be moving towards         The Importance of Key
    more rigorous measurement and accountability,         Performance Indicators
    and as they do, data is taking on a larger role in
    marketing decisions. Yet when heading toward          2009 may well go down as the year that digital
    a distant point on the horizon, any degree of         supplanted offline media as the main vehicle for
    variance can mean missing your mark by a wide         business marketing. Online marketing’s greatest
    margin. While data collected may be accurate, the     strength is its ever-increasing measurement
    decisions that marketers make about what they’re      capability: The swift and accurate calculation of
    measuring in the first place may ultimately take      impact created from dollars spent. That strength
    them in an unexpected or unwanted direction. It’s     is built on the pillar of Key Performance Indicators
    best to start the process with a clear knowledge      (KPIs), measures upon which marketers base
    of what to measure.                                   not only their campaign spend, but also their
                                                          measurement spend. Though companies across
    Return on Investment and                              the business spectrum are increasingly shifting
    “What Works”: The Backbone                            more dollars from offline to online, those with a
    of Marketing Accountability                           true grasp of online’s measurement strength are
    In 2009, marketing accountability was based on        working to ensure that it isn’t undermined by a
    effectiveness: Understand what’s working and          weak KPI infrastructure.




Prepared by Bloomberg BusinessWeek
Research Services for Coremetrics                     2
Building a KPI Foundation                                    The Benefits of Better
   Knowing customer and prospect names, profiles,               Measurement
   addresses, habits, and other, ever-deeper,
   information is driving the flight toward quality             Not every campaign has the same objective,
   marketing measurement. Lack of information                   and in fact each may require a customized
   obscures value and locks away current and future             measurement approach. The nature of online
   dollars. Proving a return through this data can              marketing and its measurement capabilities can
   be the key to success. And just as importantly,              give organizations a 360-degree view of just how
   ensuring a sustainable business model means                  well their marketing dollars are being allocated.
   making sure one’s marketing house is built on                Knowing how a campaign’s impact is felt by the
   solid ground not sand. For many marketers, the               consumer, and how it affects that consumer’s
   KPI foundation is key.                                       attitudes and behavior, continues to accelerate
                                                                the move away from traditional marketing toward
   The data-driven potential of online marketing                online marketing. Those extracting the most value
   is not lost on executives striving for value. The            from the transition are not necessarily those who
   majority of marketers report that online marketing           move fastest—as one might assume—but those
   is seen as an integral part of the marketing efforts         who measure the right things to begin with.
   in their organization (60%). More than half (54%)            The tactic of accuracy supports the strategy of
   claim it is viewed as a cost-effective way to drive          collection.
   revenue (see Chart 2).
                                                                While online offers enhanced ways to quantify
                           Chart 2
                                                                value, the goal falls in line with the goal of
 Question:
 Which of the following statements describes how online         traditional marketing: The Customer is King. In
 marketing is viewed in your organization? (Please select all   fact, this maxim is arguably truer online, where
 that apply).
                                                                companies can offer personalized and tailored
              As an integral part of                            information, content, incentives, and more. Online
              our marketing efforts                     60%
                                                                marketing efforts are focused on what’s broadly
              A cost-effective way                              known as being “sticky:” attracting, converting,
                  to drive revenue
                                                      54%
                                                                and retaining customers. Marketers expressed a
Delivers highly-targeted campaigns              40%             consistent opinion that the three most important
                                                                objectives of online marketing campaigns are
 Allows us to understand customer                               retaining existing customers, converting visitors
behavior across many touch points              39%
                                                                into customers, and attracting new website
     Helps penetrate new market                                 visitors.
segments or certain demographics              37%

 A quick and easy way to meet our                               Marketers ranked value-add imperatives such as
    customers’ changing demands
                                             32%
                                                                making sure visitors do not encounter website
       Prepares our organization to                             problems and increasing visitor value through
 capitalize on the economic upturn     19%
                                                                compelling product/offers/content, just under
       Permits our organization to                              these customer-building goals.
         leapfrog the competition      17%




   Prepared by Bloomberg BusinessWeek
   Research Services for Coremetrics                            3
Personalization is Key                                            personalization to drive online sales, even though
                                                                       many indicate that these programs are becoming
     Email, display advertising, and paid search
                                                                       a priority.
     marketing based on natural search terms are
     the most widely used online tools (see Chart 3).                  For a marketer, personalization is about having a
     But few marketers are utilizing technology-driven                 relevant and persuasive conversation with one’s
                                                                       customer. Using online tools to their full capacity
                              Chart 3                                  means stepping up and ensuring the maxim of
                                                                       “customer is king.” Though perhaps not totally a
  Question:
  Does your organization utilize the following online marketing        zero sum game, marketers must understand that
  tools? (Percent “yes”) (Please select all that apply).               for the most part, they are either all in or all out.
                                                                       To engage in personalization, marketers must
                        Email marketing                      87%
                                                                       commit to it, which means commissioning the full
                                                                       spectrum of technology advantages to capture
                     Display advertising                     86%       the attendant returns.

                                                                       Moving Beyond
           Paid search marketing based
                  on keywords used via                  69%
                                                                       the “Silo” Approach
                   natural search terms
                                                                       While most marketers are also utilizing marketing
                                                                       measurement tools that gauge individual campaign
                   Paid search marketing               66%
                                                                       performance, customer behavior, and display ad
                                                                       performance, many do not appear to be taking a
          Paid search marketing based
                 on keywords used via                 64%              holistic approach and examining their campaign
                     your onsite search
                                                                       performance in one view (see Chart 4).
            Manual onsite cross-selling
              promotions and product                  63%              As has been discussed, online affords a holistic
                    recommendations                                    view of the full marketing construct. The irony is
                                                                       in the effect that agile, online marketing has on
              Personalized email based
           on individual online behavior           52%                 its offline cousin. The lack of directly-linked KPI
                                                                       fundamentals in offline is perpetuating a “silo”
         Personalized display advertising                              approach in the traditional space. The days of
               based on online behavior           50%
                                                                       this approach may be numbered, and for more
                                                                       progressive, modern marketers, ensuring its
            Manual onsite personalized                                 demise means reconnecting KPIs to the overall
         content and recommendations              49%
                                                                       process.
  Technology-driven personalized onsite
    cross-sell product recommendations          44%
                                                                       An interesting side note garnered from this
            based on individual behavior                               research is that far more executives (60%) believe
     Technology-driven “wisdom of the                                  that personalized emails based on individual online
     crowds” onsite cross-sell product        36%                      behavior are being utilized in their organization,
                    recommendations
                                                                       compared to 40% of managers.




Prepared by Bloomberg BusinessWeek
Research Services for Coremetrics                                  4
Chart 4
                                                              Enhancing Online
Question:
Does your organization utilize any of the following online    Measurement for
marketing measurement tools? (Percent “yes”) (Please select
all that apply).                                              Optimal Marketing
    Individual online marketing
                                                        77%   The discussion over effectiveness and any
        campaign performance
                                                              disconnects in the process shows how far
                                                              marketing activity has come in the digital age;
    Online customer behavior –
                                                       76%    it used to be that the simple act of marketing—
               per visit/session
                                                              taking out a display ad or running a radio spot—
Display advertising performance                               was enough. These days, effective marketing
  based on impressions i.e. how                     69%
                                                              means effective marketing measurement. Today’s
  many were exposed to the ad
                                                              marketers know the challenges far better than
         The value of a marketing
                                                    67%       their predecessors, and at a time when the top
              campaign based on
         influence and interaction                            three challenges facing online marketing are
                                                              getting an integrated view of customers (45%),
Individual channel performance                     66%        understanding the influence of the campaign
                                                              (45%), and interpreting the data (41%), the
        Online customer behavior                              questions are no longer about tactical marketing
                                                   66%
             over time – multi-visit                          activity but the relentless drive for marketing
                                                              measurement excellence (see Chart 5). Marketers
      Offline customer behavior                    65%
                                                              understand that measuring the right metrics,
                                                              rather than simply amassing data will yield the
                                                              most value.
       Customer behavior across
       all marketing touch points                 64%
                                                              More Frequent Measurement
                                                              Yields Greater Success
       All channels’ performance
          comparison in one view                58%           Moreover, the study shows that while most
                                                              marketers review their online metrics regularly
 All online marketing campaigns’                              and adjust them at defined intervals, just over half
          performance in one view              55%
                                                              of the marketing professionals surveyed (52%)
                                                              review their online performance metrics weekly,
   Individual vendor performance              53%             while an additional 30% do it only monthly. When
                                                              it comes to adjusting their online campaigns, 41%
                                                              do so at “regularly defined intervals.”
        All vendors’ performance
         comparison in one view           43%
                                                              However, conventional marketer wisdom strongly
                                                              supports the conclusion that using traditional
                                                              offline marketing measurement techniques and
                                                              reviewing them only monthly does not work online.
                                                              The online world favors the nimble and the quick,
                                                              which is at direct odds with the accustomed




    Prepared by Bloomberg BusinessWeek
    Research Services for Coremetrics                         5
Chart 5
                                                                     Return on Marketing
  Question:
  What are your top three challenges when it comes to online         Investment: Justifying
  marketing? (Please select top three).
                                                                     Spend by Proving Value
  Obtaining an integrated view of customers
       across online marketing touch points                45%
                                                                     Return on investment is the universal yardstick
                                                                     for measuring the success of any business
   Understanding the influence of a marketing
 campaign beyond acquisition and conversion                45%       endeavor. Marketing is no different. Measuring a
    to include the influence of each interaction                     particular marketing campaign’s success is the
                                                                     starting point for evaluating whether a company
                    Interpreting data to make
                           business decisions             41%        has grown, or shrunk (or wasted) its dollars by
                                                                     investing in a particular marketing activity.

                                Data accuracy            35%         In 2009, with profits under attack and budgets
                                                                     being slashed, marketers based success on the
                   Determining which metrics
                                                                     tenet of effectiveness—what’s working and what’s
                               are important
                                                     31%             not (see Chart 6). Online marketing’s ability to
                                                                     deliver near-real-time data has given pressured
                   Reconciling multiple online                       executives the ability to justify the “spend.”
                      marketing applications        25%
                                                                     Executives know that marketing matters, but it’s
                                                                     a marketing manager’s job to communicate just
    Meeting different reporting requirements
                   for different stakeholders      20%               how much it matters, and what type of investment
                                                                     is best. Online measurement gives managers the
                                                                     capability to prove the value of their activity.
                               Too much data 14%
                                                                     Investing in programs that yield the best return
                                                                     was the focus in 2009. Overall executives in both
                                                                     the U.S. and U.K. felt a greater scrutiny than
      techniques used in the traditional marketing
                                                                     in previous years to understand what’s working
      space. To impede the fast-moving online sphere
                                                                     and what’s not. When asked how they evaluate
      with the gradual—some might say idle—methods
                                                                     marketing success, most marketers report that
      used offline is to miss the mark.
                                                                     meeting key performance indicators (KPIs) is the
      The trend of more frequent measurement seems                   top choice for measuring whether a campaign
      to be gaining ground. Data from 2009 showed that               has been effective (47%). Similarly, improving
      retailers who benchmarked performance daily to                 performance levels over last year is the second
      watch what was and wasn’t selling considerably                 most common measure (41%) and providing
      outperformed those who did not.                                the ability to trend and measure to what extent
                                                                     a campaign has been effective is the third.
                                                                     Looking back on 2009, more executives (22%
                                                                     vs. 9% managers) will evaluate 2009 marketing
                                                                     success as “having capitalized on an economic
                                                                     upturn.”




Prepared by Bloomberg BusinessWeek
Research Services for Coremetrics                                6
Chart 6                              Among managers and executives, managers lead
Question:                                                          the way in believing effectiveness will be key in
Which statement best describes marketing accountability as it      2010 (54% vs. 41% of executives). More executives
relates to 2009? To 2010?
                                                                   believe there will be a shift to optimization (43%
                                                            45%    vs. 38% of managers).
It’s about effectiveness
                                                             46%


                                                 35%
                                                                   The Self-Fulfilling Cycle
   It’s about execution
                                                34%
                                                                   Marketing return on investment has consistently
                                                                   been one of the most difficult things for an
                                                 35%
It’s about optimization                                            organization to measure, but the ability to do so
                                                       41%
                                                                   has quickly become a competitive advantage for
                                                34%
                                                                   companies that have made it a priority. Perhaps
     It’s about change
                                                 35%               that explains why, though a third of revenue
                                                                   is currently driven by online marketing (versus
                                                33%                60% by offline marketing), 74% increased their
      It’s about strategy
                                                      39%          financial investment in online marketing in 2009.
                                                                   In fact, 31% did so by more than 10%. However,
                                               31%
       It’s about agility                                          quick and nimble measurement will only deliver
                                                33%
                                                                   its full value when the process is complete: Acting
                                                                   on the measurement in a timely fashion. After all,
                                           29%
     It’s about survival                                           measuring quickly and acting slowly is definitely
                                   20%
                                                                   not in the spirit of measurement excellence.
                                           29%
    It’s about balance                                             The increased expansion of the online side of
                                                  37%
                                                                   the equation reveals that marketers are deriving
  It’s about managing                      29%                     ever-increasing value from what online marketing
          expectations                    27%                      measurement provides. Offline marketing may
                                                                   currently   dominate    among      marketers,    but
                            2009        2010
                                                                   investment in online marketing is growing. The
                                                                   three areas that have seen the biggest spending
   Compared to executives, managers felt the                       increase are all online-related (see Chart 7).
   pressure of 2009 more acutely, with 32% saying
                                                                   Moreover, three in four say they are increasing
   that in 2009, marketing was about survival. Only
                                                                   their financial investment in online marketing
   19% believe this will continue in 2010.
                                                                   activity, which appears to be driven by the fact
   Going forward, 2010 will again be about                         that 60% of marketers say that online marketing
   effectiveness—but optimization and strategy are                 is an integrated part of their marketing efforts,
   also emerging as key in both the U.K. and U.S.;                 and 54% say that it is a cost-effective way to
   managers are looking beyond survival and taking                 drive revenue. This integration must come with
   a more calculated, even tactical approach when it               a 360-degree, holistic view, to be most effective.
   comes to their marketing investments.                           While marketers say their efforts are integrated,




    Prepared by Bloomberg BusinessWeek
    Research Services for Coremetrics                              7
it would behoove them to audit their activities to                 ability to measure what matters, which in turn
     ensure comprehensiveness.                                          draws more dollars to the effort in a self-fulfilling
                                                                        cycle of data-driven effectiveness measurement.
     Accurate, Automatic
     Marketing Accountability                                           The Global Appeal
     Those surveyed believe that moving spending from
     offline to online is a more cost-effective customer
                                                                        of Online Marketing
     acquisition and retention strategy. To be able to                  The ability to effectively allocate budgets across
     measure ad effectiveness for any campaign with                     marketing initiatives is a critical success factor for
     unparalleled accuracy gives marketers the fuel,                    marketers on both sides of the Atlantic. Although
     and the cover, of accountability and optimized                     in both the U.S. and the U.K. the top three choices
     performance. Online marketing provides the                         for allocating marketing budget were online-
                                                                        based, the study shows that marketers in Britain
                               Chart 7                                  had differing priorities from their counterparts in
  Question:                                                             America.
  Compared to last year, has your spending in the following areas
  increased, decreased or stayed the same? (Percent “increased”).       The same issues surrounding marketing
                                                                        measurement exist around the globe: Again,
       Online marketing efforts                            69%
                                                                        advertising is not an exact science. Currently,
                                                                        most marketers do not have a precise way to
    Generating online business                       56%
                                                                        measure the success of a campaign. Determining
                                                                        how many sales dollars are generated by each
   Web 2.0 (social media, etc.)                      55%
                                                                        advertising dollar spent is as elusive in the U.K. as
                                                                        in the U.S., as is evidenced by the parallel tack of
     New customer acquisition                   48%
                                                                        U.K. marketers to move toward online.

            Customer retention                 47%                      In the U.K., online marketing efforts were still the
                                                                        number one spending area, but closely followed
          Customer profitability
                                               44%                      by new customer acquisition (57%), customer
                    and value
                                                                        retention (55%), and customer profitability and
                      Field sales        29%                            value (51%) (see Chart 8). Furthermore, the U.K.’s
                                                                        spending increases appear to be more balanced
     Overall marketing budget         27%                               across all areas of the marketing mix. The U.K.
                                                                        market is exhibiting similarities to the U.S.
   Traditional marketing efforts
                 (print, TV, etc.)
                                      25%                               market of 2006 and 2007: Investing in traditional
                                                                        marketing tactics.
                Telephone sales      20%


    Brick-and-mortar business        19%


                  Catalog sales 10%




Prepared by Bloomberg BusinessWeek
Research Services for Coremetrics                                   8
Chart 8                                 The Business Challenge:
Question:
Compared to last year has your spending in the following areas
                                                                      Reliable Data,
increased, decreased or stayed the same? (Percent “increased”).
                                                                      Wrong Metrics
                                                                70%
Online marketing efforts
                                                               68%    The demand to make marketing more accountable
                                                                      becomes more insistent every year. Online
               Web 2.0                                   59%          marketing can be a complex endeavor, which
     (social media, etc.)                          49%                makes it all the more important to align business
                                                                      goals with online measurement effectiveness.
      Generating online                               58%
              business                              53%               Yet this study found a disconnect between using
                                                                      effectiveness as the benchmark of marketing
         New customer                        42%                      accountability and corresponding investment
            acquisition                              57%
                                                                      increases in online, versus what marketers are
                                                                      actually measuring. Moreover, a notable number
                                             41%
    Customer retention
                                                     55%
                                                                      of marketers, both executives and managers, do
                                                                      not believe they are measuring the right type of
  Customer profitability                    38%                       data to begin with.
            and value                              51%
                                                                      Getting Back to Basics:
                                      29%
                                                                      Measure What Matters
              Field sales
                                      29%                             Only two in five marketers are confident that they
                                                                      are tracking the right metrics. As noted earlier,
      Overall marketing         20%
                                                                      meeting KPIs is the most common method of
                budget                  37%
                                                                      measuring campaign effectiveness. It stands to
                                                                      reason that marketing goals cannot be adequately
  Traditional marketing        19%
  efforts (print, TV, etc)              34%                           evaluated if marketers are not sure they are
                                                                      measuring the right metrics from the start.
       Brick-and-mortar       16%
               business          24%
                                                                      Matching expectation and efficacy is a must
                                                                      or the modern marketer will continue to miss
                              14%                                     the opportunities afforded by online and its
        Telephone sales
                                      29%                             measurement capacity. The marketer who takes
                                                                      accountability seriously will ensure a proper
           Catalog sales
                             3%                                       alignment between foundational KPIs and
                               19%
                                                                      organizational goals. The executive who doesn’t
                                                                      will almost certainly waste time, money, and good
                             U.S.           U.K.
                                                                      will. As competition heats up in 2010, not meeting
                                                                      expectations by being “disconnected” is a risky
                                                                      proposition.




   Prepared by Bloomberg BusinessWeek
   Research Services for Coremetrics                                  9
The study also found notable differences among                        The Promise of Online
     managers and executives in perceived marketing
     challenges. Marketing managers feel that                              Marketing: Unlocking
     interpreting data to make business decisions is                       the Value of Greater
     more challenging than executives do (47% vs.
     36%), as well as data accuracy (39% vs. 32%)                          Measurement
     (see Chart 9).
                                                                           The inherent measurement advantage of online
     Executives find it more challenging to reconcile                      marketing continues to make it an increasingly
     multiple online marketing applications (28% vs.                       important part of the marketer’s palette. In 2009
     20%). In addition, more executives than managers                      this advantage helped marketers survive. The
     feel it is important to segment and target using                      realization that online marketing measurement
     historic behavior data on multi visits (74% vs.                       could provide significant benefits in times of stress
     66%) and both online and offline behavior (70%                        portends a greater reliance on digital marketing
     vs. 61%).                                                             for 2010.

                                                                 Chart 9
 Question:
 What are your top three challenges when it comes to online marketing? (Please select top three).

  Obtaining an integrated view of customers across                                                                      44%
                      online marketing touch points                                                                           48%


        Understanding the influence of a marketing
                                                                                                                        44%
     campaign beyond acquisition and conversion to
                                                                                                                                    50%
            include the influence of each interaction


                                                                                                            36%
       Interpreting data to make business decisions
                                                                                                                              47%


                                                                                                      32%
                                      Data accuracy
                                                                                                                  39%


                                                                                                    30%
         Determining which metrics are important
                                                                                                          34%


                                                                                             28%
   Reconciling multiple online marketing applications
                                                                               20%


         Meeting different reporting requirements                               21%
                        for different stakeholders                            19%


                                                                       15%
                                     Too much data
                                                                               20%

                                                        Executives         Managers




Prepared by Bloomberg BusinessWeek
Research Services for Coremetrics                                10
As marketers on both sides of the Atlantic report,
the ability to measure the effectiveness of their
marketing investment allows them to justify
their activity and get the best return by better
understanding what’s working and what’s not.
As such, marketers are expanding their online
investment as they derive ever-increasing
value from what online marketing measurement
provides. This self-fulfilling cycle of investment,
effectiveness measurement, and justification
is helping to increase the number of dollars
dedicated to online.

To be sure, modern marketers are constantly
wondering if they are measuring the right things,
allocating dollars correctly, and using the tactics
that will best serve them. Yet the fact that the
dialogue has become about measurement and
what their success exposes shows how far
marketing has come from the days of “finger in
the wind” marketing activity and obscured value.




Prepared by Bloomberg BusinessWeek
Research Services for Coremetrics                     11
A Message                                                                        John Squire
                                                                       Chief Strategy Officer
from Our Sponsor                                                                 Coremetrics




Dear marketer,

Some say there’s irony in everything. Well, there was plenty of irony in Bloomberg BusinessWeek
Research Services’ (BWRS) enlightening report. As I read through, I couldn’t help but notice how a lot of
us in online marketing find ourselves in these Catch-22’s:

   • We believe that key performance indicators (KPIs) are the best measure of marketing success. But
     we’re not sure which KPIs we should use.
   • We know that online marketing demands speed and agility. While we claim to measure our
     performance frequently, we only change our direction by the month or quarter—not by the hour or
     the day.
   • We recognize that online marketing return on investment (ROI) requires quantifiable data. But
     we measure effectiveness on our own past performance versus how we stack up against the
     competition.
I’m excited about this survey and how it outlines the state of online marketing. Coremetrics
commissioned BWRS for this study to better understand the industry and our customers’ most
pressing needs. The insights in this study will help us refine our solutions, and hopefully they’ll help you
strengthen your online marketing efforts as well.

This study communicates loud and clear that online marketing is a work in progress. Some leading
companies are approaching online marketing excellence, and I’m happy to say many of them are
Coremetrics customers. Others among us need to continue building, refining, and improving. Here are
my key takeaways.

We need to be faster and more agile.
Online marketing is dynamic. Customers move fast. We have to move faster. We have to adapt on
the fly. But not many of us do. Most of us still apply old-school, offline marketing techniques to the
hyperactive online world.

I was surprised to see that in BWRS’s survey data that just 8 percent of companies monitor
performance metrics in real time. Nearly half monitor metrics either monthly or quarterly. And then, few
of us quickly adapt our campaigns based on what the metrics are telling us. That’s too much lag time.
That’s opportunity wasted.

Those that do adapt in real time can win big. We saw real-time online marketing in action in the U.S.
just before Christmas 2009. When the East Coast was walloped by a snowstorm that kept thousands of
shoppers at home on the weekend before Christmas, savvy online companies seized the opportunity.
Some whipped up storm-specific emails and personalized display ads. Others offered free two-day
shipping. You could hear the cha-ching from coast to coast.

Coremetrics’ benchmark data captured the stunning results. Online sales shot up more than 20 percent
for the weekend, compared to 2008. That’s agility in action. That’s speed of execution. That’s what
Coremetrics enables.

Hundreds of Coremetrics customers are putting our technology to work to accelerate online marketing
and measurement alike. They’re leveraging real-time automation in our Coremetrics Continuous
Optimization Platform to zero in on opportunities with targeted messaging, fast.

We need to measure the right metrics.
On one hand, BWRS survey participants ranked meeting KPIs as the no. 1 measure of marketing
success. Fair enough.

But I did a double-take when I read a related data point: More than 60 percent were unsure if they
were tracking the best metrics! If meeting KPIs are critical to marketing success, we’d better know
which metrics are most meaningful to the bottom line. To top it off, I learned that 77 percent measured
performance by individual campaigns. Far fewer had achieved the ideal of KPI measurement across
multiple campaigns and channels.

Over the years, we’ve seen how the most successful Coremetrics customers are often the ones with the
richest, broadest KPI foundations. These companies excel because they take literally the old maxim, If
you can’t measure, you can’t improve. These customers have built metrics into the fabric of their online
marketing solutions. They enrich their KPIs with ever-deeper customer data and integrate them across
channels. They’re zealous users of our analytics and reporting technologies to continually monitor,
adapt, and win.

We need to continually rethink effectiveness.
What best describes marketing accountability? According to BWRS participants, effectiveness is the no.
1 answer. So I had to ask myself, well, what best describes effectiveness?

As BWRS put it, effectiveness boils down to what works and what doesn’t. ROI is the universal
yardstick, but ROI measurement has often been more an art than a science. That’s changing, thanks to
the quantifiable data generated by online marketing. Coremetrics customers that exploit that data are
more precisely measuring ROI, and other characteristics of success.

One of those characteristics is a company’s competitive position in its industry versus competitors.
But as I saw in the survey data, nearly 60 percent didn’t find it easy to compare their online marketing
performance against the competition.

Enter Coremetrics Benchmark. One of the crown jewels in our portfolio, Coremetrics Benchmark is the
industry’s only peer-level solution that lets you benchmark performance against competition and in
your industry. More than 500 top businesses contribute data to Benchmark, including Abercrombie &
Fitch, Harvard Business School Publishing, Macy’s, Men’s Health Magazine, myFICO, Office Depot, and
PETCO.

And Benchmark is growing. We’ve doubled the number of participating companies in the past year, and
incorporated new features for near-real-time data and advanced analytics. Best of all, our Benchmark
service is free to all Coremetrics customers.

When it’s time to grow your online marketing, we hope you’ll take a hard look at Coremetrics. Leading
companies such as Bank of America, Fair Isaac, InterContinental Hotel Group, Macy’s, Staples, and
Victoria’s Secret are among the more than 2,100 global brands that use Coremetrics Software as a
Service (SaaS) to optimize online marketing through real-time personalized recommendations, email and
display ad targeting, search engine bid management, analytics, benchmarking, and more.

Central to our solutions are the Coremetrics Continuous Optimization Platform and our Lifetime
Individual Visitor Experience (LIVE) Profile, which tracks customer behavior both online and offline over
the long term. Featuring full automation, Coremetrics technology is engineered to help you deliver the
right message via the right channel to the right customer at the right time.

We share the optimism expressed in BWRS’s survey. Nearly a third of managers felt that marketing was
about “survival” during the economic ordeals of 2009. Only 19 percent believed that would continue
in 2010. Instead, managers are looking forward to effectiveness, execution, and optimization—and
ultimately, the science of success.

To learn more, please visit www.coremetrics.com

John Squire
Chief Strategy Officer
Coremetrics




Copyright and Disclaimer Notices

Neither Bloomberg BusinessWeek, Bloomberg nor Coremetrics makes any guarantees or warranties as to the
accuracy or completeness of this report. Neither Bloomberg BusinessWeek, Bloomberg or Coremetrics shall be liable
to the user or anyone else for any inaccuracy, error or omission, regardless of cause, or for any damages resulting
therefrom. In no event will Bloomberg BusinessWeek, Bloomberg , Coremetrics, or any of their third-party licensors
be liable for any indirect, special or consequential damages, including but not limited to lost time, lost money, lost
profits or lost good will, whether in contract, tort, strict liability or otherwise, and whether or not such damages are
foreseen or unforeseen with respect to any use of this document. This document, or any portion thereof, may not be
reproduced, transmitted, introduced into a retrieval system or distributed without the written consent of Bloomberg
and Coremetrics.

© Copyright 2010 Bloomberg and Coremetrics. All rights reserved.

The names of actual companies and products mentioned herein may be the trademarks of their respective owners.

ELECTRONIC VERSION AVAILABLE
To see or use an electronic copy of this document in PDF format, please visit
 http://www.coremetricsbw.com
Measuring Online Marketing Success in Times of Change

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Measuring Online Marketing Success in Times of Change

  • 1. From Survival to Success: Honing the Practice of Online Marketing Measurement in a Time of Change
  • 2. Chart 1 Background and Study Demographics Methodology Titles Bloomberg BusinessWeek Research Services launched a research program in September 2009 to determine the attitudes and opinions of marketing executives and managers with regard Managers Executives 44% to the current online marketing landscape, the 56% future of online marketing, and the use and value of online marketing tools. This white paper, “From Survival to Success: Honing the Practice of Online Marketing Annual Revenue Measurement in a Time of Change,” reviews a portion of the research and provides analysis $100M - $249.9M and insights on the topic of online marketing 13% measurement. It is the first of two white papers $250M - $2 billion+ $499.9M intended to facilitate sharing the most important 42% 13% insights from the research. As part of a wider $500M - research program, more data and insights will be $999.9M available through webinars and videos at this Web $1B - 14% $1.9B site: www.coremetricsBW.com 13% This research program is an online survey of Country marketing executives and managers at leading large companies. Overall, a total of 361 senior marketing executives in the U.S. and the U.K. were surveyed in September and October 2009 U.K. U.S. (see Chart 1). For more information about the 42% 58% contributors to this research program, please visit: www.coremetricsBW.com This research project was funded by a grant from Coremetrics and was written by Bloomberg Industry BusinessWeek Research Services. The editorial Financial Services 30% department of Bloomberg BusinessWeek was not involved in this project. For more Technology/ Communications 29% information about this project, please contact samuel_gager@businessweek.com. Consumer Staples/ 24% Discretionary Media/Publishing 17% Prepared by Bloomberg BusinessWeek Research Services for Coremetrics 1
  • 3. The Current Marketing what’s not and get the best return. Doing so has meant that managers and executives have relied Landscape: The Push on—and demanded—the use of sophisticated for More Rigorous tools to measure the effectiveness of each Online Measurement marketing dollar. Return on investment and “what works” have been the mantra. The continued growth of digital marketing reflects the desire within many businesses to The Strength of Online Marketing: more precisely target and measure the results Seeing Businesses through their of marketing investments. Online marketing Darkest Hour measurement has come into its own for a reason: As the global economic crisis subsides and In 2009, marketers across the globe had to hunker corporate leaders look forward to more prosperous down and extract value as best as possible. times, online marketing is emerging as a survivor from the wreckage. This is mainly due to its ability It used to be that marketing was far less a science to prove value through data—compared to offline than an art, with corporate budgets allocated to marketing options, which aren’t as information- those who were perhaps better at convincing rich. 2010 is shaping up to be the year that than justifying. No longer is this the case. The online marketing builds on what it delivered rise of online marketing and its attendant stream to organizations in their darkest hour—turning of quantifiable information has fast replaced measurement for survival into measurement for the “finger-in-the-wind” method of managing success. marketing. Today’s marketers appear to be moving towards The Importance of Key more rigorous measurement and accountability, Performance Indicators and as they do, data is taking on a larger role in marketing decisions. Yet when heading toward 2009 may well go down as the year that digital a distant point on the horizon, any degree of supplanted offline media as the main vehicle for variance can mean missing your mark by a wide business marketing. Online marketing’s greatest margin. While data collected may be accurate, the strength is its ever-increasing measurement decisions that marketers make about what they’re capability: The swift and accurate calculation of measuring in the first place may ultimately take impact created from dollars spent. That strength them in an unexpected or unwanted direction. It’s is built on the pillar of Key Performance Indicators best to start the process with a clear knowledge (KPIs), measures upon which marketers base of what to measure. not only their campaign spend, but also their measurement spend. Though companies across Return on Investment and the business spectrum are increasingly shifting “What Works”: The Backbone more dollars from offline to online, those with a of Marketing Accountability true grasp of online’s measurement strength are In 2009, marketing accountability was based on working to ensure that it isn’t undermined by a effectiveness: Understand what’s working and weak KPI infrastructure. Prepared by Bloomberg BusinessWeek Research Services for Coremetrics 2
  • 4. Building a KPI Foundation The Benefits of Better Knowing customer and prospect names, profiles, Measurement addresses, habits, and other, ever-deeper, information is driving the flight toward quality Not every campaign has the same objective, marketing measurement. Lack of information and in fact each may require a customized obscures value and locks away current and future measurement approach. The nature of online dollars. Proving a return through this data can marketing and its measurement capabilities can be the key to success. And just as importantly, give organizations a 360-degree view of just how ensuring a sustainable business model means well their marketing dollars are being allocated. making sure one’s marketing house is built on Knowing how a campaign’s impact is felt by the solid ground not sand. For many marketers, the consumer, and how it affects that consumer’s KPI foundation is key. attitudes and behavior, continues to accelerate the move away from traditional marketing toward The data-driven potential of online marketing online marketing. Those extracting the most value is not lost on executives striving for value. The from the transition are not necessarily those who majority of marketers report that online marketing move fastest—as one might assume—but those is seen as an integral part of the marketing efforts who measure the right things to begin with. in their organization (60%). More than half (54%) The tactic of accuracy supports the strategy of claim it is viewed as a cost-effective way to drive collection. revenue (see Chart 2). While online offers enhanced ways to quantify Chart 2 value, the goal falls in line with the goal of Question: Which of the following statements describes how online traditional marketing: The Customer is King. In marketing is viewed in your organization? (Please select all fact, this maxim is arguably truer online, where that apply). companies can offer personalized and tailored As an integral part of information, content, incentives, and more. Online our marketing efforts 60% marketing efforts are focused on what’s broadly A cost-effective way known as being “sticky:” attracting, converting, to drive revenue 54% and retaining customers. Marketers expressed a Delivers highly-targeted campaigns 40% consistent opinion that the three most important objectives of online marketing campaigns are Allows us to understand customer retaining existing customers, converting visitors behavior across many touch points 39% into customers, and attracting new website Helps penetrate new market visitors. segments or certain demographics 37% A quick and easy way to meet our Marketers ranked value-add imperatives such as customers’ changing demands 32% making sure visitors do not encounter website Prepares our organization to problems and increasing visitor value through capitalize on the economic upturn 19% compelling product/offers/content, just under Permits our organization to these customer-building goals. leapfrog the competition 17% Prepared by Bloomberg BusinessWeek Research Services for Coremetrics 3
  • 5. Personalization is Key personalization to drive online sales, even though many indicate that these programs are becoming Email, display advertising, and paid search a priority. marketing based on natural search terms are the most widely used online tools (see Chart 3). For a marketer, personalization is about having a But few marketers are utilizing technology-driven relevant and persuasive conversation with one’s customer. Using online tools to their full capacity Chart 3 means stepping up and ensuring the maxim of “customer is king.” Though perhaps not totally a Question: Does your organization utilize the following online marketing zero sum game, marketers must understand that tools? (Percent “yes”) (Please select all that apply). for the most part, they are either all in or all out. To engage in personalization, marketers must Email marketing 87% commit to it, which means commissioning the full spectrum of technology advantages to capture Display advertising 86% the attendant returns. Moving Beyond Paid search marketing based on keywords used via 69% the “Silo” Approach natural search terms While most marketers are also utilizing marketing measurement tools that gauge individual campaign Paid search marketing 66% performance, customer behavior, and display ad performance, many do not appear to be taking a Paid search marketing based on keywords used via 64% holistic approach and examining their campaign your onsite search performance in one view (see Chart 4). Manual onsite cross-selling promotions and product 63% As has been discussed, online affords a holistic recommendations view of the full marketing construct. The irony is in the effect that agile, online marketing has on Personalized email based on individual online behavior 52% its offline cousin. The lack of directly-linked KPI fundamentals in offline is perpetuating a “silo” Personalized display advertising approach in the traditional space. The days of based on online behavior 50% this approach may be numbered, and for more progressive, modern marketers, ensuring its Manual onsite personalized demise means reconnecting KPIs to the overall content and recommendations 49% process. Technology-driven personalized onsite cross-sell product recommendations 44% An interesting side note garnered from this based on individual behavior research is that far more executives (60%) believe Technology-driven “wisdom of the that personalized emails based on individual online crowds” onsite cross-sell product 36% behavior are being utilized in their organization, recommendations compared to 40% of managers. Prepared by Bloomberg BusinessWeek Research Services for Coremetrics 4
  • 6. Chart 4 Enhancing Online Question: Does your organization utilize any of the following online Measurement for marketing measurement tools? (Percent “yes”) (Please select all that apply). Optimal Marketing Individual online marketing 77% The discussion over effectiveness and any campaign performance disconnects in the process shows how far marketing activity has come in the digital age; Online customer behavior – 76% it used to be that the simple act of marketing— per visit/session taking out a display ad or running a radio spot— Display advertising performance was enough. These days, effective marketing based on impressions i.e. how 69% means effective marketing measurement. Today’s many were exposed to the ad marketers know the challenges far better than The value of a marketing 67% their predecessors, and at a time when the top campaign based on influence and interaction three challenges facing online marketing are getting an integrated view of customers (45%), Individual channel performance 66% understanding the influence of the campaign (45%), and interpreting the data (41%), the Online customer behavior questions are no longer about tactical marketing 66% over time – multi-visit activity but the relentless drive for marketing measurement excellence (see Chart 5). Marketers Offline customer behavior 65% understand that measuring the right metrics, rather than simply amassing data will yield the most value. Customer behavior across all marketing touch points 64% More Frequent Measurement Yields Greater Success All channels’ performance comparison in one view 58% Moreover, the study shows that while most marketers review their online metrics regularly All online marketing campaigns’ and adjust them at defined intervals, just over half performance in one view 55% of the marketing professionals surveyed (52%) review their online performance metrics weekly, Individual vendor performance 53% while an additional 30% do it only monthly. When it comes to adjusting their online campaigns, 41% do so at “regularly defined intervals.” All vendors’ performance comparison in one view 43% However, conventional marketer wisdom strongly supports the conclusion that using traditional offline marketing measurement techniques and reviewing them only monthly does not work online. The online world favors the nimble and the quick, which is at direct odds with the accustomed Prepared by Bloomberg BusinessWeek Research Services for Coremetrics 5
  • 7. Chart 5 Return on Marketing Question: What are your top three challenges when it comes to online Investment: Justifying marketing? (Please select top three). Spend by Proving Value Obtaining an integrated view of customers across online marketing touch points 45% Return on investment is the universal yardstick for measuring the success of any business Understanding the influence of a marketing campaign beyond acquisition and conversion 45% endeavor. Marketing is no different. Measuring a to include the influence of each interaction particular marketing campaign’s success is the starting point for evaluating whether a company Interpreting data to make business decisions 41% has grown, or shrunk (or wasted) its dollars by investing in a particular marketing activity. Data accuracy 35% In 2009, with profits under attack and budgets being slashed, marketers based success on the Determining which metrics tenet of effectiveness—what’s working and what’s are important 31% not (see Chart 6). Online marketing’s ability to deliver near-real-time data has given pressured Reconciling multiple online executives the ability to justify the “spend.” marketing applications 25% Executives know that marketing matters, but it’s a marketing manager’s job to communicate just Meeting different reporting requirements for different stakeholders 20% how much it matters, and what type of investment is best. Online measurement gives managers the capability to prove the value of their activity. Too much data 14% Investing in programs that yield the best return was the focus in 2009. Overall executives in both the U.S. and U.K. felt a greater scrutiny than techniques used in the traditional marketing in previous years to understand what’s working space. To impede the fast-moving online sphere and what’s not. When asked how they evaluate with the gradual—some might say idle—methods marketing success, most marketers report that used offline is to miss the mark. meeting key performance indicators (KPIs) is the The trend of more frequent measurement seems top choice for measuring whether a campaign to be gaining ground. Data from 2009 showed that has been effective (47%). Similarly, improving retailers who benchmarked performance daily to performance levels over last year is the second watch what was and wasn’t selling considerably most common measure (41%) and providing outperformed those who did not. the ability to trend and measure to what extent a campaign has been effective is the third. Looking back on 2009, more executives (22% vs. 9% managers) will evaluate 2009 marketing success as “having capitalized on an economic upturn.” Prepared by Bloomberg BusinessWeek Research Services for Coremetrics 6
  • 8. Chart 6 Among managers and executives, managers lead Question: the way in believing effectiveness will be key in Which statement best describes marketing accountability as it 2010 (54% vs. 41% of executives). More executives relates to 2009? To 2010? believe there will be a shift to optimization (43% 45% vs. 38% of managers). It’s about effectiveness 46% 35% The Self-Fulfilling Cycle It’s about execution 34% Marketing return on investment has consistently been one of the most difficult things for an 35% It’s about optimization organization to measure, but the ability to do so 41% has quickly become a competitive advantage for 34% companies that have made it a priority. Perhaps It’s about change 35% that explains why, though a third of revenue is currently driven by online marketing (versus 33% 60% by offline marketing), 74% increased their It’s about strategy 39% financial investment in online marketing in 2009. In fact, 31% did so by more than 10%. However, 31% It’s about agility quick and nimble measurement will only deliver 33% its full value when the process is complete: Acting on the measurement in a timely fashion. After all, 29% It’s about survival measuring quickly and acting slowly is definitely 20% not in the spirit of measurement excellence. 29% It’s about balance The increased expansion of the online side of 37% the equation reveals that marketers are deriving It’s about managing 29% ever-increasing value from what online marketing expectations 27% measurement provides. Offline marketing may currently dominate among marketers, but 2009 2010 investment in online marketing is growing. The three areas that have seen the biggest spending Compared to executives, managers felt the increase are all online-related (see Chart 7). pressure of 2009 more acutely, with 32% saying Moreover, three in four say they are increasing that in 2009, marketing was about survival. Only their financial investment in online marketing 19% believe this will continue in 2010. activity, which appears to be driven by the fact Going forward, 2010 will again be about that 60% of marketers say that online marketing effectiveness—but optimization and strategy are is an integrated part of their marketing efforts, also emerging as key in both the U.K. and U.S.; and 54% say that it is a cost-effective way to managers are looking beyond survival and taking drive revenue. This integration must come with a more calculated, even tactical approach when it a 360-degree, holistic view, to be most effective. comes to their marketing investments. While marketers say their efforts are integrated, Prepared by Bloomberg BusinessWeek Research Services for Coremetrics 7
  • 9. it would behoove them to audit their activities to ability to measure what matters, which in turn ensure comprehensiveness. draws more dollars to the effort in a self-fulfilling cycle of data-driven effectiveness measurement. Accurate, Automatic Marketing Accountability The Global Appeal Those surveyed believe that moving spending from offline to online is a more cost-effective customer of Online Marketing acquisition and retention strategy. To be able to The ability to effectively allocate budgets across measure ad effectiveness for any campaign with marketing initiatives is a critical success factor for unparalleled accuracy gives marketers the fuel, marketers on both sides of the Atlantic. Although and the cover, of accountability and optimized in both the U.S. and the U.K. the top three choices performance. Online marketing provides the for allocating marketing budget were online- based, the study shows that marketers in Britain Chart 7 had differing priorities from their counterparts in Question: America. Compared to last year, has your spending in the following areas increased, decreased or stayed the same? (Percent “increased”). The same issues surrounding marketing measurement exist around the globe: Again, Online marketing efforts 69% advertising is not an exact science. Currently, most marketers do not have a precise way to Generating online business 56% measure the success of a campaign. Determining how many sales dollars are generated by each Web 2.0 (social media, etc.) 55% advertising dollar spent is as elusive in the U.K. as in the U.S., as is evidenced by the parallel tack of New customer acquisition 48% U.K. marketers to move toward online. Customer retention 47% In the U.K., online marketing efforts were still the number one spending area, but closely followed Customer profitability 44% by new customer acquisition (57%), customer and value retention (55%), and customer profitability and Field sales 29% value (51%) (see Chart 8). Furthermore, the U.K.’s spending increases appear to be more balanced Overall marketing budget 27% across all areas of the marketing mix. The U.K. market is exhibiting similarities to the U.S. Traditional marketing efforts (print, TV, etc.) 25% market of 2006 and 2007: Investing in traditional marketing tactics. Telephone sales 20% Brick-and-mortar business 19% Catalog sales 10% Prepared by Bloomberg BusinessWeek Research Services for Coremetrics 8
  • 10. Chart 8 The Business Challenge: Question: Compared to last year has your spending in the following areas Reliable Data, increased, decreased or stayed the same? (Percent “increased”). Wrong Metrics 70% Online marketing efforts 68% The demand to make marketing more accountable becomes more insistent every year. Online Web 2.0 59% marketing can be a complex endeavor, which (social media, etc.) 49% makes it all the more important to align business goals with online measurement effectiveness. Generating online 58% business 53% Yet this study found a disconnect between using effectiveness as the benchmark of marketing New customer 42% accountability and corresponding investment acquisition 57% increases in online, versus what marketers are actually measuring. Moreover, a notable number 41% Customer retention 55% of marketers, both executives and managers, do not believe they are measuring the right type of Customer profitability 38% data to begin with. and value 51% Getting Back to Basics: 29% Measure What Matters Field sales 29% Only two in five marketers are confident that they are tracking the right metrics. As noted earlier, Overall marketing 20% meeting KPIs is the most common method of budget 37% measuring campaign effectiveness. It stands to reason that marketing goals cannot be adequately Traditional marketing 19% efforts (print, TV, etc) 34% evaluated if marketers are not sure they are measuring the right metrics from the start. Brick-and-mortar 16% business 24% Matching expectation and efficacy is a must or the modern marketer will continue to miss 14% the opportunities afforded by online and its Telephone sales 29% measurement capacity. The marketer who takes accountability seriously will ensure a proper Catalog sales 3% alignment between foundational KPIs and 19% organizational goals. The executive who doesn’t will almost certainly waste time, money, and good U.S. U.K. will. As competition heats up in 2010, not meeting expectations by being “disconnected” is a risky proposition. Prepared by Bloomberg BusinessWeek Research Services for Coremetrics 9
  • 11. The study also found notable differences among The Promise of Online managers and executives in perceived marketing challenges. Marketing managers feel that Marketing: Unlocking interpreting data to make business decisions is the Value of Greater more challenging than executives do (47% vs. 36%), as well as data accuracy (39% vs. 32%) Measurement (see Chart 9). The inherent measurement advantage of online Executives find it more challenging to reconcile marketing continues to make it an increasingly multiple online marketing applications (28% vs. important part of the marketer’s palette. In 2009 20%). In addition, more executives than managers this advantage helped marketers survive. The feel it is important to segment and target using realization that online marketing measurement historic behavior data on multi visits (74% vs. could provide significant benefits in times of stress 66%) and both online and offline behavior (70% portends a greater reliance on digital marketing vs. 61%). for 2010. Chart 9 Question: What are your top three challenges when it comes to online marketing? (Please select top three). Obtaining an integrated view of customers across 44% online marketing touch points 48% Understanding the influence of a marketing 44% campaign beyond acquisition and conversion to 50% include the influence of each interaction 36% Interpreting data to make business decisions 47% 32% Data accuracy 39% 30% Determining which metrics are important 34% 28% Reconciling multiple online marketing applications 20% Meeting different reporting requirements 21% for different stakeholders 19% 15% Too much data 20% Executives Managers Prepared by Bloomberg BusinessWeek Research Services for Coremetrics 10
  • 12. As marketers on both sides of the Atlantic report, the ability to measure the effectiveness of their marketing investment allows them to justify their activity and get the best return by better understanding what’s working and what’s not. As such, marketers are expanding their online investment as they derive ever-increasing value from what online marketing measurement provides. This self-fulfilling cycle of investment, effectiveness measurement, and justification is helping to increase the number of dollars dedicated to online. To be sure, modern marketers are constantly wondering if they are measuring the right things, allocating dollars correctly, and using the tactics that will best serve them. Yet the fact that the dialogue has become about measurement and what their success exposes shows how far marketing has come from the days of “finger in the wind” marketing activity and obscured value. Prepared by Bloomberg BusinessWeek Research Services for Coremetrics 11
  • 13. A Message John Squire Chief Strategy Officer from Our Sponsor Coremetrics Dear marketer, Some say there’s irony in everything. Well, there was plenty of irony in Bloomberg BusinessWeek Research Services’ (BWRS) enlightening report. As I read through, I couldn’t help but notice how a lot of us in online marketing find ourselves in these Catch-22’s: • We believe that key performance indicators (KPIs) are the best measure of marketing success. But we’re not sure which KPIs we should use. • We know that online marketing demands speed and agility. While we claim to measure our performance frequently, we only change our direction by the month or quarter—not by the hour or the day. • We recognize that online marketing return on investment (ROI) requires quantifiable data. But we measure effectiveness on our own past performance versus how we stack up against the competition. I’m excited about this survey and how it outlines the state of online marketing. Coremetrics commissioned BWRS for this study to better understand the industry and our customers’ most pressing needs. The insights in this study will help us refine our solutions, and hopefully they’ll help you strengthen your online marketing efforts as well. This study communicates loud and clear that online marketing is a work in progress. Some leading companies are approaching online marketing excellence, and I’m happy to say many of them are Coremetrics customers. Others among us need to continue building, refining, and improving. Here are my key takeaways. We need to be faster and more agile. Online marketing is dynamic. Customers move fast. We have to move faster. We have to adapt on the fly. But not many of us do. Most of us still apply old-school, offline marketing techniques to the hyperactive online world. I was surprised to see that in BWRS’s survey data that just 8 percent of companies monitor performance metrics in real time. Nearly half monitor metrics either monthly or quarterly. And then, few of us quickly adapt our campaigns based on what the metrics are telling us. That’s too much lag time. That’s opportunity wasted. Those that do adapt in real time can win big. We saw real-time online marketing in action in the U.S. just before Christmas 2009. When the East Coast was walloped by a snowstorm that kept thousands of
  • 14. shoppers at home on the weekend before Christmas, savvy online companies seized the opportunity. Some whipped up storm-specific emails and personalized display ads. Others offered free two-day shipping. You could hear the cha-ching from coast to coast. Coremetrics’ benchmark data captured the stunning results. Online sales shot up more than 20 percent for the weekend, compared to 2008. That’s agility in action. That’s speed of execution. That’s what Coremetrics enables. Hundreds of Coremetrics customers are putting our technology to work to accelerate online marketing and measurement alike. They’re leveraging real-time automation in our Coremetrics Continuous Optimization Platform to zero in on opportunities with targeted messaging, fast. We need to measure the right metrics. On one hand, BWRS survey participants ranked meeting KPIs as the no. 1 measure of marketing success. Fair enough. But I did a double-take when I read a related data point: More than 60 percent were unsure if they were tracking the best metrics! If meeting KPIs are critical to marketing success, we’d better know which metrics are most meaningful to the bottom line. To top it off, I learned that 77 percent measured performance by individual campaigns. Far fewer had achieved the ideal of KPI measurement across multiple campaigns and channels. Over the years, we’ve seen how the most successful Coremetrics customers are often the ones with the richest, broadest KPI foundations. These companies excel because they take literally the old maxim, If you can’t measure, you can’t improve. These customers have built metrics into the fabric of their online marketing solutions. They enrich their KPIs with ever-deeper customer data and integrate them across channels. They’re zealous users of our analytics and reporting technologies to continually monitor, adapt, and win. We need to continually rethink effectiveness. What best describes marketing accountability? According to BWRS participants, effectiveness is the no. 1 answer. So I had to ask myself, well, what best describes effectiveness? As BWRS put it, effectiveness boils down to what works and what doesn’t. ROI is the universal yardstick, but ROI measurement has often been more an art than a science. That’s changing, thanks to the quantifiable data generated by online marketing. Coremetrics customers that exploit that data are more precisely measuring ROI, and other characteristics of success. One of those characteristics is a company’s competitive position in its industry versus competitors. But as I saw in the survey data, nearly 60 percent didn’t find it easy to compare their online marketing performance against the competition. Enter Coremetrics Benchmark. One of the crown jewels in our portfolio, Coremetrics Benchmark is the industry’s only peer-level solution that lets you benchmark performance against competition and in
  • 15. your industry. More than 500 top businesses contribute data to Benchmark, including Abercrombie & Fitch, Harvard Business School Publishing, Macy’s, Men’s Health Magazine, myFICO, Office Depot, and PETCO. And Benchmark is growing. We’ve doubled the number of participating companies in the past year, and incorporated new features for near-real-time data and advanced analytics. Best of all, our Benchmark service is free to all Coremetrics customers. When it’s time to grow your online marketing, we hope you’ll take a hard look at Coremetrics. Leading companies such as Bank of America, Fair Isaac, InterContinental Hotel Group, Macy’s, Staples, and Victoria’s Secret are among the more than 2,100 global brands that use Coremetrics Software as a Service (SaaS) to optimize online marketing through real-time personalized recommendations, email and display ad targeting, search engine bid management, analytics, benchmarking, and more. Central to our solutions are the Coremetrics Continuous Optimization Platform and our Lifetime Individual Visitor Experience (LIVE) Profile, which tracks customer behavior both online and offline over the long term. Featuring full automation, Coremetrics technology is engineered to help you deliver the right message via the right channel to the right customer at the right time. We share the optimism expressed in BWRS’s survey. Nearly a third of managers felt that marketing was about “survival” during the economic ordeals of 2009. Only 19 percent believed that would continue in 2010. Instead, managers are looking forward to effectiveness, execution, and optimization—and ultimately, the science of success. To learn more, please visit www.coremetrics.com John Squire Chief Strategy Officer Coremetrics Copyright and Disclaimer Notices Neither Bloomberg BusinessWeek, Bloomberg nor Coremetrics makes any guarantees or warranties as to the accuracy or completeness of this report. Neither Bloomberg BusinessWeek, Bloomberg or Coremetrics shall be liable to the user or anyone else for any inaccuracy, error or omission, regardless of cause, or for any damages resulting therefrom. In no event will Bloomberg BusinessWeek, Bloomberg , Coremetrics, or any of their third-party licensors be liable for any indirect, special or consequential damages, including but not limited to lost time, lost money, lost profits or lost good will, whether in contract, tort, strict liability or otherwise, and whether or not such damages are foreseen or unforeseen with respect to any use of this document. This document, or any portion thereof, may not be reproduced, transmitted, introduced into a retrieval system or distributed without the written consent of Bloomberg and Coremetrics. © Copyright 2010 Bloomberg and Coremetrics. All rights reserved. The names of actual companies and products mentioned herein may be the trademarks of their respective owners. ELECTRONIC VERSION AVAILABLE To see or use an electronic copy of this document in PDF format, please visit http://www.coremetricsbw.com