What do KPI's Got to Do,
Got to Do With it?
Who needs a KPI, When a KPI can be broken?
Jennifer Green | June 30, 2021
Nothing has been debated, merchandised or squandered more by marketers in the past few years than the KPI. Every global holding company and media company has a solution, and everyone’s is the best. Now a new study by the Association of National Advertisers (ANA) has shone a light on a major disconnect between media agencies and clients: the KPIs that media agencies think are most important are not the KPIs that scratch the itch for clients.
MEDIA AGENCIES ARE BEING HELD MORE ACCOUNTABLE THAN EVER BEFORE.
The most important KPIs to media agencies are based on outcome, and to a lesser extent, measurement quality. What this really means is that media agencies are working harder than ever to prove their value as agency partners to their clients. They need to say, “this ad campaign sold a lot of units” or “this ad campaign drove a ton of consumers into your retail location.” (Author’s note: If I had a dollar for every time I heard a media agency partner or brand say the phrase “we are driving business outcomes” in the past few years I would have many dollars.)
It makes logical sense that media agencies would rank the things that help them prove their value as most important. But are these the things that really drive the most impact for brands?
MANY CMOS JUST NEED THE BEST BANG FOR THEIR BUCK.
If you slide into the DMs of some CMOs and ask what’s top of mind today, many of them would reply with “I heart efficiency.” According to the study, their top two KPIs are CPM (Cost per thousand impressions) and CPC (Cost per Click). Put simply, clients want to know they got the most bang for their buck. Monthly scorecards from the media agency are a great way for clients to show their boss, “look how far our money went!” Which matters a great deal, considering the average CMO tenure lasts only 40 months.
And yet, media agencies ranked exactly zero efficiency KPIs on their top 10 most important list.
WHAT'S GOING ON?
This is a disconnect, to be sure. Media agencies want to show they did a good job to their clients. And clients want to show they did a good job to their bosses. At a certain point, everyone needs to look out for themselves. And, the instant gratification is intoxicating.
We at Familiar Creatures often wonder, who is looking out for the brand?
Many of these KPIs hold little strategic and long-term value for brands. Sure you can make a lot of sales overnight, and do that efficiently. But what differentiates a beloved brand like Nike from a cheap, buy-one-get-one-free shoe brand? Answer: the strength of its brand (not monthly sales or ad efficiency reports).
Smart marketers know that if you continue to neglect the health of the brand you won’t even have a brand. Adidas learned this lesson the hard way a couple of years ago. At some point very soon, the marketing industry will have to rectify the disconnect between the time it takes to build/maintain a brand and the instant gratification metrics that scratch the itch in the short term. While there are opportunities (Unique Reach and Exposed ROAs, to name a couple), the industry has a ways to go in terms of effectively utilizing these metrics to measure or even come close to maintaining brand health.
WHAT DO WE THINK?
We believe it is critical to ensure brand health is always a meaningful part of the story. And according to this study, they aren’t even in the story right now. Media agencies and brand agencies should work together in service of brands, building a measurement framework that is integrated and thinks top down and bottom up. Brand health KPIs (things like: Brand Affinity, Net Promoter Score, Brand Equity, etc.) will never make into a monthly scorecard. But they shouldn’t be off in a silo by themselves.
Someday, we hope to see a paper from the ANA that discusses the importance of brand health KPIs, and how they can work together to inform the most important media KPIs to drive real business outcomes (spoiler alert: not clicks). But that’s another story for another time. Until then, we will be doing our part to make sure our brands stay healthy and thriving for years to come by working across disciplines and silos, thinking long term and short.
