Results Magazine: The Rise of the Secondary KPI
Originally published in The PDMI Results Magazine, September 2022.
By: Matt Wasserlauf, Co-Founder BLOCKBOARD
As long as I’ve been in media, reach and frequency have dominated the metrics and advertisers’ key performance indices (KPIs). At Petry Television 25 years ago, we posted buys with ratings (reach x frequency). At CBS.com, it was impressions (reach x frequency). Even now — 30 years later — it’s still the same old game.
But times, they are a changing.
More and more clients are paying attention to “secondary metrics” or “secondary KPIs.” A certain fatigue seems evident among major advertisers who have seen little sales lift over the years, and now with a recession looming, marketers are getting antsy.
A friend of mine from the leading programmatic platform would tell me that he cringed every time an agency called him in to discuss secondary KPIs. They wanted to know why they didn’t see a sales lift for all the money they spent. Yes, they understood that they got all the impressions and reach they paid for according to the report they received, but why didn’t that translate to sales?
This storyline is starting to bubble to the
top. The issue garnered headlines when Elon Musk put on hold his purchase of Twitter. Too many false or fraudulent Twitter accounts, he claimed. This is at the root of the problems in the digital ad market today.
With this new focus on secondary KPIs, more advertisers are now experimenting with “Turn Off Experiments,” as Dr. Augustine Fou writes about in his May 21 Forbes article, “Marketers’ Turn-Off Experiments Are Winning.” Fou explains that major advertisers, frustrated with their lack of results, are seeing what effects occur when they stop spending digital advertising dollars. Companies like Procter & Gamble, JP Morgan Chase, and Uber have seen no change in sales when they pulled their digital ad dollars. This is an indictment of the programmatic video delivery platforms that currently run the industry.
So, what’s a marketer to do?
Enter Web3 and an entirely new era that is just now getting underway. Web3 will be about trust, transparency, and the decentralization of the power players — like YouTube, The Trade Desk, and Facebook — in the current ecosystem. Marketers will slowly pivot from “Turn-Off Experiments” to turning on in Web3.
An interesting and critical technological advancement for the new Web3 world is the use of blockchain. You may have heard of blockchain in respect to cryptocurrency. However, blockchain, as a transparent ledger, is soon going to be a technology backbone for more industries than just finance.
The PDMI and its councils have begun public conversations around blockchain and its application in the advertising industry. (Disclosure: my company is built on blockchain technology, and we have been part of the PDMI’s recent webinars.)
The transparency blockchain allows is what will ultimately enable marketers to understand data around the advertisement and the audience better. This knowledge allows marketers to depend less on media metrics and move toward establishing secondary KPIs.
Marketers ought to make their metrics and KPIs paramount and primary, while media companies and platforms move their goals into a secondary position.
As we watch the transition to transparency and trust, I believe marketers will become more empowered to define and demand more from their partners. The days of media metrics as the primary KPI are counting down — as the need for customer behavior and sales oriented secondary KPIs start to rise.