Why Media Metrics Matter
A Primer on Media Measurement and Why it Defines Your World
We sometimes treat the information industries as if they were like any other enterprise, but they are not, for their structure determines who gets heard.
— Tim Wu, The Master Switch
Advertising funds much of the information and entertainment in our lives. The amount of advertising funding each source is determined by media metrics. Media metrics help advertisers understand who is looking at their ads (if anyone) and what they’re doing after they see them.
Perform well against key media metrics and your property will thrive. Fail to deliver and your newspaper, TV station, website, podcast, or newsletter will need to find money elsewhere.
Media metrics influence what information circulates because they determine which information sources gets paid. And content, like most anything else, follows the easy money.
What Are Media Metrics?
Media metrics tell advertisers if their ads are worthwhile. They answer questions, like:
- Are there people at the venue where I’m advertising?
- Are the people I care about at this venue?
- Are people seeing my ad?
- Are people interacting with my ad?
- Are people influenced by my ad?
- Are people taking action based on my ad?
Some of these questions are easy to answer. Some of them are nearly impossible. All of them are heavily contested and argued about due to the money involved.
Media metrics are tools marketers use in an attempt to answer one or more of the questions above.
In digital advertising, the most common media metrics are:
- Cost Per Click (CPC): How much does the advertiser have to spend to get someone to click one of their ads?
- Cost Per Action (CPA): How much does the advertiser have to spend to get someone to perform a predefined action? Often this is defined as a the audience buying something, signing up for something, or calling a phone number.
- Cost Per Install (CPI): A variant of CPA. How much does the advertiser have to spend to get someone to install an app?
- Cost Per Mille (CPM): How much does the advertiser have to spend for one thousand people to view their ad? (‘Mille’ just means thousand.) CPM is often defined by a target audience. For example, a marketer pays to deliver an ad to affluent Millennials.
There are many more metrics and new ones appear all the time. But most fail or are used by a handful marketers for their own purposes. (Domino’s Pizza used “Cost Per Pizza Ordered” for years. They may still!)
Very, very rarely a new metric will be adopted by a sufficient number of marketers and media owners to become a currency: a common metric people use to buy and sell media. Currencies are the metrics you should be aware of and understand. They’re the ones that create markets; they’re the ones that shape our world.
Creating a Media Currency
There’s no clear moment when a metric graduates to become a currency. It happens slowly but predictably. More and more advertisers allocate funds to buy a new metric driving more and more media outlets sell inventory metered by this metric. The metric becomes portable, liquid, a recurring source of spend and sales.
The creation of a media currency is a disruptive event in the marketplace. The dollars must come from somewhere. They’re either newly allocated marketing dollars (because the metric represents an entirely new type of opportunity) or shuffled from an incumbent currency (because the metric supplants existing tactics). Internal Marketing groups, media agencies, and publishers rise and fall when a new currency is crowned.
Because of this, new currencies are not easily created. Incumbent industries fight their emergence.
But this is how it generally happens:
Phase 1: Become a Shiny Object
Let’s say you create a new media property and/or social network and begin to acquire users and interest rapidly. Soon, your success can’t be ignored by media buyers. Your platform offers a unique experience, which cannot be measured effectively by existing media metrics. But that’s OK: your property is new, exciting, and hyped. It is a shiny object. Media buyers will buy ads to learn about the new format, impress their clients, and win awards.
Most advertising budgets contain a slush fund reserved for new opportunities. Some advertisers (Red Bull, Dove, etc.) use these dollars to create exciting campaigns, unhindered by usual requirements, to win awards or shift the brand’s image. Others treat this fund as a “test and learn” budget, a place where new properties or ideas can be executed with the goal of learning, not explicit marketing success. Either way, these are the funds which you’ll be courting. Let’s say you attract lots of them.
An influx in advertiser attention and money will challenge your new company. Suddenly, your platform will have two clients to keep happy instead of just one: your users and your advertisers. Maintaining focus on user happiness and growth while servicing advertisers will divide your already limited resources.
As if that weren’t difficult enough, the platform has a limited life as a shiny object. Eventually you will cease to be novel and ad buyers will demand performance against media currencies. You won’t be new, cool, or exciting forever. YOU can maintain your coolness, extending shiny object phase (For example, Vice has held this note impressively long) but coolness always fades.
Phase 2: Find a Metric that Fits
Before a platform loses its cool, it needs to find or create a media metric that properly assesses its worth and doesn’t work against its unique experience. It then needs to convince media planners and their clients that the new metric is worth adopting.
If the platform can’t create metric or can’t sell it to advertisers, media planners will evaluate the platform with existing metrics that will certainly paint it in an unflattering light.
To illustrate how a metric can be at odds with a new platform, consider Google Search. When Google entered it’s shiny object phase the dominant metric in digital ad buying was cost-per-thousand ads delivered, or CPM. Media properties were paid every time they showed someone an ad, regardless of the outcome. If Google’s fortunes were tied to CPM there would be a strong incentive for Google to show you more pages and keep you on their site longer — in short, deliver worse search results.
Thankfully, Google adopted a lesser-used metric called cost-per-click, or CPC, which billed the advertiser every time a user clicked on an ad, leaving Google’s site. This wasn’t difficult to sell to media buyers. The only limiting factors at the time were lack of organizational structure to manage ‘click’ campaigns and companies not knowing what to do with web traffic once they had it.
CPC aligned the incentives for Google, who was financially encouraged to be the most efficient search engine. The more you used Google to search, the more opportunities Google had to serve you the right ad. This resonant cycle unlocked a deluge of dollars for Google, growing them into a giant.
While Google found a metric that fit, most platforms aren’t so lucky. Usually they invent metrics they’re unable to sell to the market or forget to find a metric at all. They wake up one morning and discover they’re no longer a shiny object, are being valued with measures they can’t perform against, and there’s little runway left. If there’s no time to find and sell the right metric (or the market isn’t buying the ones you have) it’s probably time to sell.
Attempting to perform against existing currencies will undercut your platform, devalue what makes you unique, and lead you on a road to irrelevance.
This is what happened to Tumblr, who sold after it there were signs their metrics hadn’t found traction but before they shifted gears to adopt existing currencies.
- Tumblr’s Radar ad unit costs $25,000 for 6 million impressions, not including any earned media those impressions may lead to if and when users share that post. A little over $4 CPM.
- Therefore, the CPM cost of the ad dropped precipitously if you created ads people shared.
- Creating a good ad on Tumblr was hard. It required creative investment, both in coming up with an idea that would play well on the network and in producing an ad that could only run on Tumblr.
- You couldn’t target the ad. $4.
- You could only promote Tumblr posts, which really limited you to brand advertising.
- Only after Yahoo bought it did ‘pay per engagement’ (like, reblog) become a model. But that didn’t stick, because advertisers didn’t value that metric.
- Then they were abandoned all-together: IAB ads.
- Today the platform limbs along and there’s rumors Verizon is looking to unload.
Phase 3: Crown a New Currency
[tension: can you sell your currency to the marketplace?]
[who succeeded: Google]
[who didn’t: Facebook (eGRP)]
Has your platform made it through these three steps? If so, congratulations! You’ve created a currency! Waves of cash will engulf you as more budgets formalize a line item for your metric.
But while you bask in your treasure and glory, a fourth phase begins…
Phase 4: Optimize & Game
(The trick her is to align the incentives. If you get them wrong, you’ll slowly poison your platform. You’ll be paying people to get you money while not acting in the best interest of the platform. Google Search did this well. Pinterest did this well.)
- Time spent reading
- Now gated pay walls