What is “Good” Marketing KPI?

In a recent article in the same tribune, I explained that “Counting” is often what describes the so called “measurability” of the web, and along the way, reminded that it is the alignment of metrics and measures to the marketing objectives, and not the reverse, that is the key to success. Without this process of adjusting, from the outset, the implementation of the digital marketing plan, it is difficult to impartially assess and enhance the impact of its effects, and therefore the effectiveness of digital marketing. This same discipline should determine the implementation of marketing performance indicators and of digital marketing in particular, so as to bring up to date the Key Performance Indicators, the famous “KPIs” capable of fully attaining, managing, and enhancing the impact of the implemented plan’s objectives. Before going into the details of the various “quantitative” and “qualitative” measures available, it is first and foremost of crucial importance to discuss some essential principles for the establishment of “Good” KPIs.

Some essential principles for establishing the relevant KPIs

Key performance indicators, generally known as KPIs, are indicators for measuring how well a company performs. Their implementation and monitoring through performance or management dashboards are essential tools for decision-making and managing the present and future success of the business. Applied to the monitoring and control of the digital marketing plan, KPIs enable the ROI of its activities to be measured, developed, followed up, and optimized. In other words, KPIs become and are real tools for progress. Indeed – and this is essential – there is no point measuring something if it cannot be altered, improved, and optimized. It is here that the key issue of digital marketing lies. Everyone is getting involved in it and everything is being digitized, but what if you can’t show that it works? Simple, one may say, but nonetheless essential. Without measurement, there is no management. And, in any case, you can only properly manage what you can measure.

Here, then, are 10 characteristics that make a measure a “good” indicator of performance:

1. It must be aligned with the objective of the digital plan, which is itself consistent with the brand/business strategy: The objectives clearly determine the type and nature of the measures used. The measures must be “valid” and “reliable”[1]: able to consistently measure changes attributable to digital marketing, they are in phase with the culture and strategy of the company and enable accurate tracking of performance over time.
2. An individual or team has overall responsibility for it: It is well known that without a boss, without someone in charge, it difficult to assign responsibilities and ultimately it becomes the responsibility of everyone and no one. What about companies that make their agencies responsible for measurement? Does this mean that measuring one’s own performance is a matter only for a third party? Even if delegating the process of establishing KPI definitions saves time, sooner or later (indeed, sooner rather than later) everything must be reintegrated into the company and a champion appointed, a metrics boss, or at the very least a more or less systematic discipline must be imposed for monitoring the performance of digital marketing.
3. It must allow action: Able to follow the progress of operations implemented, the measures allow benchmarking, progress evaluation, and making adjustments if necessary – in short, enabling the company to be more efficient.
4. It must allow forecasting: KPIs reflect the intrinsic value of digital actions (everything comes back to the concept of “validity of measures”). The measures used should be able to take account of progress as well as any problems encountered by the digital marketing plan, so as to be able to anticipate and implement the necessary corrective actions.
5. Limited in number: It is well known that too much information kills information. It is therefore important to limit the number of KPIs. They should be both consistent with the objectives and aligned with the company’s strategy and culture.
6. They must be easy to understand and communicate: Shared with and by everyone, the measures should be understood and appropriated by all interested parties, and should be clearly communicable, both internally and externally.
7. They must be standardized: Once defined and approved, they become the basis of a common language that is consistently applied and understood by all stakeholders: client/advertiser, media agencies, advertising agencies and market research companies.
8. They must be “contextualized”: Measuring is fine, but knowing whether it is good, average or inadequate is even better. Without a context, it is difficult to progress and set realistic objectives. It is within this perspective that normative measures are necessary, since in return they allow ambitious, realistic objectives to be set and evaluated.
9. They should be able to trigger change: Measuring is a matter of understanding the past and present, but it is also projecting oneself into the future so as to steadily advance. Measurement is a discipline, and its systematic use is a source of progress.
10. Keep them simple without being simplistic: Measures should be easy to understand and communicate by virtue of being simple, but not “simplistic.” It is in this latter respect that we can sometimes reproach the famous CTR, which, when misused or misinterpreted, can distort the effects of a digital action plan.

The Way Forward

Good measurement practice is a matter of discipline, and it takes time to establish one. To illustrate this point, I recently assisted the WFA (World Federation of Advertisers) to run a survey among its members (respondents responsibility for approximately US$35bn in total marketing spend) to understand their practice of establishing Digital KPIs. One of the main output of the study, is the difficulty that global advertisers face to establish « good » Digital KPIs. Although they all look for « Data Simplicity », they simultaneously face troubles to find relevant indicators. The majority of them state they use up to 5 or 10 KPIs to monitor their performance, but they all seem to have issues to relate the ability of these KPIs to really capture the intended objectives of their digital marketing. As such, I believe that we shall all constantly challenge the nature of the marketing KPIs we use by questioning them around the 10 characteristics I highlighted above.

[1] We shall soon comeback, in a future article, on those two key principles of good measurement practice. Broadly speaking, on one hand « validity » relates to the ability of the measure to really capture the intented effect whereas « reliability » relates to the ability of the measurement process to consistently, reliably and confidently measure what is at stake.