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Intelligence Briefs

The one metric we need to focus on

Industry Contributor

Aimee Buchanan, CEO
OMD Australia

14 October 2019 2min read

Over the last few issues of the Harvard Business Review, there have been a few interesting pieces that weigh up the concept that Metrics are Undermining Your Business.  The piece examines what happens when businesses become overly focused on metrics versus the strategy they set out to deliver against.  

 

Key points:

  • Strategy is being highjacked by numbers and people’s tendency is to replace strategy with metrics.
  • People have a tendency to confuse what’s being measured with the metric used (this is known as surrogation).
  • The biggest disconnects come from the idea that it is very difficult to gain an exact metric for a strategy and the article cites Wells Fargo as an example, whereby long-term customer relationships were being measured by cross-selling of products.
     

My Takeout

The topic of measurement brings to mind a quote I once read, it states one of the biggest mistakes made by marketers, and agencies, is to “value most highly that which can be measured most accurately”. 

In principle this is correct however we live in a world of blurred lines and areas of grey. I’d argue we must always question the source of measurement. Until we can be sure that the source is pure, it could become an error to ‘value it most highly’ over confidence in a longer-term strategy.

Think, for example, of the faith we have historically put in the measurement of TV based on a few thousand people meters. Similarly, tools such as Roy Morgan Research were, and still are, a very good and often used source though it is “claimed” behaviour.

Of course we must always strive for richer and better information, however, the increased focus on measurement to prove effectiveness has seemingly driven a gap in clearly defined business strategy, which is helping fuel the focus on short termism. This, coupled with the need to measure everything, has meant that we often lose sight of what we have set out to achieve versus the levers we are measuring.

I’m a big believer in measurement but understanding how this can drive or change human behaviour is key. This can be as simple as a client who is focused on lifetime value of the customer, but key measurements are new business acquisition or revenue. Too often we find ourselves obsessing over the levers versus how we are tracking against the macro direction set out. It offers up an interesting discussion when crafting the strategic objectives for a business and looking at measurement frameworks. Understanding where the traps for surrogation are, and how to avoid them, are key, but more critical than ever is ensuring people understand the strategy as much as they understand the metrics.

From an agency point of view, we often find ourselves in conversations about audience declines or CPM increases, when really the conversation should be centred on whether this is driving the business outcomes we intended. If it’s not, we have a problem. The discussion of how we ensure human behaviour stays true to the strategy versus delivering on the measured outcome is what we need to keep ourselves accountable to.
 

Let’s go. What do you think?

Industry Contributor

Aimee Buchanan, CEO
OMD Australia

Aimee has over 19 years’ media experience in the Australian market, working across a range of categories.  Aimee was appointed CEO of OMD Australia in October 2016, leading and managing the largest media agency network in Australia both in both billings and size (RECMA 2018, 2019).  

In 2019, OMD Australia was ranked #1 media agency globally (RECMA 2018,2019). OMD Australia was ranked fourth place in the ‘Best Place to Work’ study in 2019 and has consistently featured in the top 50 for 11 consecutive years.

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