The Wanamaker Dilemma: A view from the digital frontier

I don’t know about you, but I am pretty tired of hearing that infamous statement made by John Nelson Wanamaker.  You know – the one that drives marketers insane with a disturbing half of their investment wasted.  Wanamaker was a civic leader and a master retailer.  He also holds the unofficial title of the “father of modern day advertising.”  He died in 1922, and 87 years later we are still vexed by his bleak assertion.

There is light at the end of the tunnel.

Across a number of dimensions, we are working towards a greater understanding of exactly which elements of our marketing mix are delivering value and which aren’t.  For starters, we have the granddaddy answer to Wanamaker, which takes the form of an econometric model.  Econometric models look backwards in time and factor in a wide array of variables, which are then used to determine cause and effect (with all other things constant, when I run online advertising, my sales go up).  With a tight historical model, one can begin to predict future behavior.  The problem arises when the future landscape looks markedly different from the past, and it becomes hard to predict with accuracy.  Nevertheless, this is strike one for Wanamaker.

Next up, we have a number of remarkable developments in the measurement of digital marketing’s effect on brick and mortar sales.  We have been reasonably good at gauging impact on online sales, but when the channel is offline we have been left scratching our heads.  In the consumer packaged goods space, we have Nielsen Homescan data that can get tied back to online users and can prove online advertising translates into offline sales.  All the major online publishers have a product offering in this regard.  Good stuff, but only if you are selling toothpaste or laundry detergent (or any products that are primarily sold in the supermarket channel).

Comscore has also developed a few exciting measurement services that allow marketers to measure other retail channels.  By cross-referencing online behavior with third party databases and/or scraping online credit card statements (with permission of course) they can create the same linkage between online ad exposure and offline sales.  Strike two for Mr. Wanamaker.

The final area is a particularly exciting one these days.  Unlike television, which is transacted on a demographic basis (Adults 25-49 impressions), online advertising is transacted on a total impressions basis.  That sure is curious, isn’t it?  It doesn’t make much sense, especially as digital marketing is purported to be the most accountable, targeted communications channel ever created.

My guess is that eventually we will evolve into an entirely new currency with which to transact business in the digital space.  A currency that acknowledges attentiveness and engagement.  In the interim, we are pushing the industry to get far more accountable.  This accountability takes two forms: running campaigns as ordered (go figure!) and ensuring that we only pay for impressions that reach our target.  This is the ultimate Wanamaker solution.  No waste, just verified meaningful impressions against a particular target group.

There are a few companies that have sprouted up in the past year or so that are designed to provide an automated solution for validating campaigns.  They make sure that if we are looking to reach a US audience only, that is what we get.  If we are paying for a 100% share of voice in a section, we are getting it.  And, they are ensuring that our Brands are not appearing in content that is unsavory or unsuitable.  It would make Wanamaker proud.  Three companies dominate this space: Double Verify (which we are working closely with), The Media Trust and Ad Safe Media.

Finally we have tools that are arming us with the intelligence to hold partners accountable for explicitly delivering our target audience.  Cookie and third party database solutions from Comscore, Nielsen, Quantcast, and Datran media to name a few, are invaluable in allowing us to conduct commerce on a demographic basis.   No longer will we buy total impressions.  Video inventory online will be transacted much the same way that traditional video (i.e. television commercials) is transacted.  Most importantly, there will be no waste.

We are still in the early days of having high quality third party demographic data that can be projected against the total web population, but we are rapidly getting there.

Take that Wanamaker.

Strike three.  You’re out.