The Value in Differentiating Advertising Performance and Effectiveness

By Jeremy Haft, CRO, Digital Remedy

At a quick glance, it would appear brands and agencies have nearly countless ways to measure the performance of their campaigns. It’s their obligation to advocate for the capacity to measure on the metrics that are most appropriate to understand how a campaign has performed against its specific goals. Ad tech vendors tout their ability to deliver those nuanced insights. And again, at a quick glance, marketers now have all the tools and metrics they need to optimize spend, eliminate waste – and grow the overall business, which is the ultimate goal to which all their efforts point.

But a closer look shows that a detailed view into campaign performance doesn’t necessarily provide a comprehensive view of how their campaigns cumulatively impact the overall bottom line of the business. In focusing on campaign-level performance, it’s too common for marketers to lose sight of the effectiveness of all their advertising on the business. Effectiveness must be a focus of measurement to truly analyze and optimize their advertising efforts. And measuring effectiveness requires a mindset shift – to think more like a senior executive, and to really consider their strategic goals in improving the business’s bottom line.

The whole, and its parts

Performance and effectiveness are indeed separate concepts, but intrinsically linked to each other. They’re approached and analyzed differently, which enables the business to understand the impact of its advertising holistically. We’ve all heard the terms “performance” and “effectiveness” naively used interchangeably in planning and evaluating campaigns. For the best benefits of the business, marketers need to learn how to differentiate the two – and how to connect them. Performance metrics indeed influence big-picture effectiveness. Marketers need both a wide-angle and a highly focused view of the results of their efforts in order to best strategize – especially in an uncertain economy where risk-taking just isn’t an option.

In simplest terms, performance is micro – related specifically to how individual campaigns perform. Effectiveness is whole-package – correlating with the business’s holistic success and sustainability. Performance is measured using familiar marketing performance metrics, and other metrics that can be confidently attributed to the campaign – clicks, web visits, conversions, response rate, sales, acquisitions, cost per acquisition, and so on. These insights are best suited for shorter-term goals – think months and quarters, rather than year-on-year. They’re valuable in understanding how the brand can take advantage of seasonal trends, how to best promote specific products in a brand’s portfolio, and short-term return on investment for the media budget itself. Performance metrics are leading indicators of effectiveness, but they don’t paint the full picture on their own.

Understanding effectiveness starts with understanding how to measure it

Effectiveness is measured using different metrics. Think about the brand’s trust and reputation in the marketplace, brand awareness, customer satisfaction, the brand’s marketplace performance versus that of its competitors, market share, brand health, recall, purchase intent, and business growth. Yes, some of these are recognizable as common brand campaign measurements – but they’re also commonly attributed to a set of campaigns, not just one campaign over time. It’s useful to step back from focusing on the funnel, per se, and consider branding and action-based metrics are two sides of the same coin. Brand does impact the ability to drive actions, and both impact the brand’s health and the business’s growth trajectory.

By separating performance for effectiveness, we can actually see more clearly how each factor impacts the other over the course of several years. And we gain a comprehensive view of how each advertising program or campaign may be weighted to contribute to the effectiveness of the initiative on the business and the growth of the brand.

The process of measuring effectiveness is ongoing, as individual campaigns are deployed and measured. Marketers often feel challenged to understand advertising effectiveness, and it’s more challenging if they take their eye off the ball. From the beginning, brands and marketers need to specify the business goals they’re aiming to advance through their advertising. Then they need to identify the metrics for effectiveness that best suit those goals. This enables them to understand which data insights they’ll need to connect individual campaigns to their overall effectiveness, and to develop strategies to execute high-performing campaigns that, when taken together, drive long-term effectiveness.

The interconnectivity of it all

Understanding effectiveness necessarily entails a close look at performance campaigns and brand campaigns. Ultimately, each element of brand awareness, intent, and purchase will tie into each other to drive brand affinity and to win long-term, high-value consumers. That initial conversion matters, but effectiveness addresses how brand perception leads to habitual purchase behavior. The brand’s media strategy needs to aim for positively impacting overall, long-term brand health. To put in terms marketers will readily understand: Drive sales overnight, and drive brand over time.

Metrics for short-term goals must relate to long-term goals – and this truly needs to be said. Studies have shown that an unbalanced focus on campaign delivery, and insistence on custom campaign metrics, ultimately decreases advertising effectiveness. That underlines why brand is such an important element. Effectiveness entails the proper alignment of campaign and media strategy with high-level business goals – whether those goals reflect specific product initiatives, growth in segments of or the overall marketplace, and brand impact. Ultimately, media strategy supports and drives business metrics effectively.

It’s always possible to see through industry jargon and understand the substance behind the terms. When it comes to clearly defining advertising performance and effectiveness, the substance means the difference between wasting spend or positively impacting the business’s bottom line. For the thriving of their brands into the future, and to execute campaigns that drive toward the brand’s holistic goals, marketers and agencies need to strategize for short-term and long-term advertising efforts. That’s how they can focus on and understand real return on ad spend, to better position their brand in the marketplace.