Do Marketers need to measure everything? A Paradox of Precision

Recently shares of Nike nosedived, notching the worst day in its 44-year history as a publicly traded company. The recent dramatic drop is the latest part of a worrying slide that started in late 2021. The decline coincided with Nike's aggressive push towards direct-to-consumer sales, a strategy that Nike CEO John Donahoe recently acknowledged was a mistake, stating that the brand went too far when it froze out wholesalers in favour of its own stores and website.

This shift in business strategy triggered a big change in how the sportswear giant approached marketing. In 2021 Nike rapidly shifted focus away from brand building to direct sales. Despite achieving great success by focusing on creativity and storytelling, they quietly shifted billions of dollars into sales focused programmatic advertising.

The channel was far easier to measure, aligning neatly with the data-driven ethos of direct sales. However, the decision came at the expense of abandoning an approach that had become synonymous with the brand, had delivered success, but was difficult to measure precisely.?

This begs a question that cuts to the heart of modern marketing: In an age where data reigns supreme, do marketers really need to measure everything in exact detail?

To understand this paradox, we need to delve into the world of programmatic advertising. The allure of the channel lies in its apparent certainty. Every click, every impression, every conversion can be tracked and attributed. This is the realm of last-click attribution, a model that gives all the credit to the final touchpoint before a sale. It's clean, it's simple, and it offers a sense of security to marketers and executives alike. "Look," they can say, "here's exactly where our money went and what it bought us."

But this certainty comes at a hidden cost. As more companies flock to these measurable channels, competition intensifies. It's like a gold rush where everyone knows exactly where the gold is. The result? Diminishing returns.

Think of it like fishing in a well-stocked pond. At first, the fish are plentiful and easy to catch. But as more anglers arrive, each fish becomes harder to land and more expensive to hook. Eventually, you're spending more on bait than the fish are worth.

I've experienced this firsthand. When I began consulting with one marketplace business, spend was primarily deployed on channels that offered security and safety through precise measurement, channels such as App Store Search Ads focused on brand terms. At first glance key metrics looked healthy, Impressions, Page Views and Cost Per Install, were well within the companies target range, but one important metric, Return On Advertising Spend (ROAS) was not.?

The last-click attribution model was showing that bidding on Brand Terms via App Store Search Ads performed very well, the channel was acquiring users cost effectively, or at least it seemed. The channel was highly measurable, but upon deeper inspection was not effective. As the last touchpoint before download the channel was essentially intercepting users who already intended to download the app, and not generating new demand for the companies products.

The difficulty was measuring what had led the user to search for the company's product in the first place. Looking through historical trends we could observe variance in brand searches, installs, and sales that aligned to major moments on non-attributable channels, such as a press mention, feature on a podcast, or a TikTok.??

The company was fortunate that it had a very loyal audience and received a significant amount of favourable coverage organically. The challenge was scaling up investment in any of these channels. How could we justify these expenses without concrete numbers to back them up? We intuitively knew that these channels were effective, but could not measure them with the same level of granularity as the attributable channels such as programmatic or search.?

This experience taught me the value of "good enough" measurement. As marketers we must acknowledge that we can’t measure everything with the same yardstick, and instead aim for imperfect but intelligent progress, acting with best intent and focus on the metric that matters most, revenue.?

For larger companies, this might involve sophisticated regression analyses to infer the impact of non-attributable channels. For smaller businesses, it could be as simple as surveying new customers about how they heard of you. Neither method is perfect, but both provide valuable insights that can guide strategy.

There are diminishing returns in easy-to-measure marketing channels. As these channels become saturated, it's creativity and calculated risk-taking that set advertisers apart. It's a bit like the difference between studying for a standardised test and pursuing genuine learning. The former is easily measurable but limited in scope; the latter is harder to quantify but ultimately more valuable.

This shift away from obsessive measurement towards a more balanced approach has real-world implications. It requires a tolerance for ambiguity that many organisations struggle with. It's inherently tied to a company's appetite for risk. Can you convince your CFO to invest in a campaign where the ROI isn't immediately clear? Can you trust your instincts when the data isn't definitive?

As we navigate this new landscape, we would do well to remember that marketing, at its core, is about human behaviour – something that has always resisted precise measurement. Perhaps the future belongs not to those who can measure everything, but to those who know what's worth measuring.

Reflecting on Nike's billion-dollar bet on programmatic, there’s an opportunity to learn from this grand experiment. Moving from harder to measure demand creation marketing efforts, to the easier to measure but ultimately less effective channels, proved to be counterintuitive strategy, contributing to revenue decline.?

As marketers, our challenge is to find the balance between the comfort of certainty and the potential of the unknown. It's in this balance that true marketing innovation lies, waiting for those bold enough to explore. Or maybe, in true Nike fashion, it is simply about having the courage to "Just Do It" – even when the outcome isn't certain.