The demise of cookies might have been a long time coming, but marketers are risking far more than targeting by keeping their heads stuck in the sand, with nearly all (98%) failing to use the full range of techniques to measure the true impact of their activity.
According to WARC data, only a small fraction of marketers (2%) are using marketing mix modelling (MMM), experiments, and attribution in combination to give them a complete picture.
As the industry continues to evolve, WARC has released a report examining the latest trends and emerging best practices of marketing measurement. The Future of Measurement focuses on four key areas: AI and the growth of synthetic data, the demise of third-party cookies, hurdles in holistic measurement and closing the sustainability gap.
Key challenges outlined in the report, and what marketers can do to keep pace with emerging best practices in measurement include:
Hurdles in holistic measurement
Most marketers are failing to use the full range of techniques that enable them to measure the full impact of their marketing activities; just 2% are using attribution, experiments and marketing mix modelling (MMM) in combination to measure marketing impact, while 22% say they do not use any modelling at all.
WARC highlights three techniques that are critical to holistic measurement. Each technique brings strengths that can offset the weaknesses of the other.
Attribution: The process of assigning credit to the different touchpoints that are found on a user’s path to a conversion. Fast and easy to scale, it gives real-time insight into drivers of performance. But, it is limited to digital channels and is best for measuring short-term impact.
Experiments: Uses randomised controlled experiments to compare the change in consumer behaviour between groups that are exposed or withheld from marketing activity while keeping all other factors constant. It is the gold standard to measure causality but can be difficult to scale.
Marketing mix modelling (MMM): Utilises advanced statistics to give a holistic overview of all channels, sales, and external factors. Can provide a longer-term view of media impact, but can be expensive and requires at least two years of historical data.
AI and the growth of synthetic data
Unlike ‘real’ data, which is based on observations from the real world, synthetic data is produced artificially to emulate it using purpose-built mathematical models or algorithms.
It has a variety of applications in marketing, including pricing, customer journey planning, competitor analysis and new product development and also negates customer privacy issues, as it has no personal information attached to it, and can conduct market research quicker and cheaper.
By this year, Gartner has estimated that 60% of the data used in AI and analytics projects will be synthetically generated, and according to Straits Research, the global market for synthetic data generation is projected to grow by 37% between 2023 and 2031.
However, AI-based insights bring new risks to marketing research. Generative AI tools can amplify bias, trigger privacy breaches and deliver inaccurate results. Marketers should develop clear ethics and best practices when working with these tools.
The third-party cookie countdown
The phasing out of cookies is due to take place in Q3 of 2024, severely limiting the ability of companies to track individuals online. Yet many marketers are still not prepared. According to a recent survey by IAB Europe, only half are prepared for the deprecation of third-party cookies.
As advertisers look to combat signal loss, they will have to get comfortable testing a broad range of targeting and measurement solutions to discover what works best for their business.
Proposed solutions include contextual advertising, identity solutions, first party data, attention measurement, Google’s ‘Privacy Sandbox’, and predictive audiences using AI.
Closing the sustainability gap
Over the past five years, sustainability has ranked as a top issue by respondents to WARC’s annual Marketer’s Toolkit survey. However, recent research by Scope3 concludes that there has been ‘no evidence of systemic behaviour change’ in the advertising industry to reduce carbon emissions, and according to IAB Europe, only a quarter (24%) of marketers said they are measuring emissions from digital advertising.
The compound effect of these trends is that many marketers are failing to act on sustainability – in objective setting, asset development, supply chain management, consumer messaging, and the measurement of emissions from digital ads.
New regulations and directives in both Europe and the US coming this year mean companies will need to provide more granular data on their carbon emissions – including those generated by advertising.
Lack of standards is a major barrier to accurate and comparable carbon measurement, although work is underway by the Global Alliance for Responsible Media (GARM) and Ad Net Zero to create a common currency and methodology.
Research by Magna, Lumen and Adelaide suggest that advertising in high quality media environments with higher engagement generate lower carbon emissions.
WARC managing editor of research and insights Paul Stringer said: “Amid the swirl of excitement around GenAI, another significant inflection point is fast approaching. While the threat of cookie deprecation has loomed for some time now, evidence suggests advertisers are neither fully prepared or aware of the different solutions available.
“With measurement continuing to evolve in several directions at once, marketers find themselves battling multiple headwinds: not only the demise of third-party cookies, but new regulations around sustainability reporting, and, of course, the growing influence and impact of AI.”
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