“Half the money that I spend on advertising is wasted; the trouble is, I don’t know which half.”

John Wanamaker is one of the so called “pioneers of marketing” from the 1920s. His quote sums up the ongoing mystery around how to effectively spend advertising dollars and the need marketing analytics to measure success.

Struggling to define value

For many years, the ad industry has struggled to piece together the puzzle of advertising ROI. There is always a level of uncertainty when running an ad of whether or not you’re really getting your money’s worth. In many ways, the same basic principle remains– send out your brand’s message and wait for a sales increase.

Until recently, there was not much else that companies could do to track just how successful their campaigns really were. But, over time and especially with the advent of the internet and proliferation of digital marketing, metrics that were once unknown can now be tracked and measured to monitor specific ad performance. This has transformed the advertising space and now allows a much closer level of tracking that marketers of the past wouldn’t have even dreamed of.

Let me take you through a virtual timeline of how analytics have evolved over time, the impact and details of how advertisers track buyer behavior, and how these measurements will continue to shape the advertising space in the future.

Traditional analytics

Throughout most of its existence, advertising has only been tracked through traditional means that are based on audience size and not much else. If someone wanted to run an ad on a billboard or on TV, they only really had data on the amount of people that could be exposed to their spot. Also, the only targeting that could really be done was demographically based for out of home ads or Nielsen ratings for TV spots.

Today, traditional ads are still tracked in primarily the same way, based upon a metric called impressions. These allow us to estimate the number of people that could be exposed to the ad. Besides this though, there is no other tangible way to truly track which customers were influenced by which ads and how much they really contributed to sales.
However, this would eventually change with the invention of the internet.

A new world wide web of analytics

The creation of the Internet has fostered a huge shift in how we view the world and more importantly the way that we consume media and content. Moving advertising online allows marketers to enter a new world where every interaction, movement, and impression can be tracked and recorded for later use. In this way, the Internet was able to shed light on the customer journey that traditional metrics left in the dark.

Now, advertisers not only see what their customers are doing, but they can also tell who their customers are. By using this information, advertisers can find exactly who their audience is and how well they are reaching them. The more information that is collected, the more they will be able to hone their messages to best speak to the consumer.

So, how exactly do advertisers use these important analytics?

Search engine analytics

One of the most crucial places for companies to show up online is within paid and native search. Every day, millions upon millions of internet queries are made through search engines like Google. The pages that appear as a result of a search are initially sorted on relevance, but Google allows sites to tailor their positioning based on some key factors.

Within the program Google Adwords allows advertisers to pay to have their page placed above all of the other naturally appearing pages. Advertisers can track specific analytics such as who, when, and how people are accessing their pages. Marketers can also tailor their pages through the use of keywords and search engine optimization to make sure that they are the first result that appears when customers search for their site or related products without emptying their wallets.

But, this is not the end of the story. To even the playing field, Google doesn’t just organize sites based upon who pays the most, it also wants to make sure their ads are relevant to the searcher. If companies match up their landing page content and headlines more closely to what their audience is searching for then Google will move their site further up the list of results.
This is where analytics starts to mate art and science a bit more as marketers work to find out what their audience is searching for and create the most relevant content to please google.

Website metrics

Once a user makes it to the site, the analytics does not stop there. Analytics tools can track which country they are from, their age, gender, and even what type of device they are using. Analytics specialists can then couple this with information about how long they are on the site, which pages they visit, and where they came from. All of these may seem insignificant on their own, but these analytics can contribute to paint a much truer picture of how customers are interacting with a company’s website.
Today marketers can even set goals that help them understand their online customer journey. Companies can monitor which pages a user visits, how much time users spend on the site and even which customers followed ads, to the site, and then onto the purchase of a product. This allows marketers to directly track who is responding to their campaigns, where they are coming from, and even what they are buying; a far stretch from traditional analytics.

Social media data and the future

Marketing analytics aren’t simply contained to websites and paid digital media, they also have encroached more and more into the social sphere. Major platforms such as Facebook, Twitter, Instagram, and Snapchat all collect metrics and information about their users which can then be used by marketers.
Since users freely give their information and preferences through their platform behavior, it is easy for these social media giants to harvest consumer information. Though companies use metrics like impressions and interactions to track their social pages, they can also use consumer data to create advanced, extremely targeted advertising called programmatics. Based on user location, time of day, preference, and previous site visits, companies can serve them numerous ads throughout the day based on their real time needs or wants.

All of the data and information that is collected ensures that we see relevant, smart ads that can help us navigate our day and inform our buying decisions. This is the way that advertising is heading on many levels, with the rise of advanced marketing analytics and data, we have barely scratched the surface of targeting and brand personalization.

As brands continue to find ways to inform their marketing decisions and influence buyers, they will only push further to collect more data and personalize their content. So it looks like John Wanamaker may be able to finally understand where the other half of his marketing budget has gone.