Last June a little bit of research quietly slipped out from the consulting gurus at  McKinsey& Company with some very bold statements:

“June 2008 McKinsey digital-advertising survey of 340 senior marketing executives around the world shows the breadth of the gap between what’s needed and what’s available. Hobbled by nascent technologies, inconsistent metrics, and a reliance on outdated media models, marketers are failing to tap the digital world’s full power.”

They went further to conclude

“Unless this problem is addressed, the inability to make accurate measurements of digital advertising’s effectiveness across channels and consumer touch points will continue to promote the misallocation of media budgets and to impede the industry’s growth.”

Interesting enough “Attribution” was a hot topic this year both on the AdTech and SES circuits for this very same reason. As marketing budgets have been squeezed many media buyers are being forced to defend each part of their marketing investments as isolated activities. However, without the appropriate means of measuring the complex channels of consumer persuasion, attribution of marketing impact is assigned to the last known contact point. The assumption often is that if someone buys in the store, it must be a result of location targeted marketing, if they buy via telesales it must be the result of media directly promoting the phone number, and so on.

The reality, as we and a fair amount of research know, is far more complicated. A recent B2B survey by Enquiro Research showed that 39.7% of buyers did their research online and bought online, but 26.8% did their research online and then bought offline. Although consumer side research varies by category, the relationship between online engagement and offline sales are very similar. Just because a buyer doesn’t use the internet to buy a product, doesn’t mean the internet didn’t engage them in the product. And if people are starting their engagements online, understanding the impact of that engagement on in store, telephone, and other sales channels is critical.

Unfortunately, most of us that have chosen digital marketing as a profession may have done so partly because we didn’t dig high school math. But times are a changing and the new power tool for killer digital media campaigns isn’t some hot Flash dev plugin…it’s math. Now more than ever true digital strategists and marketers must be masters of the spreadsheet and learn to navigate by numbers for maximum value.

BUT HOW

• STEP 1 – Google Analytics. At the risk of over hyping this product I have to say it can do more than most paid systems can and at a much better price…FREE. Not only can it provide analysis on paid and unpaid sources of traffic, there is an increasing body of tools out there that let you track other activities such as inbound telephone calls using the Google Analytics reports. Granted, it’s not a complete solution, but it’s a start.

• STEP 2 – Attribution Software. There are an emerging class of tools that capture and allocate value to a broader variety of online channels beyond your website, including affiliate, syndicated content, etc. An example of this is Storm Pixel Carrier Pro from DCStorm.

• STEP 3 – Direct Research. Some relationships simply can’t be tracked electronically . What is needed is a little bit of research design to come up with some basic metrics that can be translated into allocation. At the simple end, basic “print and visit” couponing for web only discounts can give you local or limited samples of the relationship between web and in store or on phone sales. At the more comprehensive end you can engage a company such as Dynamic Logic to design a multi channel tracking program.

Regardless of the method, it is increasingly critical that those responsible for online strategies ensure that underlying any and all plans for audience acquisition is a sound methodology of value allocation. Companies that fail to leverage metrics and find the opportunities hidden in between consumer actions will inevitably fall victim to those companies that do.

According to the IAB Canada’s recently published 2008/09 Canadian Online Advertising Revenue Survey internet media spending in Canada increased by 29% from 2007 to 2008 overtaking Radio spending in 2008 by more than $55MM making online media the third largest after television and newspapers.

Although Radio did gain 5% from 2007 to 2008, the lack of accurate accountability and the proliferation of mobile music technologies continue to reduce it’s attractiveness as a media spend option for shrinking marketing budgets burdened with higher expectations.

As media planners start to work on strategies for 2010 spending this fall, many will, or should be asking, is anyone listening to these spots? For the same production price, couldn’t I just create a Youtube clip, or improve my brands SEO situation and get better, measurable results? Once I create content for the web, won’t it last way longer than a 12 week air blitz?

Although much of the media community will be watching what the big newspaper outlets groups do to survive in 2010, it will be the radio networks that have to step up and get creative next year or slowly fade to silence.