In the shift to outcome-based marketing, do engagement metrics matter?

Picture today’s marketing as the fable of the six blind men and the elephant. One touches the animal’s trunk and suggests it is a snake. Another, who touches the side, guesses the beast is a wall. None of them sees the full picture.

Marketers today have sharpened their metrics over time, but the problem remains: How can we see the whole elephant, or, as the case may be, the whole customer?

The increasingly vocal concern in the industry is that engagement metrics, like the siloed blind men, don’t paint the whole picture of a customer. In fact, CMOs say their most valuable metric is ROI, according to The Annual CMO Spend Survey Research, published by Gartner in June 2020.

Marketing leaders are under pressure to tie their initiatives to outcomes, as CFOs demand stronger value for scarce marketing dollars.

In the latest issue of CORE, David Hess, senior vice president of account analytics at Epsilon, and Helen Katz, executive vice president of research at Publicis Media, discuss the roles of outcome-based metrics versus engagement metrics in the new landscape.

How do you define outcome-based marketing, and why is it gaining traction?

Hess: Outcome-based marketing is when we’re really focusing on optimizing the program toward a business outcome of interest. That could be purchasing a product, signing up for a service or downloading an app.

Engagement metrics: Engagement metrics are the measures of interactions with a brand, including ad click-throughs, bounce rate, pageviews, time on page, and social likes, comments and shares.

Outcome-based metrics: These metrics reveal the effectiveness of an organization’s marketing strategy on business objectives and can be used to demonstrate ROI.

Katz: The focus on outcome-based marketing has been enhanced because we’re able to capture more real-time data and also analyze it faster to know if we achieved the outcome, rather than having to wait six months or a year to see if the marketing actually made a difference.

Hess: There’s also an increased push towards financial justification. You have CFOs asking for demonstration that what the marketer is doing is actually driving business results. So in some respects, it’s a combination of having better-quality data, but it’s also being forced down the path of really justifying the activity that’s taking place.

As identity becomes essential, how does outcome-based marketing address this?

Hess: We typically think of data as telling us who to talk to, but there’s another piece of the data angle, which is knowing who I’m talking to. And that’s really more about identity. Outcome-based marketing is more focused on the consumer than about the context or channel that they’re in. If someone is displaying behavior that is reflective of an intent to make a purchase, I’m going to talk to them regardless of where they are. If I’m selling athletic wear, for example, I don’t care if you’re on or I’m going to talk to you because of who you are and what I know about you.

How about engagement metrics? What’s your take?

Katz: I think of engagement metrics as indicators of consumer attitudes toward a brand. From a traditional research perspective, we want to understand the identity of a person, but we also want to know what they think and how they feel about a brand—what we traditionally think of as upper-funnel measures.

Many describe engagement metrics as “vanity metrics.” Do you agree or disagree with that thinking?

Katz: I don’t think they are. Engagement metrics should be used as indicators to help drive desired outcomes. They complement outcome-based marketing. I don’t see it as an either-or situation.

Hess: The advantage of engagement metrics is that they’re easy to measure. It’s also easier to look at multiple vendors using the same set of metrics—whether that’s good or bad is a separate issue.

One of the dangers of engagement metrics is if you focus solely on the metric without tying it to the business outcome. If you haven’t firmly established the link between the two, then engagement metrics probably are vanity metrics.

“Engagement metrics should be used as indicators to help drive desired outcomes. They complement outcome-based marketing. I don’t see it as an either-or situation.” – Helen Katz, Executive Vice President of Research, Publicis Media

Katz: I don’t want to lose sight of the importance of understanding engagement outside of clicks. You’ve got to have the whole picture of the consumer. Understanding that mindset is an important component of how engagement can best work.

Hess: I would draw a distinction between engagement as a brand health metric and engagement as a performance metric.

Katz: The buyer’s journey doesn’t always follow the linear path that we grew up with in our Marketing 101 classes. It’s a complete mischaracterization to think that consumers always start at the top and work their way diligently through every stage of the journey.

Why is outcome-based marketing hard to do well?

Hess: Probably the thing that’s most difficult is building a robust consumer identity. Being able to recognize this person that I’m seeing either on a website or an app, to be able to continue a conversation, you need to have an identity that’s persistent. And a lot of companies find that’s the most difficult piece.

Katz: The other thing that makes it hard is making sure that you know what outcomes you’re actually trying to measure. What outcome do you want? Is it visits to the store? Buying the car? Measuring outcomes without any specifics in mind is a recipe for disaster.

Hess: I completely agree. We often say that you can only optimize to one KPI. You have to know the one thing you’re interested in optimizing.

For more content like this, download the full second issue of CORE. 

Copy of Header image for CORE issue 2 (2)

Image credits: Bob Elsdale / Stockbyte / Getty Images