The Dawn of the "Era of Accountability"

This entry is intended to identify the confluence of influences that came together at the turn of the millennium forever altering the advertising and marketing worlds.

The infamous Wannemaker quote suggests half of advertising works and half doesn't with a fair degree of humor found in the suggestion that in finding which half works advertisers will ultimately uncover a holy grail that provides salvation to their efforts. The quote has stood for a long time, but its relevance has never been greater than it is today. Brand health monitors, copytesting, statistical correlations, clickthrough and conversion rates - terminology all too familiar to the modern marketer. And with what common goal? To demonstrate the impact of advertising...welcome to "Era of Accountability."

Where to start? A Personal Watermark
Back in 1998-99, I was working as a media planner at Tierney Communications (formerly Tierney & Partners), a dime a dozen shop by New York City standards, but the big fish in the small pond of Philadelphia. The agency had just won the global business for Deloitte Consulting and being that unbundling had yet separate media from the creative process, I was the benefactor of being in the right place at the right time. I would even go so far as to say I was "fortunate," with many a fine meal and countless sporting events placed in my grasp (o fond farewell to ye old advertising world.)

During this time at Tierney, I remember a team of agency seniors recounting their observations from the annual AAAA's conference. The unanimous theme was around the idea of "accountability." This word was something I felt to be implied on a personal level (I tend to be a Type A personality so personal accountability to my job is typically a box I can check), but the context in which the word was being used in the recap of the AAAA's conference was not something I was very familiar with. What was more unsettling was this new application of the word appeared foreign to everyone, including the senior teams.

Accountability was being referenced in the context of a return on the client's investment. The ability to demonstrate exactly this being openly embraced by the advertising community as an opportunity to gain advantage in pursuing new business, to convince client's to spend more behind their business and to ultimately gain a greater degree of credibility among investors and shareholders. How this would be accomplished was not totally clear, but what was clear was the want of client's and agencies to find new and better ways to demonstrate greater accountability for the business.

A New Way: Online emerges as a viable medium
At this same time I was catching 76ers playoff games, I was also spending a larger and larger amount of time at work carving out space and rationale for online in our clients media plans. As I moved to San Francisco I found that search keywords, email blasts and targeted websites were the flavor of the moment here as well. Whereas the medium was still rapidly evolving, it had caught on among the marketing masses as a viable form to reach an audience with the client's message.

Furthermore, because of the technology upon which the internet was based, there was an added benefit that online could offer that no other medium could provide (at least not with the same degree of complexity)...that being response tracking. DART and Atlas tagging systems enabled clients and agencies to track their ads by site and by creative across a series of variables including total impressions, clicks, clickthrough and click-through-rate. Linking these systems to ecommerce pages on the clients website provided further understanding with regard to advertising's impact on sale. In addition to the clickthrough rate, conversions, conversion rate and ROI also became common nomenclature.

The results of this enhanced degree of data availability were many.

1) Optimization. With data reported on the fly, client's and agencies now had the assets that could help make decisions on the fly. Ads would no longer run until production dollars could be found to produce new work. Rather, weighting of messages and creative by placement would be revised on a seemingly ongoing basis based on what the data showed. This was the first step down a very slippery slope, promoting the power of the numbers to the forefront of the decision-making process (we'll come back to this in a couple weeks.)

2) A new department. Advertising and marketing orgs were suddenly very interested in individuals with statistical strengths. Director of Analytics and statistician type titles becoming commonplace, with the ability of these individuals to demand salary unrivaled outside of creative departments. The data wonks were now at the center of the decision making process.

3) Fear & uncertainty for some. Traditional advertisers became nervous...NBC could tell you how many TV's were tuned in to a commercial with a fair degree of accuracy, but they couldn't tell you if someone had left the room to grab a beer while the commercial was playing. Clickthroughs were confirmation not only that someone was seeing your add, it was also confirmation that they were interested in what you had to say.

4) Greed for others. Online media companies were bullish. Yahoo!, AOL, Doubleclick, CNET and a whole slew of other companies watched their stock prices rocket skyward. At one point over 90% of Yahoo!'s revenue was reported from advertising dollars...a dangerously high level as the following years would prove, but indicative of the perceptions that increased data reporting inherently provided a greater degree of knowledge and understanding; something they could offer on a scale matched by few.

5) Ability. Ultimately, with the want already established, marketers and advertisers now had the ability to demonstrate accountability on a level unparalleled in the history of the business.

So with the want and ability established, what else could fuel demand for accountability?

What was that popping noise? The bubble bursts in 2001
I remember landing in San Francisco in the Summer of 2000, a market at the center of the tech-bubble. 23 year olds were driving Porshe's, dinner reservations to the finest restaurants required at least 2-3 months notice...the smell of money was in the air and it was all being driven by the emergence of the internet.

At its height, the tech boom fueled an ad economy that could not spend client dollars fast enough. Aggressive (and irreverent) advertisers launched TV commercials featuring hamsters being shot out of a cannon. New businesses sought ad solutions before they had even figured out their business plan. And if caution and common sense created a moment of hesitation to take on such a business at your agency, another agency would certainly be willing for it is greed that fuels capitalism (or so Adam Smith says) and there was simply too much green going around to ignore.

For me CDNow was the canary in the coal mine. They were the first tech-bubble company that I remember failing to get their second round of funding from the VC's. The tip of the ice berg in a radical market correction that was matched only by the overzealous and unrestrained investing in technology that created the now infamous tech-bubble in the first place.

As exciting and ostentatious as the 1998-2000 period was, what followed from 2001-2003 was as sobering a time as I can recall or hope to imagine. To remind everyone how far and fast things fell:

-In the summer of 2000 the Nasdaq topped 6000.
-Last week the Nasdaq achieved a 4 year high topping 2300.

Need say no more...

...what was left was a shaken industry full of fear. The bi-product of the the bubble burst resulting in a sea change of epic proportions the majority of which continue to influence the advertising and marketing decisions we make today:

1) Our credibility as an industry was gone in the blink of an eye. With all the dollars spent on marketing and advertising a high degree of blame was being placed on client marketers and their agencies for the misfortunes of the start-ups gone belly-up and the blue chips left feeling blue.

2) Marketing dollars disappeared. Asking for an advertising budget was like a 16 year old asking for money from his parents after maxing out one of their credit cards.

3) Corporate governance created extensive (and seemingly excessive) rules for accounting practices. Dollars could no longer easily flow from one quarter to the next if they had not been spent. The Sarbanes-Oxley fall-out would make its mark on our business (as your CFO if you don't believe me.)

4) Judgment was (and is) quickly cast. The agency at which I was working had a staff of 180 reduced to less than 50 in a little over 6 months. This was largely a rightsizing effort, but consider CMO's now enjoy an average tenure of 18 months.

5) Data driven decision making processes were implemented. As the need to demonstrate accountability mounted, data was captured from a growing number of sources: Brand Tracking Monitors, in-market reporting tools, copytesting for creative. The want and need for accountability was not just for online activities, it was for any dollar spent on marketing and advertising. And as this need for accountability and the number sources from which data was avaiable grew, numbers themselves became more than just an asset, they became the ultimately veto tool - marginalizing the value of expertise and personal judgment in doing so.

So here we find ourselves, with the want, the ability and need to demonstrate accountability. A better, more efficient marketing world? Maybe. Clearly there are immediate benefactors (see Millward Brown growth in the last decade), but as for the impact of marketing efforts on the customer...only time will tell us for certain.