Effective Measurement will be Facebook’s ally, Google’s Enemy
Three execs from the largest digital publishers sat down yesterday to have a “discussion” about advertising and the future of measurement (video here at around 15:00), and things got a little awkward on stage when Facebook’s Gokul Rajaram and Google’s Neal Mohan got into a very PR-cushioned argument about the future of ad measurement. It’s easy to perceive this as a difference of opinion between two competing companies, but what really underlies this spat is a massive measurement shift underway that will have a huge impact on the future of both companies. I know this because I’ve spent time working directly with attribution modeling that accurately maps consumer influence and behavior across the full purchase cycle. These tools are quickly catching up to reality, which scares the shit out of Google.
Over the last decade, Google has entrenched themselves as the market leader in digital ads because they are able to deliver an interested buyer to the end merchant or businesses. That’s what a good search engine does — help consumers find what they’re already looking for — and Google is the dominant search engine today, therefore delivering the majority of consumers to businesses. But few businesses understand the full spectrum of consumer influence due to limitations in measurement solutions. The measurement model referred to as “Last Click” has been the most prevalent because it’s the easiest for businesses to understand. This model attributes conversions to the last touch point of a consumer - quite often a search engine. This puts a lot of ROI into just one component of the full purchase process, and — since advertisers allocate budgets based on data — a lot of dollars into getting that last click on Google. The measurement community understands that this is unfairly weighting most of the value into Google’s camp, but for the average marketer, the inputs that drive consumers to perform interested searches are still relatively ambiguous.
In the last five years, Facebook has become increasingly dominant in the category of frequency and time spent for consumers. In other words, FB controls a huge market share of inputs for consumers, and it is in their best interest to drive clarity in the market around the value of these inputs. As improving “Multi-touch Attribution” models (which allow for this clarity by measuring influential touch points that drive users to a purchase event) permeate the market, it is inevitable that a significant amount of attribution shifts from Google to Facebook, impacting measurable ROI. Ad dollars will follow this ROI, giving FB a large upside on the future advertising market.
Google will fight tooth and nail to maintain their market position (and you can hear the distress in Mohan’s rhetoric), but if FB can continue to maintain and increase their share of consumer touch points, it is only a matter of time until we see a shift of ad dollars following what has already happened to the consumer purchase cycle over the past five years.