A three-month research project into whether advert value equivalent (AVE) is the correct measure of digital marketing has found the metric is “unable to provide insight into whether or not the marketing activity achieved its objectives, unless of course the objective itself was simply to generate a certain value of AVE in coverage”.
Sponsored by online monitoring and insights software provider, BrandsEye, the research involved focus group discussions with industry stakeholders and a broader industry survey. The results of workshops held in Cape Town and Johannesburg – that involved agencies, brand owners, industry bodies, media owners and monitoring companies – were consolidated into a survey that was distributed to the wider industry. Now the company has issued a report on its findings.
AVE, says the report, is “what your editorial coverage would cost if it were advertising space” and is frequently used by the communications industry to measure coverage. Now it is also used to measure the return from earned digital media. But questions have arisen as to its efficacy. Is it just a measure of reach? What happens if the coverage isn’t favourable as the AVE metric places the same value on all coverage, positive or negative. Earned media, it says, doesn’t’ work like advertising as “advertising relies on repeated exposure and the halo effect, earned media – offline or online – operates on an entirely different set of principles. For one thing, the influence of the source of the coverage itself plays a vital role in determining its impact”. “To impose an advertising framework and advertising rates onto earned media assumes this not to be the case,” it says.
Then there’s the question of ‘what if a crisis is averted’? As anyone who’s ever been involved in crisis communications knows, what doesn’t appear is hugely important. “The avoided Twitter storm or the potentially devastating blog post. The AVE metric is not able to account for this value. This becomes particularly relevant when using the metric to evaluate the work and performance of an agency or partner,” says the report.
Nevertheless, AVE is still used prolifically within the communications and digital industries as the basis for reporting on return on investment.
“The measure, therefore, cannot be ignored but its challenges cannot be either. How do we improve the way that the AVE measure is calculated to address the concerns? Or if we abandon the measure altogether, what else could we possibly use?” the report asks.
Stakeholders who use the measure because they have to, those who find it useful and those who don’t use it at all report similar frustrations.
– There is no consistency or standardisation of the measure across the industry. Inaccurate calculation means the values often seem unrealistic or, at worst, inflated.
– Reflecting the concerns shared in the wider international debate, there are inherent flaws built into AVE’s premise preventing it from being a true measure of return or effectiveness.
– There is no consistency or standardisation of the measure across the industry. Inaccurate calculation means the values often seem unrealistic or, at worst, inflated.
Did the respondents indicate AVE should be abandoned altogether? Stakeholders were “split down the middle”, the report says, with 28.8% of respondents agreeing, 45.76% saying this was a bad idea and the remaining 25.42% undecided.
“But that picture might be a touch misleading and there’s good news. Not simple, quick or easy news unfortunately. But good news, nonetheless,” the report says. “Drilling down into the hows and whys of the resistance to a clear move away from the AVE measure, or into the arguments in support, it becomes apparent that it isn’t the premise of the AVE measure itself that is being held so tightly. There are no strong proponents for the idea that equating editorial coverage in size and placement to the relevant advertising rate is an academically robust method of valuing results,” it says.
The reasons for hanging on to the AVE measure “have little to do with the measure itself. And the arguments in favour of abandoning the metric point in the same direction”. Stakeholders argued that the AVE measure exists and that a metric is needed “to be able to understand and quantify the success of our marketing activity in earned media. At this very moment, that metric is AVE but it doesn’t necessarily have to be so”.
AVE still “provides a real world value to the intangible”. Placing a monetary value on offline editorial coverage or a brand’s online conversation means the AVE metric “is able to supply users with a number that at once seems both familiar and real. It takes what is ostensibly an intangible such as a blog post or Tweet and puts it in the budget”.
The metric can also be applied across channels and platforms but stakeholders all agreed it needs to be standardised and improved. “Not only is this sentiment repeated time and again in all discussions and survey responses, it is a sentiment that opens up significant opportunity for development. And development, hopefully, of a better, more reliable, more relevant measure,” says the report.
So what is the solution? The report provides some guidelines on how to move the process forward.
Firstly, it suggested that the industry needs to develop an index-style single metric to benchmark and evaluate results. “This metric will be able to be used to decipher how a campaign performed against the index itself or in a comparison scenario – over time, between media channels or against other campaigns.”
Secondly, an appropriate algorithm must be developed to include a combination of all relevant objective measures. “The objective measures included should be all those considered to be determinants of value and success in earned media results. And they should be able to be measured consistently and without bias no channel or source.” A “vast majority” of those surveyed said actual sales or conversions must be included. “Since this data will invariably exist confidentially for each organisation or brand, it will need to remain the responsibility of each stakeholder to correlate the metric to their own internal business information independently,” says the report.
Thirdly, data should be used to determine the weighting. One respondent said it was “not so much about counting the above factors, but how you weight and counter-weight them.”
This, says the BrandsEye report, is the rub. While stakeholders agree which objective measures are important to include, understanding what role each should play in the overall calculation cannot be done without data. “If this algorithm is to be reliably, consistently and accurately used as a determinant of success, we need past campaign and marketing activity information from a variety of brands and verticals”.
Of course, this data is jealously guarded by its owners, and understandably so as it “represents a competitive advantage”.
But in order to move towards an industry resolution on this measurement challenge, however, “we need to make it available”.
Many respondents supported the idea that the independent industry body, the Digital Media and Marketing Association, should build a data repository. This repository would enable brands to upload their historical data anonymously.
“Anonymously, of course, being the all-important factor,” the report says. “This data set could then be analysed to determine the appropriate weightings for the algorithm in development by category. It is a solution, to date, with the greatest chance of yielding useful and robust results”.
