The rapid growth of online advertising hides a serious challenge: the digital world has developed faster than the tools needed to measure it. This problem has made it difficult for marketers to fully exploit the Web’s promise as the most targetable and measurable medium in the history of marketing. Can digital advertising live up to its potential?
It’s going to take some time. A June 2008 McKinsey digital-advertising survey of 340 senior marketing executives1 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 Hobbled by nascent technologies, inconsistent metrics, and a reliance on outdated media models, marketers are failing to tap the digital world’s full power. 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.
Some companies, though, are making progress. The most exciting innovations are taking place in three areas. In media planning, marketers have been developing analytics that allow them to compare the effectiveness of on- and offline efforts. They are also developing a better appreciation of how online marketing messages convert shoppers into...