Correlation or causality

Just because two things correlate, does not necessarily mean that there is cause and effect at work.

Imagine you  have just launched a new product backed by a great TV ad, and sales exceed forecast by a factor of 5. Obviously the ad agency is going to be delirious, putting your ad on all their show reels, but did the advertising cause the sales, or were there other success factors working for you?

Emergence of digital media has complicated the lives of communication agencies and marketers enormously. By offering real ROI measurement opportunities, web-tools have made marketers  accountable for results as never before.  This does not mean it is easy, just possible.

Google analytics offers a range of tools by which to generate a host of metrics, but two challenges remain:

  1. Which are the few metrics that really get to the heart of marketing ROI
  2. What is the cause of something, and what is the effect.

Avinash Kaushik’s great blog addresses these issues, in this one, examining the complications of the ROI of Facebook advertising, something that has stumped lesser minds for a while now, and cost early facebook investors a heap in the IPO.

Reading the post, I was reminded of Seth Godins musing about the relationship between rain and umbrellas. Every time it rained, he saw umbrellas everywhere, so did the presence of umbrellas cause rain, or did rain cause the presence of umbrellas?

About strategyaudit

StrategyAudit is a boutique strategy and marketing consultancy concentrating on the challenges of the medium sized manufacturing businesses that make up the backbone of our economy. The particular focus is on their strategic and marketing development. as well as the business and operational efficiency improvements necessary for day to day commercial survival. We not only give advice, we go down "into the weeds" to ensure and enable implementation.
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