Sure, He’s a Hunk, But How Good Is Don Draper’s CTR?

If you want to go into advertising, get a computer science degree.

Why? “Madison Avenue is increasingly a bastion of geeks: computer programmers, data heads and quantitative analysts,” The Wall Street Journal reported today. The merger agreement made last month between U.S.-based Omnicom Group and the French advertiser Publicis Groupe has been described as “driven in part by the rise of big data and digital advertising.”

This leaves old-timers more nervous than ever, especially among those on the “creative” side of advertising. Mike Sheehan, chairman of Hill Holliday, a Boston-based ad agency, told the Journal, “Algorithms cannot give people goose bumps, and algorithms cannot tell a story.” He added, “That is only performed by human beings that can tell stories and can understand consumer behavior instinctively.”

Peter Drucker didn’t mind creative human beings, but his view of the economics of advertising was always decidedly skeptical.  When it comes to the micro-economy of producer, consumer and market, “much of what is considered ‘knowledge’ is really untested opinion, if not near-anecdote,” Drucker wrote in The Age of Discontinuity.

Exhibit A was advertising. “If effective at all, it should be the most economical and cheapest method of distribution,” Drucker maintained. “For every dollar of advertising spent, countless dollars should be saved that would otherwise have to be spent to bring a product to market. But no one has ever tried to find out if advertising is indeed economical mass distribution or what its economics are.”

In Managing for Results, Drucker made a similar point. “Actually, advertising in which the incremental yields do not go up as advertising expenditure increases is, in all probability, uneconomic advertising,” he wrote.

So are those uncertain days gone? Does the new surge of “data heads” in advertising, and the ability to count clicks, mean there’s finally some rigor in this field?

Actually, it’s hardly so simple. Web ad metrics remain a blurry and contentious phenomenon—some even say to the point of being fraudulent. And, as a recent blog post at M&M Global noted, “the downside of the CTR (click-through rate) metric is that it fails to provide an accurate summary of an ad’s real impact, as there is no significant relationship between clicks and offline sales. In this way, it could be argued that clicks don’t really matter.”

As Drucker asserted, “Advertising is either superbly effective—or it is no good at all.” As it turns out, we still seem to have trouble figuring out the difference.

How should a business today measure the effectiveness of its advertising?