There is an unfortunate consequence of 3rd party measurement in that it has a tendency to hold back the innovation that new markets need. This has been proven time and time again and it is these inefficiencies that many entrepreneurial companies fail to see. First let me give you a public policy example of what I’m talking about using the example of Net Neutrality.

Net Neutrality is simply defined as giving preferential performance to parties that pay the most. On the other hand Measurement could be redefined as providing preferential treatment to media vehicles that are measured. The two are not that different. It’s all about providing preferential treatment. It’s the idea that the more someone is willing to pay the more viable their business becomes. In some people’s books they may consider the concept to be extortion but to many it’s just the price of doing business.

Businesses that spend money without the ability to measure the return on investment end up with inefficient measurement which places the burden of measurement on the client a sure disaster waiting to happen. Performance measurement is the keystone to proving your worth, why would you give that responsibility over wholly to your client especially if they have no idea how to measure what you do? That’s exactly why online search has been a very successful business model, it has built in measurement, the business proves itself.

Some industries want to use financial measurement strategies (sales), but often in this model there are unmeasurable components. Think about video on demand (VOD), Nielsen doesn’t effectively measure the VOD model and therefore there is little demand from advertisers to buy it.

Truly innovative companies provide measurement with the solution. Google, DoubleClick, and other ad technologies have measurement built right in.  Those  that focus on the platform to the detriment of measurement that find themselves stagnating.  Cue the reality… many web based businesses fit this model.  Facebook = great social platform, no business model, little measurement of performance.  Twitter = cool new communication platform, no built in measurement, they’ve ceded that business model to other companies that access their APIs, and the list goes on.

Of course it’s hard to think of what to measure when you haven’t quite figured out how you’re planning on making money, but regardless I think companies are starting to see the light, especially in the online ad space.  Most companies I speak to in online advertising are considering building in measurement to their tools, a strategy that not only proves their model, but keeps the control over the measurement squarely where they need it – in their hands.  All too soon we’ll be swimming in performance data and fighting over reporting standards.  I’m looking forward to it…

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