One of the concepts that I have learned from Joanne O'Connell is the difference between a measure and a metric. Joanne O'Connell and I are developing a system for tracking and analyzing marketing campaigns. We also teach a course on marketing metrics at the University of Calgary.
I honestly thought that a measure and a metric were the same thing and I used the terms interchangeably. But I learned from Joanne that the difference is significant and important.
A "measure" is a number that is derived from taking a measurement. Your height, weight or temperature would all be measures. In the case of marketing, examples of measures would be the number of impressions, the number of visits to a website or the number of sales generated by campaign on Google's AdWords search network.
In contrast, a "metric" is a calculation between two measures. Typically, the calculation is a form of division. The format of the calculated result can be a percentage, a ratio, a fraction, a decimal or a multiple.
- A percentage is a calculation where the fraction is multiplied by 100. The expression is %. http://en.wikipedia.org/wiki/Percentage. An example is Return on Investment (ROI).
- A ratio compares the number of one thing to another. The expression is 16:9 http://en.wikipedia.org/wiki/Ratio. An example would be for every pair of pant sold we sold 2 shirts.
- A fraction is typically expressed as one number compared to another. For example, 3/4 which is three quarters of a whole. http://en.wikipedia.org/wiki/Fraction_(mathematics). An example would be 3/4 of our marketing budget was spent on the Chicago trade show.
- A decimal is a calculation where the fraction is expressed as a decimal point. The expression is 1.23 http://en.wikipedia.org/wiki/Decimal_fraction#Decimal_fractions. An example is 2.42 Pages per Session.
- A multiple is a number that is greater than what it is compared to. This would be similar to that. http://en.wikipedia.org/wiki/Price_earnings_ratio. An example is our format for Return on Marketing Investment (ROMI): For every $1 spent on marketing we generated $5 in Revenue and $2 in Profit.
The value of measures is that a marketing team can measure the results of their marketing activities. For example, between two time periods: the visits in February were 1,000 and 1,200 in March.
The beauty of a metric is that the marketing team can establish and compare performance. For example: The click through rate (CTR) increased from 1% in February to 3% in March and the result was a 20% increase in visits.
The website for the marketing metrics system that Joanne and I are developing is Mx3 Metrics.