99% of my advertising is wasted. But how wasted is it?

In the dark ages of advertising (read: before the Internet), measuring ROI was a relatively straightforward matter. You tallied your ad spend, and then you tallied your sales and profitability. Depending on which column was greater, you either won or lost. And responded accordingly. All of which produced the traditional CEO’s dilemma: “Half of my advertising dollars are wasted; I just can’t tell which half.”

Fast-forward to 2009, and it’s not even about the Internet anymore, but it’s now about the phenomenon known as social media. From out of literally nowhere, spending in this category (non-existent just five years ago) is projected by Forrester Research to grab 21 percent of all ad spend by 2012.

Did you say 21 percent?

Yep. And all based on the premise that the average attention span of a human being has shrunk to the equivalent of the length of a flea’s back leg. But I digress.

If advertising effectiveness measurement was difficult when there was just print and broadcast, consider how challenging it is today. Not only has it fragmented beyond recognition, but also that fragmentation is evolving even as we speak. In other words, the tools created to measure website traffic less than a decade ago are now old hat. Today’s tools are being designed-on the fly-to measure the effectiveness of such phenomenon as mobile marketing, social media, email marketing, display advertising, search marketing… and each of those categories have many divisions of their own. Even those “media” continue to evolve at a breathtaking pace. The good news is that new measurement techniques and technologies to address this data gap represent a huge market opportunity for firms willing to wade into the morass. A recent whitepaper released by the data firm CoreMetrics presents a good example—if you can decipher the buzzwords. But here’s the rub: it seems the very notion of social and viral marketing is antithetical to the idea of actually measuring its effectiveness. It’s dynamic, random, explosive, and nearly invisible and seems to operate blissfully outside of anyone’s control. And that’s precisely the charm and power of social media.

Having said that, if you can actually figure out how to make those tools actually work for your company and you have the time and the financial resources to throw at the effort, you’ll likely be miles ahead of your competitors. Of course, the way things are going, by the time you do figure it out, those tools will have been made obsolete by the next generation.