There is a healthy appetite these days for businesses to focus on Key Performance Indicators (KPIs). Energy, money and management time is spent on defining, creating, and collating data for dash-boarding and reporting purposes. But how much do reported KPIs inform us of future business performance? There is a difference between ‘backward looking’ data and ‘forward looking’ metrics – the latter we call ‘leading indicators’, and we believe that KPIs that are frequently reviewed should be a balance of both.
But what are the KPIs that are also leading indicators? An interesting solution to this question is the: Share of Google (SOG).
Where Google plays a role in the customer journey the notion of Share of Google provides a valuable insight into the future. Share of Google is defined as follows:
Put simply, a brand’s Share of Google is a proxy for active brand interest relative to other brands in the same sector. There are some advantageous properties that are associated with SOG:
- The data is based on a very large sample. Whilst this is not based on the entire Google population, the sample sizes are nevertheless very large
- The data is revealed preference (i.e. behavioural) and not stated preference. Unlike conventional tracking research, respondents are not asked “would you consider or be interested in this brand?”. The data is purely observed behaviour on what people are searching for
- Historic data series exists – the data can be obtained going back to 2005
- The data is high frequency, meaning that if required a daily read can be obtained
- The data is free and available in the public domain with a registered Google account
- Share of Google is sensitive to marketing investment – when new advertising campaigns begin, we can often see an increase in Share of Google
- Finally, and perhaps most important of all, we have seen that Share of Google is a leading indicator of future Sector share
In the two charts below, data is presented from very different sectors (Automotive and Financial Services). In the Automotive sector there is a three month lag between Share of Google and sector share, whereas in the Financial Services sector the relationship is within one month. With both sectors Share of Google is a leading indicator of sector share.
In a sector like automotive, the relationship between marketing in investment and sales is often too prolonged and complicated to observe directly. However, if we are to demonstrate that marketing has an influence on sector share, then an intermediate metric like Share of Google is worth paying attention to.
For KPIs to be leading indicators, the following properties should hold:
- The variable should accurately predict future sales or sector share
- The data should be easy to obtain, process and report
- The variable should be sensitive to marketing and media investment – giving us a sense of control
These criteria are not always easy to adhere to. Fortunately Share of Google fits the bill.