Spot the Difference: Vanity Metrics vs. Leading Indicators
By Jordan White, Vice President of Digital
Digital marketing is full of insider talk. Honestly, it’s one of the things that frustrates me the most about our industry. In the earlier days of digital marketing, it wasn’t uncommon for reports to be a mountain of numbers next to ambiguous acronyms (‘CPM’ confuses me to this day). Clients hated it, and honestly, so did I.
Thankfully, the industry has gotten smarter over the past few years, as a wave of marketers have spearheaded the “let’s not waste time with metrics that don’t matter” approach. Somewhere along the way, clients started asking really good questions like, “that’s great, but how is this driving revenue?” and marketers had to figure that out. The pitch decks are much shorter now (thank goodness). I’m rather proud to say that since day one, 5by5 as a team has focused ourselves on the metrics that matter. It’s not always easy – tracking can still be challenging at times – but that’s a conversation for another time.
What I thought would be helpful today is to take a look at two related terms and how a better understanding of them can help you to get better results from your marketing. The terms are “leading indicator” and “vanity metric.”
What’s the difference between leading indicators and vanity metrics?
To give us a simple starting point, I asked AI platform ChatGPT to explain the difference. Here’s what it said:
A leading indicator is a metric that predicts future performance, while a vanity metric is a metric that is used to measure success but does not necessarily provide meaningful insight into the performance of a business or campaign.
A leading indicator can give you an early warning sign of a change in performance. It is a metric that tends to change before the overall economy or a specific market changes, and it can be used to predict future trends or changes in the economy or market.
A vanity metric, on the other hand, is a metric that is used primarily to make a company or campaign look good but does not provide meaningful insights into performance. These metrics are often used to track surface-level metrics such as page views, likes, or shares, but do not provide insight into the underlying business performance.
It's important to note that vanity metrics can give a false impression of success and do not help in making decisions for the business. While it is important to track metrics, it is important to focus on metrics that are meaningful and provide actionable insights.
Thanks, robot – that’s mostly right. But here’s what’s incomplete about that explanation:
There is no universal standard.
The only way to tell the difference is to assess the connectedness of the number to the next important thing(s) that happen. And here’s the kicker – every client and situation is a little different. Page views can absolutely be vanity metrics, unless you see a strong correlation between views and leads. I could argue that leads are, in some cases, vanity metrics if they’re not eventually becoming customers.
Also, it’s important to remember that early indicators often happen before you ever know about them – that’s why they’re called “early.” Maybe the best and most accurate early indicator for potential growth is how many people are using Google (or other tools) to search for the problems your brand solves. Note that I didn’t say searching for your brand name.
Tools like Google trends can be incredibly helpful for seeing how your search terms compare to the more macro landscape of what’s going on. If you’ve never played with it, it’s really fun to look at the trends of what people are searching for.
For instance, check out what happened to “daycare near me” searches over the past five years. COVID hit in March 2020, and we all brought our kids home (myself included). After a grueling three months, we appear to have decided ‘enough of that’ and sent them back. Searches really started to take off in January 2021 – about 9 months after the main lockdown portion of the pandemic.
So… how do we know which metrics matter?
The best way to decide is to look at your data honestly and ask yourself, “Do we see clear paths between these actions?” When clicks from your ads go up, what happens to leads? When leads go up, is it directly proportional to customers? The data journey never ends, but gaining a clearer understanding of which data points lead to conversions and which don’t will help you see through the fog. Stay curious, and whatever you do, don’t base your whole plan on impressions – those are almost always vanity.
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