Web Marketing KPIs: Competitiveness Indicators Part 2—Competitive Advantage Index

As with all MeasureMyBrand KPIs, the Competitive Advantage Index was developed based on decades of b2b marketing experience. It likely has value in consumer brand marketing as well, but b2c brands should conduct their own evaluations.Competitive Advantage Index

With competitiveness indicators, it’s important for brands to first isolate and prioritize their competitive environment by identifying key competitors that pose the greatest threat to business success. Why? Because if a brand does well among this group, the probability of sustained business growth is high. Typically a competitive group should include no more than five companies (or brands), otherwise marketing resources could be spread too broadly to be effective.

When developed properly, competitiveness KPIs provide insight into the brand’s market competitiveness. They’re valuable both as snapshots in time and as a developing trends.

Web Measurement Redux
A core premise from an earlier post is that the Web is a market, not just a channel. It’s actually a ubiquitous network of content used as the basis for an economic exchange. Whether or not you’re a web transaction-oriented business, the Web acts a “place” where sellers and buyers come together to do business.

Elevating the Web from “marketing” to “a market” opens up new ways to measure and report strategic web marketing performance. Note that it’s important that web marketing is distinguished from online marketing, which includes email marketing.

Recognizing that the Web is a market means that certain web market trends are critical business success factors. These factors, then, can be measured using a set of market-level key performance indicators (KPIs), of which the Competitive Advantage Index is one.

Competitive Advantage Index™
The Competitive Advantage Index (CAI) is the only indicator in our web marketing KPI set that’s based on an index. The reason for an index is because measuring competitive advantage is complicated because a genuine performance measurement must be compared—both individually and as a group.

Essentially, an index is a “statistical measure of changes in a representative group of individual data points.” So, an index that measures competitive advantage would have a brand and its competitors collectively act as the representative group. The data points are factors that may heavily influence a brand’s competitiveness in the Web as a market.

As with all our KPIs, the Competitive Advantage Index (CAI) uses data collected from paid, owned, and earned web presence. The CAI, in many ways, is a combination of brand preference and webshare. The biggest factor (though not the only one) that distinguishes it from these two is non-branded search performance.

Keyword search results are critical for measuring a brand’s competitive advantage on the Web. If its web presence isn’t performing well in non-branded search, it doesn’t bode well for building a strong online brand. This, in turn, weighs negatively on the future prospects of the business.

The way the CAI works is that a brand is rated from -10 to +10, in comparison to the group as a whole, which includes the brand. A rating above +.67 (one standard deviation) indicates a competitive advantage and a rating below -.67 indicates competitive weakness. The higher (or lower) the number, the stronger (or weaker) is the brand’s competitiveness among the group.

What’s Behind the Index
The CAI is the only indicator in the web marketing KPI set that’s based on an index for reasons noted above. But as with the other KPIs (except Competitive Webshare), the CAI uses both quantitative and qualitative data. The way our index works is that a brand is rated in comparison to the group as a whole, which includes the brand.

Our methodology for developing the Competitive Advantage Index followed these steps:

  1. An examination of most all available raw data and metadata for paid, owned, earned and shared content from each of four web marketing channels: Press, Social, Website/Search, and Advertising;
  2. A narrowing social media data sources to include those most important to b2b marketers — LinkedIn, Twitter, Facebook, YouTube, and Google+;
  3. A narrowing of advertising data sources to include those most important to b2b marketers — search and display
  4. Determining which quantitative dimensions are core to competitiveness, like webshare;
  5. Determining which qualitative dimensions can be used to represent an advantage, like search rank.
  6. Grouping the data to create a comparative norm by which the brand is rated using an algorithm.

At the end of this process, we found that in excess of 20 data dimensions are important in calculating an index that fairly represents a web market competitive advantage. We then developed an index and rating.

Get more. 

Don’t want to sift through our individual KPI blog posts?  Download the Web Marketing KPIs white paper.

The Web is a Market, Not Just a Channel.™ is a seminal white paper on the need for marketers to expand how they view the Web.

Learn about web presence optimization as a web marketing strategy.

Be sure to follow CMO Dave on his 2015 Measurement Odyssey on YouTube!

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