As a marketer, the biggest challenge you have is quantifying your return on investment (ROI). Afterall, your company is spending large sums of money to sell a product (or service) and you should know what that money is producing for you. As difficult as that sounds these days, rest easy knowing you’re not alone. In a recent study, only one in four marketers felt confident they can quantify ROI. Because of that low figure, around 70% of chief marketing officers (CMOs) expect to invest more in analytics and attributions in the next year, according to Nielsen.
Due to the severity of this topic, and more so the implications on marketing and media investment, I want to share some thoughts on why ROI and the ability to have the answers is so critical. And just maybe, you’ll walk away with a few tips as a starting point to gain more clarity on what your media investment is doing for you.
Avoid Last Touch Syndrome
The idea of last touch has been around for a while, even as marketers didn’t realize it was their go-to methodology. Last touch means assigning 100% of the credit of the conversion (sale) to the last advertising effort that the consumer experienced prior to making a purchase. Despite all the metrics, like reach and frequency that go into a media strategy, for decades we crowned that last media exposure immediately before the conversion as the winner.
While this is an easy method to measure ROI, there is very little argument to be made that this approach has value. In both theory and application, it’s stating that nothing matters other than that one engagement – not the branding, direct mail, or display executions that lead up to the search to purchase. Clearly, there are flaws within this approach, or we’d all be tossing any other steps in the strategy out the window. So if for no other reason than to give credit where credit is due, marketers and CMOs must advance their systems to move towards an allocation of credit across multiple touchpoints. Only then does the door open to real ROI.
Assign Value To Each Media Tactic
At each stage of the customer journey, whether that be online or offline, or at the beginning or end of the process, media plays a part in the conversion and provides value. Like most things, the value fluctuates, but one thing is clear – you must understand what that value is. The best way to do so is to first understand how consumers are using that media channel, then acknowledge the sequence it falls within across the media mix, the weight it carries (i.e.: spend, clicks, engagement) and time decay. In understanding how these forces and “the mix” can impact consumer’s response and then assigning a discount factor of sorts to each variable, the overall value of each media channel becomes easier to assign.
Determine Marketing’s Impact
Marketing is a complex puzzle involving the promotion of the products and services that brands create. And to use the word complex is probably an understatement. As the head of a media agency, I often tell my team that what we do for a brand is just one slice of what goes into promotions. Partnerships, distributions and line extensions are just some of the things outside of marketing and media buying that impact sales. By defining the attribution of a conversion back to advertising and paid media, the agency and brand marketing team secures a deeper and more clear understanding of how those efforts impact the bigger picture. While that is truly a marketing answer, it is also information that the finance team and c-suite want to understand.
Look For Actionable Insights
The goal with analytics and attribution is to use data as a road map to media planning, optimization, shifting strategies, and even product development and line extensions. If all the work doesn’t lead to clear, actionable insights, the efforts are, frankly, worthless. Having time on your side helps tremendously, as time reveals patterns that marketers must be aware of and capitalize on. So look at this as a long-term game, not a quick solution of fact finding. To see those patterns, convert data into visuals which tend to portray the information in a different and sometimes better light. It’s hard combining through hundreds or even thousands of lines in an Excel file, but if you leverage pivot tables to wrangle in the data-overload, the answers may be looking right back at you.
Data is the only way you can plan and manage a successful media strategy and buy. If you want to see what a healthy analytics program can do for your brand’s marketing efforts, contact Morgan & Co., a media agency specializing in audience analysis, media strategy and analytics.