applying the science of measurement to the art of advertising - 20 january 2011 - slideshare

Copyright 2011 Jacobs & Clevenger

January 20, 2011Ron Jacobs

[email protected]

Applying the Science of Measurement to the Art of Marketing

Creating Meaning From Data, Analytics and Metrics

Applying the Science of Measurement to the Art of Marketing

Creating Meaning From Data, Analytics and Metrics

A Presentation forA Presentation for

Ron JacobsPresident, Jacobs & ClevengerCo-Author, Successful Direct Marketing MethodsSponsor, Ron Jacobs & Bob Stone Multichannel Marketing

Communications Certificate Program, DePaul University


Agenda

• Performance Measurement… Forging a connections between marketing activities and business outcomes

• Explore marketing effectiveness using Return on Marketing Investment

• Why establishing Key Performance Indicators is the starting point for measurable marketing

• Explore attribution models for multichannel marketing communications

• Tools for social marketing measurement

http://vimeo.com/10251808

http://vimeo.com/10251808


Themes from the 4A’s Conference in March 2010

• Communications’ objective is conversions

– Ad’s influence behavior– Brand stories & content– Not campaigns… Continuous

• Add Calls to Action in copy– Goal is to get conversions• Buy key audiences rather

than buying specific media– Use data for targeting &

segmenting audiences• Target geographically

– Local & hyperlocal

• Addressable media is here– Personalize & customize

communications, even TV– Adjust messages to channels

• Measurement & Accountability– Bridges marketing & finance– Invest based on Customer

Lifetime Value• Marketers, agencies,

suppliers, talent, and media need new business models

– Value based agency compensation


Create a culture of marketing accountability

• Start with the basic foundation… Measure efficiency and effectiveness, gain insight, optimize

– Data: Factual information organized for analysis or decision making– Metrics: Measurements that help quantify marketing performance– Analytics: The science of analyzing customer and/or market data– Marketing Database: Collection of personal/transactional information about

prospect/customer experiences with a brand• Align metrics to objectives

– Metrics support an organization’s business, marketing and communications objectives

• Use a few relevant metrics… Key Performance Indicators– Know the sources of marketing revenue & customers

• Using analytics is one trait of accountable organizations– Organizations need a decision process to take customer insights to appropriate

decision makers


Accountability.It’s not about what is measured, it’s about

effectiveness (Vs efficiency)


Top Performance Metrics 2010


Lifetime Value helps marketers to direct customer marketing strategy

• What is Customer Lifetime Value (LTV)?– The Net present value of the profit to be realized on the average new customer

during a given number of years.– To compute LTV, you must be able to track customers from year to year.

• LTV used to assess acquisition & customer marketing strategies– To best target sales and retention efforts, know the value of customers – LTV helps to determine how much a marketer can afford to acquire a new

customer– LTV provides a way to segment during a customers lifecycle for up-sell, cross-sell,

maintenance and retention of the most valuable customers• LTV can also be a short-term metric of the long-term benefits of good

(or bad) customer experiences. (Peppers & Rogers)– E.g. Any experience that improves the likelihood of future purchases– Increase/decrease in LTV represents the effect on value of an immediate

experience


Return on Marketing Investment – A measure of marketing effectiveness

Input• Promotion Cost

$1,000,000• Average Sales $ 300• Profit Margin

25%• Total Prospects 250,000• Total Number of Sales

45,000

Return on Marketing Investment (ROMI)

• Total Revenue $1,350,000• Total Profit $125,000• Cost per Prospect $4.00• Cost per Sale $22.22• Conversion Percent 18%• ROI (?) 12.5%

• ROMI Incremental Revenue $1.35

• ROMI Contribution Margin $ .125


Marketers (and Agencies) need to show accountability & effectiveness, not just measurement

• Everything has a Key Performance Indicator (KPI), but cross-channel activity makes measurement and attribution harder

– Relevance• How marketing adds value to the business

– Alignment• Proof that marketing is focused on the success of the business, not

the size of its budget – Rigor

• A fact-based, disciplined approach to strategy and execution• Without the above, Marketing gets The ROI Question– This is Finance’s way of asking “Can Marketing be trusted to spend the

company’s money wisely?”


Key Performance Indicators (KPIs) can help measure everything

1. Business contribution:Channel reach, revenue contribution (direct and indirect), Return On Investment (or ROMI), category penetration, costs and profitability.

2. Marketing outcomes: Customers, leads, sales, service contacts, conversion, retention, winback and response efficiencies. Acquisition cost, Avg. order, Avg. profit, Lifetime Value.

3. Customer satisfaction:Usability, performance/availability, recommendation behavior. Opinions, attitudes, reasons for defection, brand impact and churn.

4. Customer behavior :Profiles, customer orientation (segmentation), usability, clickstream and site actions. Bounce rates, conversions, page views, depth, page & site duration, RFM and transaction behavior.

5. Channel promotion:Attraction efficiency. Referrer efficiency, cost of acquisition and reach. CPM Vs CPC. Search engine visibility and link building. Unique visitors, frequency, e-mail marketing results. Channel integration.

6. Social media:Engagement (e.g. # of comments); involvement (e.g. time spent); bounce rate; # of reads, comments, & posts; brand affection/aversion; conversions; mention of brand name; advocacy; viral activity; referrals; recommendations; multiple moving averages; etc.

1. Business contribution1. Business contribution

2. Marketing outcomes

2. Marketing outcomes

3. Customer satisfaction

3. Customer satisfaction

4. Customer behavior

4. Customer behavior

5. Channel promotion

5. Channel promotion

6. Social Media

6. Social Media

•KPIs distill analytics data into relevant information

•Exclusive to each business

• Specific

•Valuable

•Actionable

•Focus on the 3 – 5 most significant metrics


Marketing Dashboards. The visual display of metrics.

Marketing Dashboards graphically display KPI’s in main categories

– Brand– Product– Customer– Channels– Efficiency– Organizational

Development– Macro-

economic Environment


Once you measure, optimize.Testing and attribution


Creativity & accountability are compatible

• cre·a·tive (kr-tv)adj.1. Having the ability or power to create: Human beings are creative

animals. 2. Productive; creating. 3. Characterized by originality and expressiveness; imaginative: creative

writing– n. One who displays productive originality: the creatives in the

advertising department• Creatives love metrics. At least the ones I work with do!

– They don’t want to do ads/stories that have no objectives, no strategies, no grounding, no framework, no purpose

– Creatives crave more information, more research, more data, more metrics


Construct a test plan

• What are you testing• Why is it being tested• What audience segments are being tested• Describe the expectations for the test (e.g. Success, failure)• Identify the measures of success for the test• Are there risks associated with running the test• What are the internal resources required to run the test• Who are the stakeholders requesting the test• When are results needed?


Test Elements

• Headlines• Sub-headlines• Body copy• Offers• Calls to action• Images• Colors• Landing pages• Product attributes

• Bounce rate• Lead Forms• Testimonials• Price• Bonus offers• Guarantees• Video• Audio• Fonts


Two types of web testing

• A/B testing (Split Testing)– Compares the performance of two different pages– Good when a web site has fewer than 1,000 page views per week– Can help when moving sections around or changing the overall look of

web pages• Multivariate Testing

– Compares the performance of content variations in multiple locations on a page

– Good when a web site receives more than 1,000 page views per week– Can help optimize multiple content changes in different parts of

multiple web pages simultaneously


A/B Split Testing

Headline

Image

Offer

Body Copy

Test A Test B

Headline

Image

Offer

Body Copy

Call to Action Call to Action

Test one variable at a time


Multivariate Testing

Headline 1

Image A

Offer 1

Body Copy a

Test A Test B

Headline 2

Image B

Offer 2

Body Copy b

Call to Action I Call to Action II

Test C

Head line 3

Image C

Offer 2

Body Copy c

Call to Action III

Test multiple variables at a time

36 Variables (3x3x3x3x3x3) = 729 Tests


Last ad standard

Atlas Solutions, Microsoft Advertising


Engagement Mapping across channels

Atlas Solutions, Microsoft Advertising


Social MediaRelevant measures are being tracked, analyzed and

used for program optimization & ROMI


This points brands in a physical and experiential direction to connect with customers and influencers


Businesses are Taking Social Marketing Seriously

• The amount of video uploaded to YouTube every minute– 35 hours

• The amount of time it would take to view every video on YouTube– 1,750 Years

• The number of YouTube videos viewed per day– 2 Billion

• The average number of tweets on Twitter.com every day– 90 Million– 25% contain links


Businesses are Taking Social Marketing Seriously

• The number of photos archived on Flikr.com as of June 2009

– 13.6 Billion• The amount of content (Links, news, posts, notes,

photos, etc. shared on FaceBook weekly – 3.5 Billion• The number of minutes spent on FaceBook daily– 16 Billon• If FaceBook were a country– It would be the 3rd most populated in the world, behind China

& India• The number of Articles on Wikipedia

– 16 Million


As consumers and influencers flock to social marketing, organizations must demonstrate an ROI


Improve the framework for social marketing measurement… Dashboards help

• Scale – No. of visitors, registrants, followers, fans, members, comment; sources of traffic; etc.

• Involvement – Downloads, readership, views, time spent, network/community numbers/quality,

frequency, geography, etc.• Engagement

– Actions: e.g. Conversions, reads, posts, comment, reviews, recommendations, rating scores, etc.

• Intimacy– Sentiment, Positive Vs negativeposts), opinions expressed, etc.

• Influence– Advocacy, viral forwards, referrals and recommendations,social bookmarking, mentions outside of your community, etc.


Five indicators of customer engagement

• Memorability– Do they remember the communications and message

• Favorability– Positive Sentiment Vs Negative sentiment

• Purchase Consideration– More or less likely to purchase after exposure

• Time Spent – Positive correlation between time spent and purchase consideration

• Cognitive and Emotional Response– Understand and feel good about the messaging


Prospects and customers make discrete channel choices

• Users increasingly prefer different channels for different types of messages– E.G. A customer might prefer a phone app for checking airline

schedules, a web site for making reservations, SMS for flight delay notifications, email for upgrade and mileage status and a Facebook feed for airline promotions.

• Each channels role in the marketing mix becomes clearer– Channels have specific roles and message types– Clarity allows marketers to

• Better focus content creation on more meaningful messages• Measure and evaluate success• Better communicate each channels benefits to management

Alterian’sSocial EngagementIndex

2010Super BowlTV Ads

www.alterian-social-media.com/

http://www.alterian-social-media.com/

Alterian’sSocial SentimentIndex

2010Super BowlTV Ads


http://www.alterian-social-media.com/


How much is a tweet, a fan or a follower worth?



Conclusions

• Marketing accountability is among all marketers top priorities for 2011

• Testing and optimizing ads provides a way to improve performance for online and offline ads

• To prove marketing effectiveness, use a few KPI’s aligned with organizational goals, which have indisputable rigor

• Attribution modeling is difficult, often flawed, but essential in a world of multichannel marketing communications

• “If you don’t like change, you’re going to like irrelevance even less.”


Questions & Answers

Questions?Questions?


[email protected]