measurement strategy€¦ · create meaningful brands that support growth in profits, not just...
TRANSCRIPT
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Introduction & Scope
Why Read This Paper
5 Key Takeouts
DefiningMarketingEffectiveness
Fortitude
Journey
Ecosystem
Best Practice
What Success Looks Like
JargonBuster
Gain Theory
The Author
EffWorks
WHAT’SINSIDE
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ThispaperhasbeencreatedbyGainTheoryandcommissionedby EffWorks,aninitiativeorganisedbytheIPAthatchampions accountabilityinmarketingandpromotesacultureofMarketing EffectivenessfromC-Suite,allthewaydownthroughorganisations.
Increatingthispaper,acrosssectionofseniormarketingandinsightprofessionalsfrom40brandswereinterviewed,representingaUK advertisingspendofmorethan£7bn.
ThepurposeofthispaperistogeneratemomentumanddirectionaroundMarketingEffectivenessmeasurementandtohelpmarketingandinsightprofessionalsmaximisetheimpactofmarketing.
INTRODUCTION & SCOPE
ContributorsInclude
Combined£7b MediaSpend
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ManyorganisationsstrugglewithMarketingEffectiveness.Indeed,manyarestilltryingtofigureoutwhichadvertsareworking;andhowmarketinginabroadersense,beyondadvertising,ishelpinggeneratebusinessgrowth. Anorganisation’s marketingstrategycan allowittodifferentiate productsandservicesand createmeaningfulbrandsthatsupportgrowthinprofits,notjustturnover.
Toensurethatmarketingisaseffectiveaspossible,itsimpactmustbemeasured.HavingtherightMarketingEffectivenessstrategywillhelpmarketerscreatetherightculture,maketherightdecisions,avoidwastageandmaximiseimpact.
Inspeakingtomorethan40brandrepresentativesresponsibleformorethan£7bnadvertisingspendintheUK,wefoundthatnosingleorganisationwaswhollysatisfiedwiththewaythatMarketing Effectivenesswasassessed.
Forsome,organisationallimitationsareabarrier–nothavingtherightpeopleinplaceattherighttime.Forothers,itisthesheercomplexityoftheirmarketsandgainingadeepunderstandingofwhatKPIswouldgenuinelychangethedial.
ThisWhitePaperhasbeencreatedtogeneratemomentumaroundtheMarketingEffectivenessstrategyconversation.It’sdesignedtohelporganisationsfocusonwhatmattersandtosuggeststrategiesthatwillensureMarketingEffectivenessbecomesanestablishedpartofhowtheydobusiness.
WHY READTHIS PAPER?
If marketing is the engine of business growth, the boiler room of decision-making requires a ‘best-in-class’ effectiveness strategy.
No single organisation was wholly satisfied with the way that marketing effectiveness was assessed.
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5 KEYTAKEOUTS
Getting The Basics Right MarketingEffectiveness improvements,whilesignificant, canbedwarfedbythebenefitsfrom simplydoingexistingmarketingbetter.LateTVbookingsintheUK,for example,canattractasubstantial additionalfeeand,evenifthefeeis avoided,youoftenendupwithpoor inventory.Forwhitegoodsretail, similarlybasicquestionsinclude: areweadvertisingproductsthatwill drivefootfall,orpurchasewithahigh attachmentrateandhighmargin? Issupplierfundingbeingusedinthe bestway?
Less Detail = More Impact Afloodofdatameansthatwecan bemoremicroandgranularthan ever.That’snotalwayshelpful. Asanexample,forlarge multinationalstheabilitytomovebudgetsatthemarginfromonecountrytoanotheristhebiggestpotentialwin.Inthisscenario,bigpicturemetricssuchaseconomic forecasts,marketsize,penetrationandmarketpotentialaremuchmoreimportantthanmicrochannelROI.
Match Metrics To Strategy Akeyelementofsuccessful MarketingEffectivenessistoensure thatactivityisassessedagainst therightKPI.Everyonewants profitablegrowth,butdifferentcompanieswillbetakingdifferentroutestogetthere.Themetricshouldmatchthebrand’schosenroadmap.
Anticipate Themetricsthatmatterwillvary. Best-in-classMarketing Effectivenessanticipatesand predictsthesechanges.
Stop Standard Reports Issuingpoorlycuratedstandard reportsisnotbestinclass.Move towardsaresponse-basedstyle whereanswerstospecificquestionsareavailable,notjustaone-sizefits-allapproach.Understandthehierarchyofmetricsandwhatisimportanttowhom.
Start as you mean to go on - organisations need to have the emotional and political fuel to start and stay on course for the Marketing Effectiveness journey if they want to create a best- in-class strategy. This includes having the willpower, motivation and desire, as well as the ability to collaborate.
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Isitaboutjustifyingpastactionsorlearningaboutthefuture?IsitjustaboutReturnOn Investment?Doesitembracethemarket disruptionsthatarehappeningallaroundus ordoesitstrivetopresentapictureofcontrol?
Thebestapproachdeliversallofthese thingsandmore,buttheimmediategoalfor ourintervieweeswasensuringthatevery marketingpoundwasspentinthewaymostlikelytofurthertheoverallgoalsofthe company.
Mostofour intervieweesalso pointed out that MarketingEffectivenessisaboutmorethanjustmarketing.Indeed,theverytermcanputitinasilo,reducingitspowerandinfluenceacrossthecompany.Practitionersnow commonlyrefertotheprocessasBusinessEffectiveness.
WeusethisterminologythroughouttheWhitePapertoemphasisethefactthatmarketingisoneofthekeyleversthatbusinesseshaveattheirdisposaltoincreaseprofitablegrowth.Marketingis,orshouldbe,attheheartofthedebateinanycompany,whethertheexecutiveisdebatinghowbesttolaunchanewproductortryingtounderstandwhatconsumerstrulywantfromthebrand.
DefiningtherightmetricsandapproachtoassessBusinessEffectivenesswillbedifferentforeverycompany.Thekeytomeasuringit accuratelyishavingaclearideaofwhatthemarketingactivitywasdesignedtodo.
Differentcompanieswillrequiremarketingtoperformdifferentrolesbutthemeasurestodeterminesuccessmustbedeterminedatthestartoftheprocess.Indeed,thiswasakeyrecommendationinlastyear’s“CultureFirst”reportfromtheIPA.
Whiletheoverallgoalsofthecompanieswespoketowerebroadlysimilar–profitablegrowth–theirchosenpathswereoften different.
Everyone talks about Marketing Effectiveness but it’s not always clear what it means. And Measurement Strategy cannot be implemented successfully without an agreed definition.
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ThereshouldbeatightfocusonasmallnumberofKeyPerformance Indicators(KPIs)ormetrics.
Thereshouldbeaconsistentapproachtomeasuringeffectiveness.
Thereshouldbeaconstantevaluationofthetechniquesavailableto establisheffectiveness.
DEFINING MARKETING EFFECTIVENESS
Marketing Effectiveness is about more than just marketing.
Threethingsremainedthesame,however:
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Shared Purpose
HaveeveryoneagreeonwhatMarketingEffectivenesswilldoandwon’tdo;definesuccess;agreelanguageandmanageexpectationssothat peopleunderstandit’snotaboutbeing‘data-driven’butbeing‘data- informed’.AsoneFinancialServicesCMOsaid:“It’skeytotakeemotionoutofdecision-makingbyagreeingoncommonobjectivesandmetricsacrosstheorganisation,andthenmanagingthoseusingdataand insight.”
Collaboration
CollaborationiskeyacrossseveralfunctionsandnotjustFinance.OftenMarketingandMediateamswillnothaveadirectimpactonProduct, PricingorPlacementetcbutinevitablythesewillimpactsuccess.Beingclearfromtheoutsetwhoyouneedtobringalongonthejourneyandwhattoask,whentoaskandhowtoask,willhelpcreatebetteroutcomes.
Breaking Down Silos
OneMediaVPwasrecentlyquotedassaying:“Ourcompanystruggleswithsilos,withbrandsthataresetuptobecompetitiveentities,andthussharingisaculturalchallengetosaytheleast.”
Zero Based Budgeting TheevidenceforthesuccessofZeroBasedBudgetingismixed,andevenwhereitdoesmeetourdefinitionofsuccess–higherincrementalprofits–theworkrequiredtodelivergenuineZeroBasedBudgetingshouldnotbeunder-estimated.It’sprobablynotsomethingthatshouldbedoneevery 12months.ButamindsetofZeroBasedBudgetingisveryuseful–havinganunderstandingofexactlywhatthedifferentelementsinthemarketingmixaredoingtocontributetoprofitsisafundamentalpartofassessingeffectiveness.Ifwedon’tknowwhatit’ssupposedtobedoing,successorfailureisimpossibletodefine.
FORTITUDE
FortitudeisakeycharacteristicforsuccesswithMarketingEffectivenessprogrammes.Fortitudemeanshavingtheemotionalandpoliticalfueltokeepthejourneyontrack.
Our company struggles with silos, with brands that are set up to be competitive entities, and thus sharing is a cultural challenge to say the least.
Itmeanshavingtherightmotivation,intentanddesire.But,mostimportantly,it’sabouthavingallthesecharacteristicssharedbyeveryonenotjustMarketingorInsights.
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No black box solutions
Everythingneedstobetransparent.Thishasimplicationsastowhethertheheavylifting/analysisisout-sourcedandhowwellthiswillwork.Italsobecomescrucialthatreportsgoingoutsidethemarketingdepartmentarecarefullycurated.
Triangulation Asinglesourceofevidenceisnotsufficient.Inretailing,forexample,thedecisionastowhetherabrandrunsTVadvertisingthatfeaturesspecificproductsandoffersvscopythatfeaturesaparticularstrength,suchasservice,productknowledgeortodeploycause-relatedmarketingisnotgoingtobemadeonjustaneconometricanalysisofpastmediareturnoninvestments.
Humility Haveawillingnesstoadmittoandlearnfrommistakes.Infact,“mistake”mightnotevenbetherightword–decisionsarealmostalwaystaken usingthebestandmostup-to-dateinformation.Butthingschange, competitorsevolveandmarketschange.Marketingteamsmustbewillingtoembracechangetoo.
Credibility Beyond Marketing: Finance
FORTITUDE
EnsuringBusinessEffectivenessmeasureshavecredibilitybeyondMarketingmeansFinancemustbepartoftheconversationasearlyaspossible.
Acrosseverybusinesstherewasarecognitionthatatensionexistsbetweenspeedof responsewhenmarketsarebeingdisruptedand“analysisparalysis”thatcanbecreated
WithoutthebackingofFinance,thereisadangerthateffectivenesseffortsaresimplyseenasjustanothertokenefforttoputa valueonmarketing.
whenseekingtolocateasingletruenorthfrommultiplesources.Nevertheless,the effortwastypicallyseenasworthwhile.
Financerequiresthattherebe:
ACEBstudyfoundthat47%ofthe18companiesthatusedZeroBasedBudgetingin2014/2015sawasignificantmarginimprovement,comparedto45%of40 companiesthatusedtraditionalbudgetingmethods.Thatsuggestsresultsarenotguaranteed.
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Crawl
10% 30% 60%
Walk Run
THE JOURNEY
Crawl
Effectivenesscanbeoverwhelmingforthoseatthebeginningofthejourney.Wespoketoorganisationswherelarge-scalestudieshadbeencommissionedbuttheresultshadnotbeendisseminated,norhadanychange happenedorrecommendationsbeen implemented.
Intheseorganisations,thekeychallengesappearedtobealackofexperienceinmakingdecisionsbasedaroundanalyticsandinsightand/oralackoftrustineitherthedataorthetechniquesbeingused.“It’sjustablackbox–whyshouldItrustit?”washeardmorethanonce.
ThejourneytoembeddingBusiness Effectivenessinanorganisationhasthreeclearstagesofdevelopment:Crawl,WalkandRun. Duringourinterviews,weaskedrespondentstocategorisetheircompany’seffortsin BusinessEffectivenessonascaleof1to10.
Foreffectivenessprofessionalsandadvocatesinsuchorganisations,thekeyistostartslowandstartsmall.Relyingsolelyonspecialistagenciescanbetemptingbutunwiseasitwilldonothingtosolvetheblackboxperception.
Bestpracticeistocombineanin-houseteamwithexternalspecialistsbutensurethatthein-houseteamplayastrongerrolethanjustactingasgatekeeperorprojectmanager.Resultsshouldbesharedwidelyandinternaladvocatesarealwaysrequired.
Atthisstage,effectivenessmeasurementsaretypicallylimitedtoreportingonwhathashappenedand,sometimes,whatishappeningnow.Typically,insightisbasedaround standardisedreports.Dataisoftenkeptinsilos,whetherintentionallyorotherwise.
Allrespondents,wherevertheyranked themselves,recognisedthattheycouldnotstandstill:lower-rankedcompaniesweredeterminedtoimproveandthosetowardsthetop understood that they had to continually improvetomaintaintheirposition.
It’s just a black box – why should I trust it?
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Walk
Analyticprogrammesarewellestablishedinkeypartsofthebusinessanddecisionsarebeingmadebasedonthisresearch.Theriskforcompaniesatthislevelisthatreportingbecomesroutine,slow-movingand concentratedintobig,expensiveset-piece analyticsconductedbyexternalagencies. Often,resultsareusedtopost-rationalise decisionsthatweremadeonothercriteria.
Companiesthatwereimprovingwere beginningtoimplementquickTestandLearnstudiesinarangeofareas.Oftenthesewereinformalandthetechniqueswererelativelystraightforward,buttheyhadpower
nonetheless,andhelpedtheconceptof“test,measure,implement,testagain…”togain traction.
Whereasduringthe‘Crawlphase’,most activitywasaround“what”hashappenedorishappeningnow,activityinthisphasetendstobemorearounddiagnosis(whydidithappen)andprediction(whatmighthappenif…).
Datagovernancehasbeenestablished,andtherearenolongermultiplesourcesofthesameinformation.Also,thereisanincreasingemphasisonaction:“analyticsdemonstratedthat,weshoulddothis.”
Thechallengefororganisationsatthisadvancedlevelwastwo-fold:
Ensuring that the company moves together
Thereareoftenparalleltrackswithinorganisationsandtheseshould begintobesmoothedoutearlyintheRunphase.InFinancialServices, forexample,machinelearningmaybeusedtosegmentloanapplicantsonthebasisofrisk,withthedecisiontograntaloanbecominggraduallymoreautomated.IntheRunphase,similaralgorithmscanbeappliedto developinsightsaroundpropensityofcustomerstobuyadditionalservicesortoopenandactonanemail.
Ensuring that the company stays up to date
EnsuringthatthecompanystaysuptodatewithtechniquesandthatinnovationswithintheBusinessEffectivenesssphereareassessedfortheirrelevance.
Run
Changedrivenbyadvancedanalyticsisthestandardapproach,withawelldeveloped TestandLearnprocessinplace.Thereisagrowingacceptancethatoutsidespecialists
canusefullybringadditionalinsightsandthecompanyhasthestructureandtheculture tomakeeffectiveuseoftheseconsultants.
THE JOURNEY
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Ofthecompaniesthatwespoketo,nonecurrentlyrankedthemselvesasa10,butseveralthoughttheywerereasonablyclose.Encouragingly,almosteveryrespondentinterviewedsaidthateachyeartheireffortswithinBusiness Effectivenesswerebecomingmoresophisticatedandhavingagreaterimpactonthebusiness.
Thejourneytowardsaneffectivemeasurementstrategyiscapturedbelow–itismuchmoreaboutrelationships,trustandcuratingresultsthanitisaboutusingaparticulartechnique.
“It took a long time to build up a good level of trust and confidence with our analytics partners. Getting them to understand the business; getting them to understand how to present the results in a way that made them important to the exec. Now, a lot of time is spent ensuring that we don’t rest on our laurels - we regularly meet with different agencies and test innovations to ensure we stay at the forefront of effectiveness measures”
Head of Marketing Effectiveness
THE JOURNEY
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The Hierarchy of Metrics
Nometricexistsonitsown.Itsplaceinthehierarchyneedstobeknownandunderstood.Peoplehavetoknowwhysomethingisbeingmeasured;theyneedtoknowwhereitsitsintheoverallhierarchyandhowitcontributestotheircompany’soverarchingstrategicobjectives.
Acleardefinitionofsuccessisknownandshared.Wehaveseentimeandtimeagainthatapoormeasureofsuccesshindersbothmeasurement(what,exactly,arewemeasuring?).
Appropriatelycuratedcommunicationexists.Aplannerneedstoknowwhichtacticandpublisherworksbestondigital.TheCMO,inmostcases,doesn’tneedtoknowandtheCFOandCEOcertainlydon’t.TheC-Suitearemorelikelytobefocusedonbig-picturedecisionsthatarelikelytomovethedialinmoresignificantways–anexamplemightbemovinganelementofthebudgetfromamaturebutwealthymarket(e.g.NorthAmerica)toonewherethecurrentreturnsaresmallerbutwheregrowthpotentialismoresignificant.
Notallmetricsarecreatedequal.Norshouldwenecessarilymeasuresomethingjustbecausewecan.Whenspeakingtobrandrepresentativestheywereveryclearthattherewasahierarchyof metricsandthat,formost,profitablegrowthwasatthetop.Ofcourse,thesemetricsdonotexistinisolationandwhilegrowthinprofitsmightbethe
keymetric,othersareimportantbecausethey ladderintoandcontributetothisultimateKPI.Whatdoesthismean?Well,profitablegrowthiskey.Butthismetricitselfdependsonanotherset ofmetrics,allofwhichneedtobemeasured. Forexample:
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Growthinprofitsiskey.Oneroute is to increase market share
Market sharemightbedrivenby improvementsinbrand strength
Brand strengthmightbedriven by better marketing
Marketing Effectiveness mightbe improvedbyanenhancedcreative
Toembedsuccessfulmeasurementofmarketingandtogenuinelyhaveanimpactonthebusiness,theecosystemiskeytogetright.Andit’snot necessarilyaboutpickingaparticularmethodology,it’sfarmoreimportanttofocusonunderstandingthehierarchyofmetricsandhowitshouldbe definedforyourbusiness.
It’salsohowtobuildaneffectivenessteam,andhowtobalancetheneedforin-housecapabilitywiththerecognitionthatbestpracticeand innovationtendstobegeneratedmoreby consultancies.
Soforsuccessfulmeasurement,weneedtoacknowledgethat:
THE ECOSYSTEM
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Hierarchy of Metrics
Exec / C-Suite
Profitable Growth
Market Share
Competitor Strength Brand Health
Economic and Business context
Incremental Like for Like Sales
Financial Contribution Made by Marketing
Marketing ROI
Social Listening
Saturation by Channel
ROI by Marketing Channel
Life Time Value
Short Term and Sustained Impacts
Tactic
Campaign Analysis
Value Perception and Price Elasticity
Publisher
Product / Category Analysis
Counter Cyclical Planning - for
Boom and Bust
Awareness, Consideration,
Recommendations
Marketing Directors & Managers -
Decision Makers
Analytics & Insight Teams
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Hierarchy of Metrics
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Thisisameasureoftheresponsiveness ofsalestoachangeinpriceandis usuallydefinedas:
Market Share
Price Elasticity
Thiswasoftentrackedcloselybyour intervieweesandtheircompaniesbuttherewasfrustrationthattheeffortrequiredtoincreasesharebyevenonepointwasnotwellunderstood.Forexample,anewretailbankwithambitionstogain5%marketshareof allpersonalcurrentaccountswouldneedtoacquire70%ofallthoseswitchingaccountsoverthenextfiveyears.
Understandingwhatthismetricissayingmeansnotlookingatmarketsharein isolation,especiallyinmarketsthatare growingordeclining,itisquitepossibleforsharetofallwhilesalesvolumesaregrowing.Whilethisisstillpoor–competitorsare growingmorestrongly–theimplicationsandremediesareverydifferenttoasituationwhereshareandsalesvolumesareboth falling.
3 COMMONMETRICS
Therelationshipisnearlyalwaysnegative becauseifpriceincreasesweexpectvolumesoldtofall.Themetricisunlikelytobea simplerelationship;theremaybeasymmetrybetweenpriceincreasesanddecreases; theremaybethresholdeffects.Andthe relationshipmightbenon-linear,where biggerpricechangeshaveagreaterrelativeimpactonsalesthansmallerones.
However,essentiallyitdescribeswhathappenstodemandwhenthepriceischanged.
WhilemanyBusinessEffectiveness measurementprogrammesfocusontheReturnOnInvestmentformediaspend,theimpactofthepriceelasticitychangingovertimeonoverallprofitabilitycanbeenormous,oftenoutweighingtheimpactofadvertisingovertheshort-term.
Thisisbecausetheshort-termimpactof advertisingaffectsarelativelysmall proportionofbrandsalesbutwhenthe pricechangeseveryoneisaffected.
Ifconsumerscanbepersuadedtoaccept apriceincreaseor,morerealistically,a constantpricewhileothersarecuttingtheirs, profitabilitywillbestrongerthanthe competition.
THE ECOSYSTEM
PriceElasticity ofDemand =
%Change in Sales
%Change in Price
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TheabilitytochargeapremiumortomaintainpriceswhenothersarecuttingisdeterminedbyBrandStrengthandlong-term,consistentbrandadvertisingcancausethepriceelasticitytofallovertime.
CorporatesknowthisandinRetail,for example,priceperceptionistrackedandexaminedindetail,whileFMCGbrandsuseBrandStrengthasakeyindicatorofsuccess.
THE ECOSYSTEM
Imaginewehaveamid-sizeFMCGwithannualsalesof £100mandagrossmargin(justnetofproductioncosts) of40%.Thepriceelasticityhasbeenmeasuredas-2.5.
So,a10%priceincreasewilldecreasevolumesoldby25%.
Priceischangedbyasmallamount-justa3%increase. Theimpactovertheyearisforgrossprofittofallby£1.1m. Theimpactofpeopleswappingforsubstitutesisgreaterthantheimpactofremainingcustomerspayingahigherprice.
Butwhatiftheelasticityis-1.5?Now,thesameprice increaseboostsprofitbyover£1.5moraswingofaround£2.6m.Andthisisnotrevenueorturnover,butgrossprofit.Andtheeffectwillpersistovertime.
Picture This
3%priceincreasehereleads toprofitrisingby£1.5m
weeks
3%priceincreaseleads toprofitfallingby£1.1m
Consistentbrandadvertisingledtopriceelasticityfallingovertime
3%priceincreasehereleads toprofitrisingby£1.5m
weeks
3%priceincreaseleads toprofitfallingby£1.1m
Consistentbrandadvertisingledtopriceelasticityfallingovertime
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Mostdefineitasfollows:
Return On Investment
ThisWhitePaperisnotjustaboutReturn OnInvestment(ROI)–ourviewisthatthis isanintermediateKPI.Nevertheless,itisan importantmetric,andonethatvirtuallyall ourintervieweestracked.
Theremaybeotherelementstoaddinortakeout,dependingonthetypeofbusiness,ortomakethecalculationagreewiththewayotherinvestmentsareevaluated.Forexample,WhiteGoodsRetailersmightaddinanassumptionaroundinsuranceorserviceagreements, althoughthesearelessimportantnowthaninthepast.Othersmightwanttoexcludeagencyfeesandproductioncosts.Moresophisticatedapproachesmighttakeafive-yearviewofthemarketinginvestmentandassessonacostofcapitalbasisagainstalternativeusesofthemoney.
ThechallengeforBusinessEffectivenessistounderstandwhatdrivesROI,andhowitcanbemaximisedwithoutdamagingthelong-termpotentialofthebrand.
Butwhatevertheexactdefinition,theROIisessentiallytheincreasedmarginincomedividedthroughbythecostofgeneratingthisincrementalvalue.Andtherearesomesimplerulestofollow(withoutgettingintothemorecomplexissueofdiminishingreturnstomediaweightandsaturationeffects).
THE ECOSYSTEM
Do not use ROI to create your strategy.
MarketingReturn onInvestment
SalesValueUpliftXMargin
MediaSpend+ProductionCosts +AgencyFees
=
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THE ECOSYSTEM
Theseinclude:
Sales Value Uplift Itshouldincludeallhaloeffects,synergiesandideallyaviewonthelong-term,eitherthroughanevolvingbaseorbylinkingmarketingspendtochangesinpurchaseintentthroughtosales.IfROIistheobjective,thenmakesurethat,inFMCG,youfocusonthebigbrands.InRetail,focusonthefootfallgenerators,orthoseproductsandcategoriesthatdriveahighattachmentrate.
Margin Matters Foraretailer,marginvariesquitewidelybetweencategories.ThesameistruewithinFinancialServices.FocusingonhighmarginproductsorserviceswillgenerateastrongerROI.
Media Spend MediaSpendisakeycomponentofROI.TodrivethehighestROIensurethatmediachannelsgobeyondthosethathaveadirectimpactonsalesresponsebutalsoincludethosethatactasenablersandmakeothermediachannelsworkharder.OuranalysissaysthatTVisstillkey,withVODandSVODgrowinginimportance.
However,donotusetheROItocreateyourstrategy.Definestrategyand thenusetheROIasausefulinputtoallocatethemarketingbudgetbetweencompetingchannelstohitpre-determinedbusinesstargetsbasedonthe strategy.
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Building an Effectiveness Team
Onceacommitmenthasbeenmadeto measuringtheimpactofmarketingonthewiderbusiness,thequestionbecomes“how dowedoit”?
Howdowebuilduptheexpertise?Howdo wefindtheteamsthatcanruntherequired analysis?Andperhapsmostcrucially,how dowefindthecommunicatorswhocantake the results and ensure they are turned into coherentbusinessrecommendations?
BusinessEffectivenessteamscanbein-house,externaloracombinationofthetwo.Thereareadvantagesanddisadvantagestoeachapproach.
ResearchrecentlypublishedbySource(2018)suggeststhat,globally,approximately75% ofallanalyticsandinsightworkisrunbyin-houseteams,withjust25%undertaken byconsultantsandagenciesofvarioustypes.
Someoftheapproachesthatwesaware setoutinthefollowingpages,eachhasitsclearcostsandbenefits.Pickingtheright approachwilldependonyourowncontext andpreferencesaseachcanbesuccessful.
Inreality,mostcompaniesadoptamixedapproachwithsomepartsoftheeffectivenessprogrammeoutsourced,andothersverymuchkeptin-house.
Duetofearsaboutpoorlycuratedresultspresentations,theoverwhelmingmajorityofrespondentsretainedahighlevelofcontroloverhowresultsarecommunicatedinternally.Findingeffectivenessconsultantswhowereconsistently“boardroomready”wasfoundtobeachallenge.
Forthosecompaniesandbrandsoperating inmorethanonemarket,therearealsochallengesoverwheredecisionsonBusinessEffectivenessweremade.Therewerebroadlytwoapproaches,whichoftencoincidedwiththelevelofbrandmaturity.
THE ECOSYSTEM
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Thisapproachtendedtobefavouredbynewbrands,oratleastbrandsthatarenewtoparticularmarkets.WithinTech,forexample,abrandmighthavevery differentlevelsofbrandstrength,penetrationand trustindifferentmarkets.Successmeasuresneedtoreflectthis.Thestrengthsareclear–consistencyofmeasurementbutflexibilityinKPIsuccessmeasures. Ariskwiththisapproachisalackofbuy-inatthe locallevelthatrisksunderminingthewholeprocess.
Thekeyadvantageofthisisthatlocalexpertisecanalwaysbebroughttobear.Thedisadvantageisthat,unlesscentralcontrolistight,subtledifferencesintechniquesandmeasurementcanstarttocreepin,underminingtheprocess.Thisapproachtendedtobefavouredbymaturebrands,whereKPIscanbebroadlysimilarinmostterritories.
Define success centrally, measure locally
Define success locally, measure centrally
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DEFINING SUCCESS
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Approach What This Means Pro Con
In-House Team Datapulledfromvariousstakeholders(e.g.mediaagencies)butallanalyticsandvalue-addinginterpretationofthisdataisdonebyfulltimeemployees.
Overtime,anin-depth knowledgeofwhatworksandwhycanbebuiltupbythisinternalteam,andtheyactasvaluableinternalconsultants.
Teamsareusuallysmall,so canbevulnerabletooneor twopeoplechangingroleor leaving.Also,whiletheyhaveverygoodexperienceit’sonlyofasingleclient.Thismakes ithardtobenchmark performanceandalsoto innovate.
Pure Outsource Inthiscontext,external agencies/consultanciescoverallaspectsofoneormoreeffectivenessprogrammes.
Benefitfromwideexperiencenotjustwithinasingle vertical,butalsorelated industries.Havethe experiencetoknowwhatquestionsyoushouldbeaskingaswellasansweringtheonesthathavealreadybeenasked.Mostinnovationhappensagencysideevenifdrivenbyclientdemands.
Cansometimesseemremotefromthewiderbusinessandthequestionsthatare currentlybeingaskedandittakestimeandeffortfromclientteamstoensurethattheyareproperlybriefed.Butwithallanalytics,themaxim“garbagein,garbageout”holdstrue.Animportantriskwithoutsourcingisthesheerlengthoftimeittakesnewagenciestofullyunderstandthebusiness.ThiswasfeltmoststronglyinFinancialServicesandRetailbutwasmentionedbymanyrespondents.The dangeristhatitrisks“sticky” relationshipsandalackof innovationasbudgets remainedfixedyearonyear.
In-Source Partnership,whereby agencyteamsworknextto clientteams,typicallyat clientoffice.
Bestofbothworlds.The internalteamcan‘briefon thego’andshouldhavegreatconnections across the organisation.Theagencyteamtendtosecureaccesstoawidergroupofpeopleonamorefrequentbasis,therebymakingtheanalyticsricher,moredetailedandmorefinelytunedtowardsansweringthekeyquestions.
Thisisoftenmoreexpensivethanotheroptions.
In-House Expertise Clientteamsdon’tnecessarily“do”theanalyticsbuttheyareverycloselyinvolvedandcananswerquestionsaboutresultsandriskswithout needingtogobacktotheagencyteams.
Canbeveryeffective–havinginternalconsultantswhoun-derstandbothhowtheresultswerearrivedatandthejudge-mentsthathavebeenmade,increasingthelikelihoodthatinsightswillbedeployedandimprovementsgenerated.
Sometimesanelementofdoublingupofroles,sonotnecessarilythemostefficientapproach.
TEAM APPROACHESTHE ECOSYSTEM
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Thereisaveryclearhypothesisbeingtestedandaverycleardefinitionofwhatconstitutessuccess.
Testandcontrolsamplesareresult-neutral.Marketersneedtothinkaboutwhethermembershipofaparticularsamplewillaffectresults.Forexample,oncustomervisitstoawebsite,arandomisedtrialwillprobablyworkwell.Butforaretailer,randomlyselectingstoresis unlikelytobeeffective.
MultipleTestandLearnexperimentsarenotbeingrunwiththesamegroupofcustomers(bothtestandcontrolgroups).Setupdifferentgroupsforeachhypothesisthatyouwanttotest.
Decayedorlaggedeffectsareallowedtoworkthroughbeforefullyassessingtheresults.Alsoensurethattheimpactofonetestdoesnotaffecttheresultsofthenextone.
Takeintoaccountthatonlinetestscanbedifficulttomanage.Forexample,awebsitemaybevisitedmanytimes(andonmorethanonedevice)soitissometimesnotalwaysclearwhichversionofawebsitehasbeenseen.
TestandLearnexperimentsstartandendonthesamedaytoavoiddayofweekresponseorpurchasepatternsimpactingresults.
Test & Learn
TestandLearnisnotanewconceptbutwithadvancesindatacollection,particularlyintheonlinesphere,it’sexperiencingsomethingofarenaissance.
Theprocessisbothsimpleandpowerful.Takeanactionwithonegroupofcustomers(thetestsample),generallykeepallotherfactorsconstantforasimilarsetofcustomers(thecontrolsample)andthencompareresults.
Theseresultsaretypicallysimpletoanalyseandarestraightforwardtointerpret.Providedthatnootherfactorsaffectjustthetestorthecontrol,causalityisalsoclear.
However,thereareanumberofpitfalls. Gettingitrightmeansensuringthat:
BEST PRACTICE IN KEY AREAS
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Market Mix Models and Path to Purchase
BEST PRACTICE IN KEY AREAS
MarketMixModels(MMM)havealonghistoryand,usedwell,canmakeanimportant contributiontobothunderstandinghow marketinghasworkedinthepastandhowtomakeitworkharderinthefuture.InasurveyrunbyForresterandBurtchover2017,45%ofrespondentswerecurrentlyusingMMMwithafurther18%eitherpilotingprojectsorplanningtouseinthenext12months.
MMMsdohaveonemajordrawback:theyareasingleKPImodel.
Thatis,theyfocusontheoutcomeofjustonevariable–usuallysales,whetheritbevolume,unitsorrevenue.
PathtoPurchase(P2P)approachesdifferinthattheyexplicitlyacknowledgethatmarketingismorenuancedandisoftendesignedtohaveanimpactbeyondjusttheshorttermandthatotherKPIsarealsoimportant.
ThisisespeciallyimportantforAuto,FinancialServicesandWhiteGoodsretailing,wherethenumberofpeoplein-marketatanypointintimeislimited.
Forexample,somemarketingactivitiessuchasNike’s2018Kaepernickcreativearefocusedmoreoneithershiftingorreinforcingbrandvalues.
Itisclearthatthegoalforthistypeof marketinghaslessofanemphasisonwinningcustomerstodayandmoreaboutgainingafootholdwiththecustomersofthefuture.
Andmarketsregisterthisintent.ForNike– despiteaninitialsharepricefallof3%and numerousvideosofcustomersburningtheirNikeshoesandclothing–theshareprice actuallyendedhigherthanbeforethespotwasaired.
AnMMMsolutionwouldevaluatethisspotonthebasisofitsimpactonsaleswhileitwasairedandperhapsuptwotothreeweeks afterwards.
Fine,asfarasitgoes.Butinthiscase,that’sprobablynotfarenough.
AP2Papproachwouldalsoevaluatethisshort-termimpact,butitwouldn’tstopthere.Itwouldalsoassesstheimpactonfactorslikepurchaseintentamongkeydemographicsandwouldthenrelatethesebacktosalesand profits.Thismorenuancedapproachcapturesthefullrangeofwhatmarketingistryingtodo.
Gettingitrightmeansensuringweunderstandwhateachlineofactivityistryingtoachieveandevaluatingitaccordingly.WhenmarketingactivityisjustdesignedtoaffectsalesthenMMMisfine.
Forallotherinvestments,itwillarguablyresultininvestmentreturnbeingundervaluedandP2Papproachmaybemorerelevant.
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Long-Term Impact
BEST PRACTICE IN KEY AREAS
ThereareanynumberofwaysthatMarketingandBusinessEffectivenessteamsattempttobuildanunderstandingofthelong-term effectsoftheirmarketingstrategies.One popularoptionisConsiderationorNet PromoterScores.
However,theevidenceforsimplelinear relationshipsbetweenthesemetricsand volumesalesisnotalwaysstrong,partly because the data is not consistent and partlybecausesamplesizeisusuallytoo smalltopermitdetailedanalysis.
Increasinginpopularityaremoreadvanced analyticsalgorithmssuchasUnobserved ComponentModels(UCM).Theseworkby allowingthebasetoevolveovertime.This, afterall,isoftenthepointofmarketing
activity–buildingbiggerbrandssothatall futureactivityismoreeffectiveandthe productorserviceappealstomorepeople.
Arecentstudycommissionedforthe ProfitAbilityreportpublishedbyThinkbox, providescasestudiesandin-depthresearchprovingthatUCMscanbothidentifyand evaluatetheimpactofmarketingactivityoverthelongterm.
Gettingitrightmeansunderstandingwhatis drivingthegrowthinthebase.Wehaveseencaseaftercasewherethebaselineofsaleschangesovertime,independentofnormalseasonalpatterns.
Thesalesbasemightfallbecauseof competitoractivityoritmightincreasethankstomarketinginitiatives.Understandingthecauseofthesechangesisfundamentalto understandinghowtoimprovebusiness outcomes.
Forexample,inRetail,anadfocusingonashort-term offermaywellbringpeopleintostorebutwillitleadto moreprolongedsuccess?
Perhaps,buttheevidencewehaveseentodateisthat movingawayfromanexclusivefocuson“call-to-action”messagingcangrowthebusinessoveralongertimeperiod.
Picture This
Getting it right means understanding what is driving the growth in the base.
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ThereareanumberofapproachesthatfallunderthebannerofAttribution,including:
Gettingitrightmeansthatwecancombinetheoutputsofanattributionstudywithknownbudgetconstraintstoinformoptimisationoftacticalinvestmentsovertime.
Digital and Cross-Channel (Multi-Touch) Attribution
Digital Attribution Includesoneormoretrackableonlineexposures(includingDisplay,Video,SEM,Email)againstanonlineKPI(e.g.sitetrafficor e-commercesales).
Cross Device Attribution InclusiveofMobile;requiresimplementationofUniversalUserID technologyandleveragesdeterministicandprobabilisticIDmatching.
Cross Channel Attribution (also referred to as Multi-Touch Attribution or MTA) Includesintegrationofselectofflinemarketingandsaleschannels(e.g.DirectMailorCRMsales).
BEST PRACTICE IN KEY AREAS
Fororganisationsthatinvestindigital media,thereisoftenaneedtoassign conversioncredittothedigitalchannelsof influence.DigitalAttributionleverages user-leveldataandagranulatstatisticalmodeltodetailtheimpactofdigital.Modelsanalysethedifferenceinmediainteractionsbetween‘converters’and‘non-converters’,allowingfortheattributionofimpactbeyondthe‘lastclick’,identifyingwhatactuallydrivesthesale.
Becauseofthesheervolumeofdataavailable,analyticwindowscanbeshorterthanMMM(e.g.28daysratherthanthelast2plusyears).ThismakesAttributionmoresensitiveto near-termconditionsthanMMM,makingitaneffectivetooltomeasurefast-evolving channels,suchassocial,andcampaignsthatcovershortperiodsoftime.Inaddition, granulardatameansthatchannels, publishers,sites,tactics,creative,and combinationscanallbeexploredusing Attribution.
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Unified Measurement Framework
Regardlessoftheapproachutilized,severalbestpracticeshaveemerged:
Two-stage Modeling:MMMisconductedfirsttoidentifycontributionbychannel(e.g.TVvs.DigitalDisplayvs.DigitalVideo…)andthenAttributionisusedtofurtherallocatesalesbytactic.
Granular MMM:Regressionmodelsusingdailysalesbygeographyorstore,marriedwithgeo-spatialmedia/marketing,enablesnear-termandhighlygranularinsight.
IncorporateTotalSales–onlineandoffline.Whena‘complete’salesviewisnotavailable,ensurethatthesalesdatausedisrepresentativeofthebrandstotalbusiness.
Buildwithinaconsolidateddatainfrastructure.Thisenables deduplicationofdatahandlingtasks,anddeeperintegrationwithinmodelling.
Ensureanaccuratereflectionof‘baseline’byincorporatingall controllableandnon-controllabledrivers.
Measureimpactagainstthree-timehorizons,theimmediate,the shorter-termandthelong-term.
Operateatvariouslevelsofgranularitytosupportupstream,strategicthinkinganddownstream,in-campaignoptimisation.
BEST PRACTICE IN KEY AREAS
Best-in-classmarketingrequiresabroadsuiteoftools.MMMandAttributioncomplementeachotherwell,astheweaknessesofone arethestrengthsoftheother.Eachmethodworkswellinisolation,buttheyworkbestwhenintegrated,allowingforanaccurateapproachtoomni-channelmarketing measurement.TheoverarchingbenefitofaUnifiedMeasurementFrameworkisthattheinsightsgeneratedcaninformtheentiremarketingprocess,fromupstreamstrategicthinking(budgetsbygeography,brandandchannel)throughtodownstreamtactical optimisation(budgetsbycampaign,tacticandcreative).
AUnifiedMeasurementFrameworkbringstheworldofAttributionandMMMtogether.It enablesoneanalyticalframeworkacrossallmarketingchannels,causalparametersandKPIs.ThismeanstraditionalchannelssuchaslinearTV,traditionalcausalparameterssuchasstorepromotions,andtraditionalKPIs
Gettingitrightmeansensuringthatallresultsandplanning/buyingrecommendationscomefromthesamemeasurementsystem.Thereisnodoublecountingofresultsandeverythingisassessedagainstacommoncurrency.
Thisallowsmarketerstosayexplicitlywhichactivityisactinginanenablingroleacrossbothon-andoff-linemedia.Thistypeofsynergisticbehaviour,whereonemediaoractivityworksmoreeffectivelyinthepresenceofanother,isrelativelycommonandismosteasilyfoundbetweenpaidsearchandTV,withTVmakingsearchworksignificantlymoreeffectively.
suchasofflinesalesareconsideredinthesamemodelasdigitalimpressions,clicksande-commercesales.
JoiningAttributionandMMMintoaUnifiedMeasurementFrameworkcanbedoneusing avarietyofmethods.Examplesinclude:
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Machine Learning
Thereasonsaretwo-fold:
Marketers have to deliver optimized outcomes to the highest possible degree withincreasingspeedinthefaceoffast-pacedconsumerneedsandshiftingmedialandscapes.Fasterdecision-makingsupportis requiredtooptimisemarketinginnear-realandnear-futuretime.
Data scientists are tasked to deliver faster, more accurate predictive insights inthefaceofanexplosionofdata;pressurefrommarketingteamsispushingthemtodelivergranularinsightsfornear-realtimeandnear-futuretimeoptimisationpurposes.
BEST PRACTICE IN KEY AREAS
MachineLearningworksbyleveraging large-scalecomputerprocessingpowertointerrogatebig,disaggregateddatasetstouncoverpatternsthatcanclassifyandpredicthumanbehaviours.Inotherwords,MachineLearningcanshinealightonspecificareasofopportunitytodeliverameasurablebusinessreturn.
Thecomplexityoftoday’spathtopurchaseposesachallengeformarketerslookingtoacquire,growandretaincustomers.
Broadlyspeaking,MachineLearningworkslikethis:feedinasetofdatawithaKPIthathasaknownoutcome,holdsomeportionofthedatabackforvalidationandthentrainthealgorithmtocorrectlypredicttheoutcome.
Forward-thinkingmarketersandinsightsteamswithadvancedanalyticsapproacheshavestartedusingMachineLearningtohelpthemsolvethischallengeandmakefaster,smarterdecisions.Andthisisasectorthat isgrowingfast–ForresterandBurtch(2017)estimatethattheMachineLearningindustry isgrowingbyaround15%eachyear.
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Theadvantagesarefour-fold:
Speed
Inthenot-toodistantpast,alotofanalysiswouldtakeanumberofdays,sometimeslonger.Now,itcanbedoneinamatterofhours,sometimesminutes.
Automated
MachineLearningisnotconcernedwithunderstandingwhysomethinghashappened.Itisonlyconcernedwithaccurateprediction,enablingautomationtobedoneeasily.
Scale and Flexibility
MachineLearningcancombinedatasetsthathavedifferent structures.Forexample,textanalysiscanbeeasilyincludedalong withnumericaldata.
Real Time
BecauseMachineLearningcanautomateatscaleandwithspeed,itenablesmarketerstotakeactioninrealtime.Inpracticethatmeansbrandscanknowwhatmessage/tactictousetomaximisethechanceofconversioninonlinesales;orincustomerservice,flaggingsocialmediacasestoidentifywhichneedtobedealtwithurgently.
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BEST PRACTICE IN KEY AREAS
Gettingitrightmeanshavingqualitydata. Ifthedatathatgoesintothemodelisn’t accurate or is based on hypotheticals then the predictionsandrecommendationsgeneratedwillalmostcertainlybeskewedorwrong. GarbageIn,GarbageOuthasbeentruefor alongtimeandtheopaquenatureofmany MachineLearningsolutionsmakesitevenmoreimportanttoday.
Italsomeansavoidingtheriskofconceptdrift.Wherereal-worlddatadiffersfrom trainingandvalidationdataitcanleadto poorpredictiveperformance.Conceptdrift isawell-knownproblemandisakeyreasonwhyverysimpleforecastmodelsoutperform complexMachineLearningvariantswhenitcomestolong-termforecasts.
Makingsureyouralgorithmisn’toverfittingisalsokey.ThemoresophisticatedaMachineLearningalgorithmandthebetteritpredictsthetrainingdata,themoreproneitisto confuseidiosyncrasiesinthetrainingdatawithgenuinesignals.
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Ensurethatallquickwinsareachieved beforemovingontomorecomplextasks.
Isyourmediainventorythebestthatitcanbe?InRetail,hassupplierfunding
beenmaximisedandusedinthebestway? InFinance,AutoandTech,isthereaclear
understandingandagreementonlife-time value?InFMCG,istheimportanceofprice
elasticityunderstoodandthepotentialfor marketingtosupportandreduceprice
sensitivityrecognised?
QUICK WINS
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WHAT SUCCESS LOOKS LIKE
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Agreeonwhatsuccesslookslikeup front,andwhy.Understandhoweach lineofactivityfitsinwiththeoverall businessstrategyandmatchappropriatemetricstoit.Understandtherequirementsofstakeholdersbeyondmarketing, especiallywhenitcomestothethreeTs –Triangulation,TransparencyandTrust.
2DEFINESUCCESS
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WHAT SUCCESS LOOKS LIKE
Be open
aboutwhatyoucando internallyand,whereneeded,
plantoimproveyourcapabilities. Yourpositionon‘Crawl,Walk,Run’
spectrumandthespeedwithwhichyouneed tomovewillindicatethebalancebetween
buildingin-housecapabilityversusworkingwithpartneragencies.Picktheapproachthatbest
fitsyourcompanycultureandmaximises thechanceofsuccess.
KNOWYOURLIMITS
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Partner and collaborate but remembertobecourageousaswell.Focusingonlyondecisionsthatwillgenuinelymovethe needletakesfocusandcourage.
BEBOLD
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Whether you build in-housecapabilities,outsourceto
specialistagenciesoracombinationof thetwoandwhetheryouareusingthelatest
MachineLearningalgorithmsortriedandtrusted MarketMixModelling,it’svitalthatyoumatchyour
analyticeffortswiththebusiness’abilitytousetheinsightsgenerated.Doestheeffectivenessworkneed
toberealtime?Ifnotnow,whenwillyouneedthatcapability?Justaseachlineofmarketingneedsto
contributetooverallbusinesssuccess,somusttheBusinessEffectivenessprogramme.
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WHAT SUCCESS LOOKS LIKE
SELECTYOUR TOOLS
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6TEST &LEARN
ImplementingacoherentTestandLearnprogrammeiskeyto
improvingtheeffectivenessofmarketinganditsimpacton
thebusinessnowandintothefuture.
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JARGONBUSTER
JARGON BUSTED ADVICE
IncrementalLike-For-Like Thechangeinsalesrevenueand profitabilityinoneperiodovera similarperiod,oftenthesameperiodlastyear.InRetailmaybereferredtoas“SameStoreSales”,like-for-likesstripouttheeffectsofstoreopeningsoracquisitionsandmayalsoattempttoabstractfromcompetitoractivity.Anattempttounderstandandfocusonorganicgrowth/decline.
Akeymetricandcloselylinkedtomovementsinacompany’sshareprice.Beawarethatadjustmentssometimesneedtobemade–insomeyears,thefirstquarterwillincludeEaster,in othersitwon’t.
MarketShare Onthefaceofit,anobviousconceptandonethatshouldbetracked. However,thedefinitioncouldandshouldchange,dependingon objectives.Forexample,whatis themarketshareforCola?Just carbonateddrinks?Doesitincludemineralwater,othersoftdrinks? Actually,doesitincludetea,coffeeandotherhotdrinks?
Takecarehowmarketshareisdefined.Toonarrowanditmightnotinclude importantdevelopmentsoutsideofwhatyouthinkarecorecompetitors.Toobroadanditrisksbecomingameaninglessnumber.
EconomicandBusiness Context
Thishasamajorimpactonallkeyperformanceindicators.Forexample,thepaybackfromadvertisinginadownturnislikelytobeverydifferenttothatwhentheeconomyis booming.Somechangesmaybe permanent–forexample,thegigeconomy.
Contextisalwayskeyandmustbe overlaidonallmetricsthatmatter.
BrandStrength Iskeybuttypicallynotagood predictorofsalesnextweek,ortheweekafter.Itistypicallyaslow- movingindexformaturebrands. Weoftenfindthatitisusedto explainpasteventsratherthan helpingtopredictthefuture.
Carefullyconsiderwhichareasofbrandstrengthareimportant.Itisseldomawareness,whetherpromptedor unprompted.Considerationandintenttopurchasearetypicallymoreusefulforpowerbrands.
CounterCyclical Planning
DespiteGordonBrown’sclaimstothecontrary,boomandbuststillsurvives.Andwhileitmayvaryconsumertoconsumer,atanaggregatelevel, demandforproductsandservicesvaryinlinewithchangestothe economy.Otherthanstaples,demandwilltendtofallinaneconomic downswing.
Evenwithproductsthatpeoplebuyeveryday,likebreakfastcereal, consumersmayswitchtoprivatelabelduringperiodsofausterity.Planningtooffsetthesecyclicalmovementsiskeytolong-termsuccess.
Contributionof Marketing
Maybemeasuredindifferentwaysfordifferentbrands,dependingontheirobjectives.Thismayrangefromtestandlearn,marketmixmodelling,complexUnifiedMarketingImpactAnaytics (UMIA)throughtoanalysisofsinglesourcedata.Butplacingamonetaryvalueonmarketingiskey.
Formarketingtobeeffective,itsimpactmustbeknown.Andsuccessshouldnotbedefinedaftertheevent.
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JARGON BUSTED ADVICE
LifeTimeValue(LTV) Referstothevaluegeneratedbyatypicalcustomeroverthedurationoftherelationship.Shouldincludeallrelevant details,includingcross-sells(e.g.sellingaloantoacurrentaccount holder) and upsells (e.g.convertingastandardaccounttopremium).
Oftendifficulttodefine– narrowmeasures(bycustom-ertype)typicallydon’tmatchwithanalyticsandbroadmeasureslackmeaning.Also insomeverticalshardtoagreeonasingleLTV.EspeciallytrueinRetailBanking.
ShortandLongTerm Oftensomeconfusionaroundtheshortandlongterm,notleastbecausethedefinitionshouldchangebyvertical.Forexample,theshortterminAutoisprobablynotfarshortofthelongterminsoftdrinksandconfectionary.
Perhaps a better phrase than a“long-termeffect”isa“ sustainedeffect”.
ReturnOnInvestment Oftenusedwithadvertisingandverysimplydefinedastheincremental(oradditional)benefitfromrunningactivity dividedbyitscost.AnROIabove1isusuallyconsideredtopaybackonitsinvestmentthoughFinanceteamsarelikelytouseamorerigorousdefinitionofthecostoffundsusedforadvertising.
Itsimportanceshouldnotbeoverstated.WhilsttheROIisusefulasamechanismbywhichspendcanbeallocatedacrossmediachannels,thesuccessofacampaignshouldnotbedefinedbyitsROI.Moreimportantisthechangein like-for-likesales.
Saturation&Diminishing Returns
Theimpactofadvertisingshouldincreasewiththelevelofinvestment,allotherthingsbeingequal.But,atsomelevelofspend,increasingweightbyafurther10%willgeneratelessthan10%incrementalbenefit.Theeffectdiminishes.
Understandingwheredimin-ishingreturnskicksinisusefulfromanefficiencyperspective–addressesthequestion“shouldweincreaseweeklyweight,orstretchthecampaignoutwithmoreweeksofactivity”?
PriceElasticity Describeshowresponsive consumersaretoprice changes.Typically,brands trytomakeconsumers unresponsivetopriceincreases(maintainorgrowprofits) butresponsivetopricecuts(gainshare).
A really key KPI and one that canbeassessedusingdifferentmethodologies.Wherepricechangesarerareorhavenottakenplaceforsometime,conjointanalysiscanprovide ausefulguide.
ValuePerception Price elasticity is key but can bedifficulttodefineforaretailerwherethousandsorhundredsofthousandsofSKUsmaybeonsaleoveraperiodofmonths.Sopriceorvalueperception,typicallyusingdatafromabrandtrackerbecomesanimportantKPI.
Oftenperceptionismore importantthanrealityand issomethingthatcanbe reinforcedbyconsistent advertising.
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GainTheoryisaglobalMarketingEffectivenessconsultancythathelpsmarketingandinsightprofessionalshavetheconfidencetomakefaster,smarterbusinessdecisions.Itbringstogetherdata,technologyandadvancedanalyticssolutionsdeliveredwithahightouchconsultancyapproach.
AsanindependentpracticewithinWPP,GainTheoryispassionateaboutmakingameaningfuldifferencetobusinessperformance–toimprovemarketingefficiency,growmarketshareanddrivebaselineprofitsandsharepricegrowth.
Theglobalteamconsistsofmorethan200consultants,datascientists,modellers,analystsandmartechspecialistsoperatingfromthreecoreregionalhubs–NewYork,London,Singapore –andserving113marketsworldwide.
ABOUT GAIN THEORY
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JONWEBB
JonisaManagingPartneratGainTheoryandhasmorethan25years’experienceintheMarketingEffectivenessfieldbothclient-sideandasaconsultant.
Inhisclient-sideroleatNationalSavings,hisremitasChiefEconomistsawhimplayapivotalroleinbringingtogetherthevariousdataandanalyticsfunctionstoensurethattherewasaconsistentmeasureofsuccessthatwassocialisedacrossthebusiness.
AtGainTheory,Jonhelpsclientsunderstandhowtooptimisethevalueofmarketinginvestmentsbyleveragingmarket-leadingtacticsdevisedthroughintelligentdata,analytics,insightandconsultancy.Hisworkhashelpedleadingbrandsimprovenewlaunchforecasting,optimizethemixbetweenpaid,ownedandearnedmediaaswellasimprovingcoursecorrectionin-campaign.
Asanaccomplishedauthorandspeaker,Jonisanadvocateforthepropertreatment ofclients’marketingspend,seeingitasaninvestmentratherthanacostandhas publishedanumberofpapershighlightingthedemonstrableimpactofadvertisingonshareprice,theultimateKPIfortheC-Suite.
Jonholdsabachelor’sdegreefromStaffordshireUniversityandanMAfromthe UniversityofEastAnglia.
Managing PartnerGain Theory
THE AUTHOR
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ABOUT EFFWORKS
TheIPA’snewMarketingEffectivenessinitiativeseekstocreateaglobalindustrymovement,topromoteaMarketingEffectivenesscultureinclientandagencyorganisations,andimproveourday-to-dayworkingpracticesinthreekeyareas:
Marketing MarketingDevelopingthecaseformarketingandbrandinvestment intheshort,mediumandlongterm,andpromotingthe benefitstointernalandexternalstakeholders.
Managing MarketingProvidingawarenessandunderstandingofhowmarketingworks,howtowritethebestbrief,developthebestprocessforplanningandexecutingmarketingprogrammes,andmotivatemarketingandagencyteams.
Monitoring MarketingDeliveringthebestmodels,andguidanceontoolsand techniques,toplan,monitor,directandmeasuretheimpact ofmarketingactivity,usingholisticapproachestoreturnoninvestment.
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TALK TO US
EFFWORKS
For more information contact
Janet Hull [email protected]
effworks.co.uk
GAIN THEORY
For more information contact Jon [email protected] gaintheory.com
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ABOUT THIS WHITE PAPER
If marketing is the engine of business growth, the boiler room of decision-making requires a ‘best-in-class’ effectiveness strategy.
ThisWhitePaperhasbeencreatedtogeneratemomentumaroundtheMarketingEffectivenessstrategyconversation.It’sdesignedtohelporganisationsfocusonwhatmattersandtosuggeststrategiesthatwillensureMarketingEffectivenessbecomesanestablishedpartofhowtheydobusiness.