As a business, you want to use your marketing budget wisely – especially in times of economic headwinds and increased margin pressure. But measuring marketing effectiveness isn’t getting any easier. A multi-angle approach can help marketers get as close to the truth as possible and increase the return on their marketing efforts. In collaboration with a team of marketing experts, Objective Platform has developed a six-step guide to help you unlock the full potential of measuring marketing effectiveness for your business.
Changing Marketing Landscape
In recent years, measuring marketing effectiveness has become both more important and more challenging.
Calls for consumer privacy have resulted in legal and technical measures such as GDPR, the rise of adblockers and recent moves by Apple, Google and Meta to restrict tracking. However, these measures complicate attribution.
Other popular methods for measuring the business impact of marketing efforts pose their own challenges. One alternative method is marketing mix modelling (MMM): regression models that correlate investment and business outcomes. These models are primarily used to optimise budgets across various channels. But MMM tends to lack granularity and results can be fickle, which limits opportunities for tactical optimisation.
A third method for measuring impact is experimentation, which is often based on attribution, MMM or a combination of the two. This involves A/B testing or ‘incrementalism experiments’ with a hold-out group. The downside is that organisations often rely on third-party solutions for experimentation, which causes the testing process to lack transparency and makes causal relationships difficult to establish.
The Importance of Brand Building
The average marketing campaign tends to focus primarily on short-term goals, as marketers are keen to achieve quick wins. And– not infrequently – this is what CFOs are aiming for as well.
As a result, there is a risk that marketers focus primarily on performance and revenue and less on branding. Yet branding is very important in order to achieve long-term growth objectives and maintain a brand’s relevance for customers. When it comes to marketing strategies, experts recommend focusing on brand KPIs in addition to performance KPIs, such as conversion rates and bounce rates. This creates a holistic view of the effectiveness of marketing activities and value for your business.
Combining to Win
According to marketing experts, a combination of attribution, marketing mix modelling (MMM) and experimentation provides the most clarity when it comes to impact. They all measure the same thing, but each has its own advantages. Marketing mix modelling serves as a strategic planning tool across all channels, attribution serves as an optimisation tool and experimentation serves as a validation tool. A unified model that combines all of these is the holy grail for measuring marketing effectiveness.
Our next-gen marketing effectiveness model will help you on your way to measurement maturity in just six steps:
- Step 1 The basics: Make sure the basics are clear before you start measuring your marketing activities.The basics include your business goals, data and resources.
- Step 2 Implement the first method: Implement the first method for measuring your marketing effectiveness: MMM or attribution
- Step 3 Experimentation: Design experiments to test hypotheses in your learning agenda. You can use the results of these tests to fine-tune your MMM or attribution model.
- Step 4 Implement the second method: Implement the second method. Combine MMM with attribution in order to measure your marketing effectiveness.
- Step 5 Unified model: Combine both methods (MMM and attribution) with experimentation. A unified model is the holy grail for measuring the impact of your sales.
- Step 6 Incorporate brand impact: Incorporate brand KPIs into the models in order to measure the long-term effects of your marketing spend. This allows companies to optimise their brand performance budget.
Curious? Download our whitepaper “The key to a bettermarketing & ROI” to find out how to:
- set a clear scope and involve the team;
- build a decision structure and start optimising marketing activities and media budgets;
- expand and increase profitability.