Toolbox Marketing, Julian Baring

June 24, 2020

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How to Make Marketing More Measurable

In this article, Julian Baring, Adform's General Manager, Americas, discusses, why mistrust in marketing is a major issue and how measurement can be the answer to making marketing better than ever for your organization.

Trust in marketing has been declining among executives for some time now, and the lack of accurate measurement has definitely contributed to that decline. In fact, a BCG survey found that very few marketing executives feel comfortable with their capacity for measurement. Only 9% of respondents feel they can accurately and precisely forecast the impact on ROI of a shift in marketing spend, and a mere 5% think the quality of data available to them meets their business needs.

So how can marketers get better at measuring? What can be done to improve trust?

Taking Control of the Measurement Agenda

The fundamentals of marketing have largely remained the same despite recent technological advancements. The four Ps of Marketing (price, product, promotion, and place) are as relevant today as ever. Nevertheless, marketing can now be more evidence-based. Well-established and proven rules work in a modern data-driven era, giving marketing a credible foundation from which to operate.

Despite the modern capacity for measurement, however, marketers still struggle with everyday operational accountability. Marketers say that the most challenging activity is “demonstrating the impact of marketing actions on financial outcomes.” Many marketers want to demonstrate the financial impact of their activity so that they can show accountability. However, the measurement criteria involved in marketing are often less precise than the measurements of other business activities.

CMOs should be honest about the inherent uncertainties of marketing measurement by highlighting the fact that marketing is an art and a science that deals with the complexities of human emotions and decision-making. Any attempt to measure the impact of a particular ad is susceptible to irregularities.

However, this should not erode confidence in data. CMOs know that their metrics are valid when evaluating whether marketing activity is working as expected. The inherent imprecision in measuring marketing’s financial outcome does not undermine its validity for understanding how a campaign is working.

Here are some potential approaches and considerations for marketers. These can help advertisers take back control of the measurement agenda.

Step 1. Start with understanding business value

Clearly define what marketing should be held accountable for – over both the short and long term. While technology can help easily provide accessible and communicable measurement metrics, change is required across the company culture, processes, and partnerships to help realize a measurement agenda.

Step 2. Test and learn

Continuous experimentation and optimization are key. This comes from the attitude and incentives that technology on its own cannot provide. It is useful to take a portfolio approach to tech and partner selection. Many attribution vendors exist with a perfect, unbroken story about how they will bring universal understanding to all channels and touchpoints, but due to the broken and organic nature of customer journeys, this is not always possible.

Step 3. Pick Partners Wisely

Despite advanced tracking mechanisms, marketing analytics tools are still error-prone. It’s impossible to track user behavior with 100% accuracy. As a result, marketers must look to a range of partners to help with different aspects of their measurement and reporting needs. Platforms that bring together multiple measurement partners help to provide a more holistic picture of user activity.

Deciding What to Measure

The most important measurement for marketing will depend entirely on an advertiser’s business goals. Nevertheless, here are some suggestions for marketers to get the most out of measurement.

Marketing ROI: This metric sits at the heart of credible measurement, over both short- and long-term conditions. There are simple calculations for immediate ROI, but over the longer-term, econometric methodologies are better suited. ROI is the one definitive measurement that should be elevated within the marketing function; everything else simply feeds into this understanding.

Conversion Rates: The conversion rate helps you track the percentage of users that completed the intended goal.

Customer Acquisition Cost (CAC): CAC tells you the average amount of money you need to spend to acquire a new customer.

Average Order Value: Average order value helps you understand how much money a buyer spends on an order. This metric is particularly useful for e-commerce businesses.

Customer Lifetime Value (CLV/CLTV): CLTV helps you understand the average amount of money a customer spends on your offerings during their relationship with your organization.

Underpinning the above is the power of data management. Having great tech and metrics is only as good as the quality of data you use to fuel these. So taking control of measurement is about taking control of data, too.

Proving the value and return of marketing over the short and long terms is essential if marketing is to be clear on what it does and delivers. Embedded within this is the requirement to measure – and therefore manage – what is working across the different points along the whole customer journey. From brand awareness, preference, and bias, to knowing the triggers that drive a shift into action and purchase, being able to determine the value of marketing activities is essential.

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