According to Nielsen’s Annual Marketing Report, which surveyed over 350 marketers globally, organizations often base their investments in digital marketing and advertising on perceived value, even when the effectiveness of those investments cannot be readily verified. But with their brands’ reputations and sales on the line, why do so many marketing departments pour resources into tactics they don’t have the data to justify?
To illustrate, when asked to rank the most effective paid digital media channels, surveyed marketers ranked video and social among their top choices, despite simultaneously admitting only moderate confidence in their ability to measure ROI for those same channels.
When it comes to digital marketing, it can be challenging to quantify the impact of each channel and tactic on a sale or other desired outcome, but that doesn’t mean that marketers should forgo measurements altogether.
The current environment makes it more important than ever for marketers to know which channels are most effective at reaching target audiences. As budgets become tighter, competition increases and the ways in which people consume media continue to change, brands have to make smart choices and invest in marketing strategies that provide a return.
To increase confidence in their investments and ensure their decisions yield the desired outcomes, marketers need to put detailed measurement practices in place. Here are the measurement strategies and tools marketers should employ to help bring reality to their perceptions and devise strategies that are quantifiably effective in driving business.
Key Performance Indicators
Developing Key Performance Indicators (KPIs) is the first step in effectively assessing the performance of different marketing techniques. When marketers adopt a new digital channel, they need to articulate their expectations for it and then decide how they will assess if those expectations have been met (e.g., social media reach and engagement)—otherwise known as KPIs.
These expectations should map to larger brand goals—for example, if the company’s objective is to increase sales, what are the marketing micro-goals of the channels at their disposal that support that?
By defining these measurements, brands can more accurately and visibly monitor whether their digital investments are performing in ways that further the brand’s objectives.
Establishing precise KPIs is particularly critical for brands monitoring business performance against the impact of the coronavirus outbreak. With consumer behavior changing daily, macro views of performance aren’t as helpful in identifying sudden fluxes in data. By monitoring micro measurements, brands can better foreshadow and respond to nuanced shifts in consumer engagements.
Understanding how consumers advance through touchpoints on the path to purchase is no simple process, but with Multi-Touch Attribution (MTA), which provides real-time tracking of consumer-media interactions, marketers can zone in on how their tactics are working.
By incorporating data from digital channels such as online display and paid search, MTA measures and predicts marketing performance at granular levels, like how consumers are responding to creative or keywords. This data offers visibility into consumers’ paths to conversion, enabling marketers to identify which of their methods are working, as well as direct how they need to adjust the ones that are not.
Marketing Mix Modeling
With a wider array of channels to incorporate into their campaigns than ever before, marketers need to know which ones are best suited to influence their specific target audiences and drive revenue.
Marketing Mix Modeling (MMM) offers clarity here by aggregating relevant marketing and non-marketing factors (such as past sales trends or geographic and seasonal considerations that impact performance) to calculate the total effect marketing channels have on sales. This statistical analysis helps marketers identify which of their tactics are most impactful, and it can also produce models that forecast future marketing results to help marketers plan their spending accordingly.
Campaign Lift Analysis
When budgets are tight, marketing departments need to know quickly if their tactics are paying off so that they can either forge ahead or smartly change course.
To assess the sales impact of a particular strategy, a campaign lift analysis identifies those audiences who were exposed and unexposed to the brand’s content and monitors the responses of both. This way, marketers can see if their strategies are prompting their intended outcomes in addition to helping them identify which campaign elements categorically drive the greatest audience actions.
Especially nowadays, with media consumption changing dramatically, it’s critical that marketers understand which channels are most effective at reaching specific customers, and the way to do this is through using quantifiable data.
For many brands, identifying the value of different digital marketing channels and initiatives comes down to the perception of what’s working, but gut feelings shouldn’t be driving marketing decisions. While mass increases in overall media consumption present many opportunities to brands to make an impact on audiences, there’s also the risk of pouring spending into efforts that widely miss the mark if there’s no truth to the strategy behind them. In order for investments to pay off, marketers need to back them with dynamic measurement tools that can either demonstrate those strategies’ worth or proactively alert to opportunities for readjustment.