How to Quantify Advertising’s Impact on Revenue

“Half the money I spend on advertising is wasted,” lamented merchant John Wanamaker at the turn of the 20th century. “The trouble is I don’t know which half.” With the breakthrough of digital marketing, understanding how advertising influences your pipeline is much less of a challenge today than in Wanamaker’s day. You can trace the impact of an ad, after all. it’s possible to know if an online sale came from someone clicking on your Google ad, for instance. You can pinpoint the channel, the moment the sale occurred, and you can gain insights on the demographic and the content quality that will help you improve your marketing and sales engine going forward. This is amazing!

The trouble? It works best with simplistic, transactional sales—purchases with short sales cycles that have single decision-makers in the B2C space (think buying a birthday present). This is not how major purchases are made in B2B enterprise sales. The enterprise sales process is multi-touch, across many decision-makers, resulting in long, arduous, and complex sales cycles. So how can you best attribute the credit? Read on to learn how.

How Can You Know If Your Advertising Works?

Your advertising has likely always been a top of the funnel endeavor, but can it help drive sales success beyond the initial awareness to have real impact on revenue? There’s a lot of marketing science about why marketing works. You have variety of demand programs, marketing books that talk about positioning, and many resources that are available to help you drive revenue. But if you cannot say your ads (or any other marketing efforts) work better on people who have seen them than those who have not, it’s a waste.

Traditionally, there are three common attribution approaches to give credit for a sale:

• The first touch. In this method of attribution, the channel that established the first touch brought you this customer and so gets credit for the deal.

Why it falls short: Perhaps a prospect engages with your marketing and then goes dark. You reengage the prospect five years later at a conference and make a sale. What happened five years prior is irrelevant to their decision to buy.

• The last touch. In this method of attribution anything that happened along the way to promote a sale doesn’t matter, it’s only the conversion that closed the deal that matters.

Why it falls short: Perhaps a prospect engages your marketing and is ready to buy when the sales development representative (SDR) engages the prospect. The SDR is basically an order taker at this point but gets credit for the Sale as the last touch.

• Multi-touch. This method leverages technologies like your CRM, marketing automation, and other software support to consider all the touches to determine attribution. While this is a much more nuanced approach that better reflects reality, it’s also tricky because you must determine how you weight different actions across the channels up front. Typically, earlier touches are weighted as less significant than later touches in the sales process.

Why it falls short: The weighting is typically a best guess based on individual judgement rather than hard data. It also does not consider the quality of individual touches, for instance the quality of the channel, content, or specific, unique engagements. All touches, simply put, are not equal and ascribing the weights to determine the proper allocation is a squishy science at best.

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How Can You Better Measure Your Marketing?

To measure the impact of advertising on revenue, we began analyzing the performance of our customers. We compared prospects influenced by advertising throughout the sales cycle with control groups that weren’t exposed to any advertising. If the conversion rates were the same between these groups, it would indicate that our advertising spend was ineffective.

Our study revealed something quite different, however. Look at the hard data of the sample 14 companies of different sizes and program length. The advertising-influenced group converted in 2.26x more pipeline than the uninfluenced group. In fact, there was a significant boost to revenue across the board for all client companies, proving out marketing’s value in the process.

Extreme Advertising Conversion Is a Full Court Press for the Revenue Generation Team

For sales driven organizations, traditionally advertising was in isolation from the sales process. We unfortunately, still see this a lot, and it is the main reason for low advertising performance. In the end, successful advertising is a paradigm shift. Instead of thinking about your advertising solely as a one-way top-of-funnel communication with the objective of awareness, think of it more as a conversation with your prospect throughout the sales cycle. As you continue your relationship there is an added depth of value creation as you and your prospect learn more about each other.

Intuitively, this is an obvious shift. In real life, these programs can be difficult to execute. But the more you align with your Sales team, share information, and communicate with each other, the better you will be able to scale your sales effort, augmenting it with digitization that results in improved advertising performance, accelerating and ramping revenue that will have your CEO, CFO—the whole CXO suite—your board, and investors cheering.