How Marketers Can Improve ROI by Strengthening their Measurement Practices
By Tina Wilson, EVP, Media Analytics and Marketing Effectiveness, Nielsen
It’s standard practice for marketers to measure the ROI of their efforts, though oftentimes the extent of their measurement is assessing impact on overall brand revenue. However, such a blanket measurement offers few insights into whether marketers dollars are working as strategically and effectively as they could be. For example, certain conversions would be more accurately represented in metrics specific to their medium (e.g., impressions for a commercial), while other marketing KPIs are not directly related to sales (e.g., collecting customer emails) and therefore need to be defined more granularly.
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Knowing how to appropriately measure ROI across campaigns isn’t always so straightforward either, though. According to Nielsen research, it’s estimated that brands are capable of measuring ROI for less than half of their total media investment. What this gap suggests is that marketers are often investing time and resources in activations without knowing whether they’ve achieved their campaign goals.
To maximize their campaign ROI, marketers need to look deeper than how they’re impacting the business’ bottom line and establish measurement practices that secure actionable insights into each campaigns’ performance. Here are the foundational steps strategic marketers should take in order to maximize the impact of their efforts:
Look for opportunities to measure ROI at every leg of a campaign
When marketers only consider blanket indicators of success (such as total revenue, which can be influenced by a number of factors beyond marketing), they miss opportunities to finetune their strategies and make the strongest impact on audiences. According to Nielsen research, the consequences of this shortsightedness can’t be ignored. Should they neglect to consider all sales drivers within a campaign, brands can expect an 80% increased average error rate in forecasting ability for their strategies, leading to 47% inflated incremental outcomes and 68% misattributed ROIs.
In practice, this misattribution can look like neglecting to articulate and pay due attention to top-funnel activations, such as bolstering the brand’s distribution list before launching a persuasive email campaign. Without first working towards increasing their audience size, marketers jeopardize the impact of their main campaign. Instead, marketers need to take a full-funnel approach to defining ROI so that they can then quantify how their dollars are being spent on a granular level. By segmenting marketing strategies with their own respective goals, marketers can better recognize which tactics are working and which ones need to be adjusted.
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Having step-by-step objectives enables marketers to work more resourcefully; instead of altering entire campaigns when results aren’t satisfactory, marketers can pinpoint specific initiatives to improve. Additionally, taking the time to define measurements in the first place can increase the likelihood of a campaign reaching marketers’ overall objectives, as the process of articulating what marketers want to measure and why can help them ensure each step contributes to the desired outcome.
Improve productivity by connecting teams over common value sets
While defining how a marketing team will measure ROI is an essential first step in devising campaigns, those metrics will only yield so much value if the metrics aren’t used consistently across an organization, regardless of functions or geographies. Importantly, these metrics need to be scalable so that all teams can collaborate successfully and understand each other when detailing initiatives within their respective areas. Without democratic access to data and a universally understood context for how to interpret it, teams will struggle with media planning and buying as a unified brand.
On another level, establishing a shared language for articulating ROI helps marketers more efficiently communicate their efforts with leadership. Especially with marketing pressures evolving so rapidly over this past year, marketers have seen how imperative it is for them to be able to affirm their organizational value to business leaders. With the agility afforded by having granular metrics in place, marketers will also be able to demonstrate how they’re equipped to navigate and quickly respond to any industry changes ahead of them, increasing organizational confidence and securing internal buy in for their efforts.
While overarching metrics like brand revenue are useful and necessary, marketers are better informed about effectiveness and efficiency of their investments when measurement or revenue is complemented with conversion metrics across the funnel and specific to the brand objectives. With sound measurement practices established across their efforts, marketers can maximize their ROI and drive success for their brands, across markets.
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