At the crossroads of advertising and statistics lives the practice of Marketing Analytics. It is here that marketers strive to prove their value and statisticians seek to demonstrate their relevance. Both parties wanting nothing more than to do more of what is working well and less of what is not. Working hard to make sure their marketing doesn’t suck.
I have had the pleasure of calling this crossroad my home and at PortMA we’ve built a nice practice for ourselves applying the rigor of academic research methods to the world of marketing with a focus on marketing brand strategy and event marketing evaluation.
The Three Metrics Every Marketer Must Measure
When a data scientist meets with the marketing team there are always too many metrics to choose from. The marketing team will want to measure everything. Their anxiety comes from a concern that there is value to be found and if you don’t measure it all, something might be missed. This often results in data systems and practices with a long list of metrics and little strategic direction.
The strategic direction will come when you know the three business questions that matter to any marketer:
- Reach: How efficiently am I reaching the right consumers?
- Impact: Am I creating intent where it didn’t previously exist?
- Value: Under what circumstances am I doing this in a way that generates the greatest ROI?
When you can measure, track, and react to marketing performance against these three questions you’ll be working in a value-centric manner. And using these three questions as your guide you ground the anxiety that results in a “measure everything” approach.
Knowing Why Your Marketing Worked
Let’s start by taking a brief step back and talk first about the job of marketing, to begin with.
Every brand has a consumer in mind when developing itself. This may be Moms with young children in the household. It could be twenty-something, outdoorsy men. It might be young professionals working in human resources.
In marketing research, we call these groups demographic or psychographic profiles and they are the root of any consumer segmentation and at the core of the “identify,” a brand works to create.
Regardless of who you’re trying to reach with your marketing, there is a reason why 100% of this target consumer group is not buying the brand. And that reason is always that the consumer is stuck at some stage in the purchase process.
Why they are stuck is often called the “Marketing Challenge.” Good marketing “un-sticks” them.
What to Measure?
The marketer’s job is to “un-stick” the consumer so they move through the purchase cycle and can realize the solution the product or service has to offer. Your marketing metrics should relate to this process guided by the three grounding questions outlined above.
Consumer Reach: Marketing metrics related to reach have both a quality and quantity component. What’s the count (e.g., unique visitors, gross rating points, etc.) and is it the right person (e.g., millennial moms, gaming enthusiasts, etc.).
Marketing Impact: Impact measures will focus on attitudinal change when consumers are in the early stages of a purchase cycle because educational marketing is what will move them toward a buying decision.
These measures will need to shift to metrics related to behaviors when working with later purchase cycle stage consumers as the marketing will only “un-stick” them when it overcomes
Value (ROI): Value comes from the merging of reach and impact to derive a monetary value. When this monetary outcome is modeled against program spend, the resulting measure is the “Return-on-Investment” or ROI.
The reach is your volume metric. This volume metric is multiplied by your measure of incremental impact to estimate a count of individuals impacted. The dollar value of everyone impacted depends on the nature of your marketing’s call to action. You can use the Ad-Value Equivalency (AVE) practices to place a dollar value on actions leading up to a purchase. And then the purchase itself can be generalized to an annualized customer value.
Adding all of this up and dividing by cost is your campaign’s ROI. Segmenting this ROI by actionable groupings allows you to identify where you’re over-indexing and what marketing practices to drop.
Written by Chris Clegg, President at PortMA. PortMA is a niche marketing research firm focused on developing brand communication strategy and measuring the performance of marketing campaigns. We work with Agency Executives and Brand Managers to make sure their marketing dollars work harder and smarter. We make sure your marketing doesn’t suck. You can reach Chris at firstname.lastname@example.org if you’d like to start a conversation about how to make your marketing better.