Marketers have to be able to prove that their campaigns have worked. To do that, you need to know what to measure...
Marketing used to be seen as an activity focused on communications, and the skill set of marketers leaned in that direction. That is no longer the case. Most companies now see marketing as their engine for growth.
Marketers are expected to be able to measure their success and use data and analytics to power their campaigns and digital marketing strategy. The discipline has become as much a science as an art.
But research from several respected organisations, such as the Ehrenberg-Bass Institute, EffWorks, and the Institute of Practitioners in Advertising (IPA), has shown that marketers and brands are often measuring the wrong things.
Below, we run through a few questions to ask yourself when planning and measuring campaigns that will get you thinking in the right way.
This is a huge and complicated area. We can’t hope to cover it all here, so we’re pointing you in the right direction. If you have ambitions to reach a leadership position in marketing this is a crucial subject to learn about.
- Do you understand the difference between Effectiveness and Efficiency?
Effectiveness, or performance metrics, measure what you achieved – for example, growth in market share, or a reduction in price sensitivity.
Measures of Efficiency, on the other hand, tell you how much you got for your investment. Return on Investment (ROI) and its marketing equivalent, Return on Marketing Investment (ROMI) are well-known, frequently used efficiency metrics to measure what impact your campaigns are having on the bottom line.
There is a big problem though. Being a quantitative rather than qualitative gauge, efficiency metrics encourage the constant cutting of budgets. As marketing effectiveness guru Les Binet says: “The best ROI always comes from a marketing budget of zero.” But zero marketing budget probably won’t be very effective…
As another advertising and behavioural science thought-leader, Rory Sutherland, says in the first five minutes of this podcast: “There are many areas in which Efficiency is a good proxy for Effectiveness. Marketing is emphatically not one of them.”
If you are interested to learn more on this topic, read more from Rory about the problem with the trend towards efficiency in marketing.
- Do you and your organisation understand the difference between Brand Building and Sales Activation?
These are the two ways that marketing works, and they are measured with different metrics. This diagram from Les Binet and Peter Field’s paper, ‘Media in Focus’, sums them up.
Digital channels, with their targeting abilities, are very good at sales activation. As a result, more and more marketing effort has gone into activation over the last couple of decades. But longer-term brand building goals have been neglected by many brands, to their detriment.
Impressions, Likes, even seemingly significant engagement like Comments – all mean nothing if they aren’t measured in terms of their effect on a real business outcome, such as profitable growth.
- Is your organisation balancing long-term Brand Building and short-term Activation goals?
Which leads us to ask: does your organisation balance these two things? This is a more complicated question than it might sound, as the optimum balance is slightly different for every brand. However, Les Binet and Peter Field’s research has repeatedly shown that the average sweet spot for marketing investment is around 60% on brand building and 40% on activation.
Ask yourself if your organisation’s online marketing activities usually reach a large audience that includes people unfamiliar with the brand. Or are they almost always tightly targeted? Are they influencing future sales, or just trying to achieve them now?
You should start to get a sense of the balance. If the majority of your organisation’s activity is consistently around sales activation, the brand will be damaged in the long term. This chart showing the effects of sales activation vs. brand building should clarify why:
To understand more about the correct balance of your marketing investment, spend a bit of time with Les Binet and Peter Field’s research, “The Long and the Short of it,” “Media in Focus,” and “Effectiveness in Context.”
- How good at measurement is your organisation?
This white paper by Gain Theory will help you work out how good at measurement your organisation is. They identified three levels of expertise amongst the brands and agencies they spoke to:
- At the lowest stage, organisations are limited to reporting on what has happened. Insight is based around standardised reports. Data is often kept in silos.
- The next stage up includes companies who have well-established analytics programmes in place that go beyond measuring what has happened, to diagnose why. Decisions are made based on this research. Data governance is established, and there are no siloed sources of the same information.
- At the top level, the essential ingredient for best-in-class measurement is a test-and-learn environment. This entails an organisation constantly running experiments, measuring the outcomes, and devising new experiments as a result. Change driven by advanced analytics is the standard approach here.
- Are you focusing on ‘vanity metrics’?
The digital revolution means we can measure an awful lot of things. But not all of them are significant. One area where this has become a pervasive problem is social media.
‘Vanity metrics’ are those that make you feel good, but may have no actual substance. Impressions, Likes, even seemingly significant engagement like Comments – all mean nothing if they aren’t measured in terms of their effect on a real business outcome, such as profitable growth.
Luckily, there’s a free guide that helps you to plan, execute and measure social media campaigns with your organisation’s goals in mind.