April 1, 2015
How Effective Is Your Marketing?
To see how effective you are, you need a combination of technical skills and must measure "above the line" and "below the line."
When speaking about the power of having different technical disciplines converge to yield customer insights, it’s common to focus on analytics and research.
However, another rich territory for seeing the benefit of multiple technical disciplines to deliver customer insight (CI) is measuring how effective your marketing is.
One reason for calling on the skills of two complementary CI disciplines is the need to measure different types of marketing spending. The most obvious example is probably the challenge of measuring the effectiveness of “below the line” vs. “above the line” marketing. For those not so familiar with this language, born out of accounting terminology, the difference can perhaps be best understood by considering the “purchase funnel.”
Most, if not all, marketers will be familiar with the concept of a purchase funnel. It represents the steps that need to be achieved in a consumer journey toward making a purchase. Although often now made more complex, to represent the nuanced stages of online engagement/research or the post-sale stages toward retention/loyalty, at its simplest a purchase funnel represents four challenges. These are to reach a mass of potential consumers and take some on the journey through awareness, consideration and preference to purchase. The analogy of the funnel represents that fewer people will progress to each subsequent stage.
Back to our twin types of marketing: Above-the-line marketing (ATL) is normally the use of broadcast or mass media to achieve brand awareness and consideration for meeting certain needs. Getting on the “consideration list,” if you will. Traditionally, ATL was often TV, radio, cinema, outdoor and newspaper advertising. Below-the-line marketing (BTL) is normally the use of targeted direct marketing communications to achieve brand/product preference and sales promotions. Traditionally, this was often direct mail, outbound calling and email marketing. In recent years, many marketers talk in terms of “through-the-line” (TTL) advertising, which is an integrated combination of ATL and BTL messages for a campaign. Social media marketing is often best categorized as TTL, but elements can be either ATL or BTL, largely distinguished by whether you can measure who saw the marketing and have feedback data on their response.
Let’s return to the theme of using multiple CI disciplines to measure the effectiveness of these different types of marketing. The simpler example is BTL. Here, the data that can be captured on both who was targeted and how they behaved enables the application of what is called the experimental or scientific method. In essence, the skills of database marketing teams, to set-up campaigns with control cells and feedback loops. To merge the resulting data and evidence incremental changes in behavior as a result of the stimuli of marketing campaigns and optimize future targeting.
ATL is more of a challenge. Because control cells do not exist and it is impossible to be certain who saw the marketing, the comparison needs to be based on time series data. Here, the expertise of analytics teams comes to the fore, especially econometric modeling. This can be best understood as a set of statistical techniques for identifying which of many possible factors can best explain changes in sales over time and then the ability to combine these into a model that can predict future sales patterns based on those inputs. There are many skills needed here, and the topic is worthy of a separate post, but for now suffice to say that analytical questioning techniques to elicit potential internal and external factors are as important as modelling skills.
I hope you can see that my definition of today’s TTL marketing campaigns thus necessitates making use of both database marketing and analytics team skills to measure marketing effectiveness. But beyond this simply being a division of labor between ATL elements being measured by analytics teams and BTL by database marketing ones, there is another way they need to work together.
Reaching the most accurate or helpful marketing attribution is an art as much as a science. In reality, even BTL marketing effectiveness measurement is imprecise (because of the complexities of media interdependencies and not knowing if the consumer really paid attention to communications received). In a world where your potential consumers are exposed to TTL marketing with omni-channel options of response, no one source of evidence or skill set provides a definitive answer. For that reason, I once again recommend convergence of customer insight evidence.
Best practice is to garner the evidence from: (a) incremental behavior models (econometric or experimental method); (b) sales reporting (reconciling with finance numbers); (c) market position (research trackers); (d) media effectiveness tracking (reconciling with behavior achieved throughout purchase funnel).
Converging all this evidence, provided by data, analytics, research and database marketing, provides the best opportunity to determine robust marketing attribution. But do keep a record of your assumptions and hypotheses to be tested in future campaigns.
I hope that was helpful. How are you doing at measuring the effectiveness of your marketing? I hope you’re focused on incremental profit, not “followers.”