Guide to Marketing Measurement
Given major budget pressures from brands’ finance teams, the concept of “marketing measurement” is being brought up more and more in today’s marketing world, but what does it actually mean? Read below to find out what it is, why is it important, how it has changed over time, how to ensure it is future-proof and so much more.
What is Marketing Measurement?
In short, marketing measurement quantifies the impact or effectiveness of overall marketing efforts over a certain period of time. The purpose of marketing measurement is to help brands understand which of their marketing efforts are working and which aren’t, as well as to help them plan and optimize their future marketing investments for better results based on these findings. There are many different types of marketing measurement, including marketing mix modeling (MMM), unified measurement, and multi-touch attribution (MTA)—to name a few.
What Are Marketing Metrics?
Marketing metrics measure the success of marketing campaigns and demonstrate how well campaigns are contributing towards your marketing goals, or key performance indicators (KPIs). In a nutshell, they are measurable values that marketing teams use to prove the effectiveness of their projects, campaigns, strategies, etc. across marketing channels.
Examples of Marketing Metrics
If you have successfully made the switch to a modern marketing measurement approach, your brand can now evaluate an expanded and more powerful set of KPIs, outcomes and metrics, such as:
1. Full Revenue Impact Across All Channels
This evaluates the total revenues captured across all conversion channels. For example, a retailer would examine sales revenues across e-commerce and in-store.
2. Complete Views on New Customer Acquisition
This includes the measurement of media impacts on the cost to acquire a new customer. More advanced versions examine LTV and longer-term customer value.
3. Economic Activity Across Key Customer Segments & Audiences
Most brands have customer segments based on demographic, psychographic and behavioral characteristics. In this approach, the brand measures how marketing activity drives sales across these various segments.
4. Comprehensive Mid-to-Upper Funnel Metrics
Traffic, high-value engagements and earlier signs and signals are examples of mid-to-upper funnel pre-purchase behaviors.
The Importance of Marketing Measurement
The reason why marketing measurement is important is simple: it allows marketers to gain a solid understanding of how their marketing efforts are performing and make informed decisions based off that information that are best for their brand. What is the point of investing in marketing if you are blind to what is working and what isn’t? Effective marketing does not exist without measurement.
Marketing Measurement: Then and Now
There are certain methods that were once a solid strategy for measuring your marketing—but aren’t anymore. Multi-touch attribution (or variants of unified measurement that include MTA) is no longer an accurate form of marketing measurement, as it has been disrupted by the ongoing wave of privacy changes and regulations in the industry today.
By now, it is commonly known that Apple and Google have or are about to make major consumer data privacy changes. But what is less known is that these changes are making 1:1 ad-targeting and personalization much more difficult, which are truly significant disruptions to marketers who have relied on these techniques to boost ad performance. However, what’s been lost in this conversation is that fact that these privacy changes also disrupt multi-touch attribution by making it far less accurate which limits the future viability of MTA solutions.
Consider Apple’s iOS 14.5 App Tracking Transparency (ATT) changes which opt-out all iOS device users from tracking by default. To-date only about 15-20% of users have opted into tracking, leaving a mammoth hole in about 80% of iOS campaign impressions, or 40-50% of the entire mobile advertising market in the US. If you’re using MTA as your marketing measurement solution which requires the ability to track users for channels such as Facebook (or any other mobile-heavy ad network such as Snap, Twitter, TikTok, YouTube or Pinterest), your brand’s ability to measure campaigns in these channels is now experiencing significant data loss and as a result, major new accuracy problems.
Google will be next. In late 2023, they will begin to simultaneously kill cookies in Chrome and stop all individual ad-targeting and tracking within the Google advertising ecosystem. This will create another massive data hole in the digital advertising market and its effects won’t be limited to targeting and personalization. Instead, it will create another set of major problems for all MTA marketing measurement solutions.
Lastly, there is a significant wave of regulatory movement in the consumer data privacy space. Several U.S. states have enacted privacy laws giving consumers the right to be “forgotten”, the right not to be tracked, the right for their data not to be sold, and many other new restrictions and consequences for brands that do not comply. The implications for multi-touch attribution solutions are clear: the use of PII and consumer tracking will now carry significant new compliance risks for marketers.
Long story short: Multi-Touch Attribution (MTA) as we know it is dead, and is no longer a valid form of measurement in today’s marketing world.
Why Do You Need to Have a Marketing Measurement Framework?
Having a measurement framework is essential in today’s ever-changing marketing landscape. First and foremost, measurement must lead to decisions and changes to drive improvement. Otherwise, what’s the point? But not every measurement question is the same and there may be many different reasons to measure marketing along with very different kinds of outcomes measured.
Secondly, decisions don’t happen in a vacuum (and when they do, bad things can happen). A framework helps guide the analytics professional (or the analytics team) to drive real results within complex, dynamic organizations, markets and myriad marketing methods.
Creating a Marketing Measurement Framework
If you or your team does not have a marketing measurement framework, you are not alone. But how do you actually create one? OptiMine is here to help guide you through this process with our agile marketing measurement framework, outlined below.
The Agile Marketing Measurement Framework:
1. Why “Agile”: The market is changing quickly, consumer behaviors are shifting faster than ever, and competitive forces now require a quicker response. “Agile” is a mindset that drives a “test & learn” mentality which critical for flexibility and success. OptiMine borrows from the agile software development methodology which focuses on shorter “sprints”, faster efforts and heavy business stakeholder involvement to drive better results.
2. Start With the End in Mind: Measuring the value of personalization in marketing is a completely different question than measuring the revenue impacts of marketing, even though the two might be distantly related cousins. This example shows that trying to mix or combine outcomes with a single measurement approach or solution may lead to bad outcomes. The objective or KPI must be crystal clear and should include a definition of what “success” is with the “success” thresholds clearly outlined.
3. Right Question / Right Tool: Being crystal clear about the objective or KPI then sets the stage for the selection of the right approach, solution or method for the measurement. There are many kinds of marketing measurement methods and there isn’t one ring to rule them all—they each have their own special, unique place in the toolbox.
4. It Takes a Village: Don’t forget the stakeholders—many analysts think that coming up with the answer is the most important thing, and they forget to include important stakeholders in the process- then things get political. Stakeholders need to be part of the process, understand assumptions, provide feedback, and be included in the process from end to end because ultimately, they may be the ones that have to do something with the measures. If they aren’t on board, even the most brilliant analytic work may sit on the shelf unused.
5. Agile Test & Learn: As privacy regulations change, new channels emerge and consumer behaviors continue to evolve, so must your company’s approach to measurement. To ensure ongoing success, and importantly, not lose the drive for continuous improvement and innovation, agility is key. Agile test and measure sprints will help your brand measure marketing changes and read performance quickly to provide a continuous feedback loop to drive improvement.
6. Success = Decisioning + Accountability: In order to ensure success, a brand needs to make sure that measurement drives actual marketing changes, and that these changes are then evaluated on an ongoing basis. Accountability is also crucial to ensure that each stakeholder doesn’t go back to their “old ways” thereby undermining the goal of the marketing measurement framework itself. This requires active governance, leadership, and persistent, ongoing participation of all stakeholders.
Future-Proof Your Marketing Measurement
Smart brands care about properly measuring the incremental contributions of their marketing investments regardless of whether these are digital or traditional channels, and smart brands want to understand the total impact of their marketing across all conversion points— not just digital ones. But knowing that certain forms of marketing measurement have become more difficult, less accurate and now have new regulatory risks, how should brands think about future-proofing their measurement? Marketers have no choice but to adapt and evolve.
Read OptiMine’s Future-Proofing Guide for a more detailed plan of action. To get started quickly, keep these simple but effective tips in mind:
- Understand that measuring your marketing performance does not require PII nor customer/device tracking
- Traditional methods such as Marketing Mix Modeling using modern AI, machine learning and high-speed computing provide better, more agile measurement solutions
- Understand what use cases and measurement needs match with the best tools for the job (example: tracking-based measurement is the right approach to measure consumer experience, but isn’t the right approach for marketing campaign measurement)
- Agility, speed and flexibility are required for success in a faster-moving world being disrupted by new technology-first upstarts and competitors
- Doing nothing isn’t a plan for success.
NOW is the time to move to privacy-forward marketing measurement with OptiMine. Contact us today!