In 2018, consumers will spend half of their time interacting with online media, more than any other medium. As the consumption has shifted more to digital, so have the marketing dollars, with companies on track to spend $119 billion on digital marketing by 2021. While digital has given marketers new options to reach their target audiences, it has also forced them to learn new disciplines, understand more in-depth metrics, and make investments in channels they might not fully understand.
While digital has fast become a vital piece of any marketing strategy, the honeymoon period for experimentation with this medium seems to be over. The level of scrutiny across all marketing investments is growing, and marketers are now expected to make sure their dollars are spent efficiently and be accountable for the results.
Here is a look at what marketers need to know about what’s “in” and what’s “out” when it comes to measuring the true effectiveness of their digital marketing investments:
In: Measuring Sales Performance (Conversion)
The shift to digital gave rise to “success” metrics such as click-through rates, likes, impressions, open rates and visitors that are, at best, indicators that the audience was there but not true measures of marketing effectiveness. Sure, these delivery metrics could assess whether the message attracted attention (“eyeballs”), but what they don’t measure was whether the message was compelling enough to drive a sale. When it comes to being accountable to marketing program delivery and ROI, marketers today need to rely on more tangible metrics that prove conversion and reduce waste, regardless of whether they are measuring digital tactics or traditional advertising. Measuring conversion, which produces sales, is paramount. Conversion impacts the higher-level goals of revenue performance and company growth. The focus on the transactions and the dollars spent also allows a company to understand their true cost to acquire a customer/sale, a metric that gives marketers and their bosses a way to compare one marketing investment against another. Conversion is such an important part of the equation that companies are beginning to reallocate marketing dollars to “non-working” investments (money spent outside of a traditional “campaign” tactics) in areas such as data and technology and customer experience. These investments are efficiency plays. Better customer data and insights lead to deeper and better targeting. An improved customer experience closes the loop on the entire process and drives conversion, making the marketing spend that much more effective.
Extensive Sets of Marketing Data
In: Clear KPIs that Show Business Impact
The most difficult job for marketers today is organizing, understanding and executing digital campaigns based on a plethora of data available to them. In speaking with a marketing analytics consultant recently, he indicated that his firm doesn’t “provide clients with data just for the sake of data.” His job is to distill all the marketing metrics down and link them to the higher-level performance of the business. The movement toward simple performance dashboards is intended to equip marketing leaders with the ability to make better and more timely decisions based on business impact. This is nearly impossible to do if every marketing channel or tactic (advertising, email, display/banner, SEO/SEM, email, social, etc.) is producing a different set of measurements that marketers review in a silo. It’s okay to offer a deep set of data for in-depth tactical analysis, but companies need to avoid putting too much stock in channel-specific metrics (i.e., impressions, clicks, opens) that might only serve to justify expenditures on each marketing tactic versus actually driving conversions (sales).
In: Constant Measurement and Optimization
Not only are metrics changing, but the frequency of measurement is also changing. The growth of new technology and digital tools means that there is plenty of data to assess (as discussed above) and it is available to view on a real-time basis. In the past, marketers would wait until a program ran its course and do a post-mortem with their agency to evaluate its effectiveness. Today, marketers need to take advantage of the availability and timeliness of data at their disposal to monitor campaigns that are in-flight and optimize the approach if the objectives are not being met. The benefit of real-time marketing data and new tools to measure performance is that small adjustments can be made without a dramatic shift in direction. This is called optimization and it allows marketers to shift money between channels, and/or refine messaging strategies -all based on campaign response. There will always be a fine line between giving a campaign enough time to know if it’s working, versus shifting strategies if you’re not seeing results too early. Yes, this effort could come with a learning curve, but smart marketers will not return to the days of launching a campaign and then waiting for the final results to see what worked and what didn’t. Instead, they will have the capacity to measure and optimize while a campaign is live to meet goals that contribute to company performance.
Accountability is not new a new term in marketing. CMOs in particular have always been under an “accountability microscope” and the rate of turnover that often comes with that role proves the difficulty of justifying marketing investments. In a world where digital marketing presents so many opportunities as well as pitfalls, smart marketers will focus on measuring and reporting on sales performance metrics that are more closely tied to company goals versus simple delivery metrics of clicks and impressions. They’ll need to sort through all of their data and separate the true measures of success from the directional indicators and select a platform that allows them to clearly see the results. They’ll need to seek marketing partners and agencies who not only understand these success metrics, but can act on them in real-time to influence the result of campaigns. Finally, marketers need to be proactive in evaluating their own effectiveness. If the tactics they’ve used in the past are not enough to meet business demands today, then they’ll need to adopt new strategies that prove return on investment -because throwing more money at the problem is not an option anymore.
About The Authors
Christopher Wallace is the Co-Founder and President of InnerView, a marketing consulting firm that helps companies improve alignment between marketing and sales. Their solutions are designed to drive increased conversion and revenue by equipping customer-facing teams to tell a more effective and consistent brand story.
Mike Blumberg is Vice President of Client Development for the OneMarket Shopper Exchange, an advertising solution within the OneMarket product suite. OneMarket is the world’s first retail technology network with the mission of reshaping the way the world shops.