Marketing is a data-rich domain. With a sea of metrics in our analytics arsenal, measuring marketing impact should be easy. But it's more difficult than that.
First, you must transform that data into quantifiable insights, and this process is the foundation of the Marketing Impact measurement.
Mastering, assessing, and enhancing marketing impact is transformative for any marketing organization. It transcends mere expenditure tracking to genuinely comprehending the returns on investment (ROI).
The ultimate goal is to link marketing efforts directly to tangible business outcomes, and this process starts with recording, integrating, and standardizing spending data. In other words, spend data pre-processing.
Marketing Impact Measurement
Marketing impact measurement is a systematic approach to quantifying the effectiveness of marketing campaigns by estimating their contribution to tangible business outcomes. It involves collecting and integrating channel data and building statistical models to estimate channels' ROI.
Marketing impact measurement enables organizations to understand the impact of their marketing efforts, identify areas for improvement, and make data-driven decisions. It also helps organizations to optimize their marketing mix and allocate resources effectively.
Marketing Spend Aggregation
We start by collecting and consolidating data from various sources, including digital advertising platforms, traditional media buys, and marketing automation tools.
First-party cookie data, such as Google Analytics, are among the most important sources of truth when it comes to measuring true conversion.
Your channel spend data should include as many of the following metrics as possible:
- Impression
- Click
- Cost-per-click (CPC)
- Cost-per-thousand impression (CPM)
- Conversions
- Cost-per-acquisition (CPA)
- Return on Ad Spend (ROAS)
Why Your Third-Party Cookie Data is Wrong?
While first-party cookies are essential, third-party cookie data is typically inaccurate or incomplete. This is because the third-party cookie data relies on users to allow tracking and opt-in for personalized ads, which many users do not do.
By 2025, Google Chrome plans to discontinue support for third-party cookies, joining the ranks of Mozilla’s Firefox and Apple’s Safari, which have already taken similar steps.
The changes in the Privacy law mean they will no longer be able to track whether your digital advertisements have successfully led to conversions.
As a result, the data from these cookies can be skewed and not accurately reflect actual conversions or ROI.
Blend Marketing & Business Data under One Model
Gauging the success of marketing efforts is not just about vanity metrics such as likes and impressions. The next step is to link marketing data with actual business outcomes.
Employ statistical methods such as Bayesian linear models and hierarchical models to construct a probabilistic perspective on marketing expenditure and its impact on business.
The probabilistic model facilitates forecasting, allowing you to model the impact of various actions and anticipate potential future revenue. This is the foundation of the probabilistic reasoning engine behind effective data-drive decision making.
This approach gives you insights into the overall performance and profitability of your marketing efforts. It also allows for data-driven decision-making, as you can allocate a marketing budget based on ROI predictions rather than relying solely on historical data.
Performance Marketing as a Core Strategy
We now move beyond mere measurement into a proactive mode that Performance Marketing (PM) channels. This involves using the insights from MIMF to optimize the channel mix.
Optimizing Channel Mix
With a refined understanding of various channels's ROI, we can now make informed decisions on shifting budgets to the most effective channels.
The key here is to constantly test and optimize, leveraging real-time data to ensure that the channel mix remains in sync with changing market dynamics and consumer behavior. This highlights the importance of continued investment in UpLift experiences.
Accelerate Growth while Minimizing Wasted Cost
Adopting a performance-centric mindset allows for the acceleration of growth while simultaneously minimizing wasted costs.
Case Study: B2B Furniture Company
To put theory into context, consider the example of a B2B company in the business furniture space. By adopting this Marketing Impact Framework, the company could reduce its cost-per-conversion by 14% and drive up an 8% increase in overall growth.
The company began by conducting a granular analysis of its marketing spend. This revealed discrepancies in certain underperforming channels and highlighted areas where increasing spend could yield higher returns.
By meticulously linking marketing data with business outcomes, the company identified that its digital advertising and content marketing efforts were particularly effective in generating leads, while more traditional trade show appearances had a greater impact on sales conversions.
The company then utilized this data to inform its Performance Marketing strategies.
By implementing an in-house Marketing Mix Modeling (MMM), the company was able to predict the impact of changes in marketing spend before implementing them, further optimizing its allocation and ensuring that every marketing dollar was contributing toward the ideal impact.
Conclusion and Call to Action
Mastering the Marketing Impact Measurement Framework is critical for any modern marketer, as it enables a more strategic and data-driven approach that leads to more measurable and impactful marketing efforts.
Marketers and business analysts looking to enhance their marketing performance should not shy away from the complexity. It's a process that demands a commitment to data and analytics, but the rewards are significant. From reducing wasted spend to maximizing ROI, the implementation of a robust marketing measurement framework is the linchpin for success in today's competitive marketplace.
If you're interested in developing this kind of solution for your organization, we'd love to help you. Feel free to reach out to start your journey from data to decisions. Remember, in the digital age, every metric tells a story – make sure you're listening to the right ones.
