As marketers cope with an ever-expanding array of technology platforms for advertising, social engagement, customer relationship management (CRM), automation, content marketing and web analytics, many professionals have found themselves needing to rethink their craft. A “big data” overload, in terms of the amount of raw information, is only part of the problem. There simply isn’t enough time in our workday to analyze all of this data properly so we can draw meaningful conclusions that improve our decision-making processes.
So, instead of measuring the performance of individual marketing tactics, then trying to deduce how they perform, smart marketers are now looking at their marketing efforts as a holistic ecosystem. That is, they are evaluating how media mix touch points are working together to produce a desired outcome (e.g. a sale).
Never Lose Sight of the Big Picture
While the integration of CRM and email automation have been a big part of the picture, Google’s attempts in 2012 to offer “assisted attribution” visibility across touch points via Google Analytics has helped marketers think differently about which tactics “get credit” for a conversion. Here’s the reality: Rarely does a single medium or marketing tactic move a buyer from awareness to the purchase stage. That’s why it is critical to understand the path a buyer takes in interacting with all of your marketing touch points.
From an advertising standpoint, many marketers are still stuck in what has been termed Analytics 1.0, whereby marketers correlate sales data with a few dozen discrete advertising variables. Those days are over.
Many of the world’s biggest companies are now deploying Analytics 2.0, a set of capabilities that can process terabytes of data and hundreds of variables in real time to reveal how advertising touch points interact dynamically. The early results are showing a 10-30% improvement in marketing performance.
Analytics 2.0 involves three broad activities
(1) Attribution: The process of quantifying the contribution of each marketing element.
(2) Optimization: Predictive analytics tools to run scenarios for business planning.
(3) Allocation: Real time redistribution of resources across marketing activities, according to optimization scenarios.
Step 1: Attribution
The challenge facing marketers begins with attribution. Last click attribution — giving credit to the most recent marketing tactic prior to conversion — ignores the impact that preceding marketing tactics had on the buyer. Just like a point guard in basketball who earns points both by scoring baskets and dishing out assists to other players who score, so too must marketers measure both statistics for marketing tactics like email, pay per click (PPC), social media, PR, display ads and broadcast ads.
The common mistake in attribution is to give too much credit to PPC and PR and not enough to social media and display ads. Why? PPC and PR may be the mediums that buyers typically interact with later in their buying cycle. However, “going dark” on certain types of advertising or social media engagement can quickly show a decline in conversions, thus validating their role in assisted conversions. David Edelman, a principal for McKinsey & Company’s Boston office discusses this in several short videos you can watch on YouTube.
Step 2: Optimization
The next challenge lies in optimization. You don’t have to run large, customized software applications for war game style simulations. A tool like Excel can calculate the ROI and predict how a $1 shift in marketing spending to other tactical combinations may drive a sales result.
Large brands are realizing, however, that manual optimization has its limits across complex business models and product lines — so large computing power is being applied to accelerate these calculations. The optimization process allows brands to influence outcomes because it provides real-time redistribution of marketing resources.
Step 3: Allocation
Instead of looking at assisted conversion paths monthly or quarterly to reallocate budget or staff, marketers can look at performance hourly. Years ago, Google AdWords gave marketers a glimpse of this with Day Parting — the ability to display ads during certain day(s)/time(s), based on ad performance. Imagine being able to target an entire marketing ecosystem spend based on not just time but behavior dimensions…
If you are a modern marketer, there is still time to catch up on Analytics 2.0 as it is just emerging. However, if you do not view your marketing efforts as an ecosystem and fail to harness cross-channel and assisted attributions, you are behind.
If your business needs to catchup to the Analytics 2.0 universe, we are always here to help.