CLUBHOUSE TALK VOL1: Why do so many struggle with measuring marketing RoI
It was a great pleasure talking to you all and very inspiring to see 💡 that our topic really matters to a lot of people.
So I wanted to provide everyone 💁♂️ with some brief summary and some additional material so that you can start your very own return on invest journey and finally understand what drives your very own marketing performance.
Second: Don't listen to anyone but your own curiosity! There is a lot of hype out there that will tell you which numbers or methods are key. Some people will even tell you that it is simply impossible to measure ad impact and that advertising might now even show any impact at all (like Dr. Fou points out here: https://www.forbes.com/sites/augustinefou/2021/01/02/when-big-brands-sto...). Others will try to sell you their very own approach or tool. Both sides will likely try to fool you.
So don't get fooled and try to be a good German by following Kant's definition of enlightment and try to excerpt from your self-inflicted immaturity instead!
Marketing research has spend a lot of time and energy to measure advertising lift. There is a sophisticated palette of tools and techniques available to quantify the impact of advertising and other marketing activities. I will post some articles, which I personally find to be inspiring below. Most of them are open access, for some of them you will need to get access through a university library.
While you read through these sources, keep some basic rules in mind!
First rule of the marketing RoI Club (no I don't mean you should not talk about the club):
0️⃣1️⃣ Don’t be fooled by numbers! Don't run for high conversions or clicks. Don't focus on the things that happen on the way. But focus on the outcome. In many cases in marketing this may be sales. In other settings this may be polls (politics) or share price (finance). Once you understand what to focus on, you will also understand at which other variables you want to look at, when trying to understand what drives your performance variable of interest and how these things work together!
0️⃣2️⃣ Don't take it easy! Only because some ads show magnificent numbers or your numbers seem to tell you that one thing drives them all, it doesn't need to be so. Last click attribution is often confused as a performance measurement tool. But it isn't! In fact last click attribution is like blaming your last drink the night before for your headache. We are living in a complex world. Things interact. And you certainly had a drink or two before, which may similarly explain your current state of affair. The trick is to understand how things worked together, and how much the first prosecco made you stay at the bar and have another drink. And how this again affected your decisions to move to shots an hour later. Once you understand the dynamics across a consumers decision process and how these things work together over time you will be able to really quantify the individual impact of each drink you had. Or all the ads you booked!
0️⃣3️⃣ Remember again, about what we talked. Once you have your performance variable, identify performance drivers. These will point you on the performance indicators, using analytics and models, you will be able to identify lead performance indicators and comparing impact numbers you will finally be able to identify your personal Key Performance Indicators. And again, don't trust other people who claim to have found the one and all KPI. Remember, some people like Tequila. Others Rum. And some even like Whiskey. At the end of the day, it is about your individual model.
0️⃣4️⃣ Once you have your KPIs, try to understand what is driving them. This means you can move forward, by becoming more granular with your analysis. You know that number of comments matter from your model when it comes to polls? So the next question is then, what drives commenting behaviour. Add the necessary information to your model. Code each post into topics. Use text mining tools to understand how emotions influence comments. Continue to climb down the ladder. You will soon learn that this game never ends. It only makes you smarter!
0️⃣5️⃣ Keep being critical and curious. Models are only one part of the equation. Experiments are the other. You believe you identified something? Try it out. Use some posts to play with the identified drivers and see if your idea is working. If not, go back to step 4 and see what other factors may cause your variable of interest.
I know at the beginning this all feels overwhelming and complicated 🙈. At the end you will realize that this isn't rocket science 🚀. Still you will see that once you dive into this world, the sky is the limit 🛰🛸! To begin your journey, I recommend to start having a look at the attached readings. If you are not scared by greek symbols and math, start with the journal articles. If you prefer more verbal explanations and feel that you would like to first understand the logic behind it, start with Koen Pauwel's book (the third reference). He walks you gently through each topic and helps you to develop your very own marketing return on invest model. At the end you will even be able to develop your very own dashboard to monitor and track your KPIs.
- De Haan, E., Wiesel, T., & Pauwels, K. (2016). The effectiveness of different forms of online advertising for purchase conversion in a multiple-channel attribution framework. International Journal of Research in Marketing, 33(3), 491-507.
- Peters, K., Chen, Y., Kaplan, A. M., Ognibeni, B., & Pauwels, K. (2013). Social media metrics—A framework and guidelines for managing social media. Journal of interactive marketing, 27(4), 281-298.
- Pauwels, K. (2014). It's Not the Size of the Data--it's how You Use it: Smarter Marketing with Analytics and Dashboards. Amacom
I hope you enjoyed this very brief intro. If you like to know more, just drop us a mail and join us for our next clubhouse talk next week!