Optimizing Net Attribution Across Digital, Social, Offline Marketing and a Broad Range of Commercial Drivers
Quantifying the real impact and value of marketing, especially through digital channels, on short and long-term growth is increasingly more challenging – executives are too often struggling with increasing marketing budgets but aren’t necessarily seeing the top or bottom-line growth to justify incremental investment. More and more marketing is impacted by a holistic set of variables that include sales force, product and operational factors as well as external influencers. Making analysis of marketing ROI even more complicated is the need to understand and accurately attribute the impact of highly granular digital and CRM tactics at an individual customer level. It’s in these latter areas, where the richness and granular level of the data behind such tactics – coupled with the right predictive analytics and strategic approach – is helping Fortune 1000 companies create holistic, more precise targeting and high-value commercial optimization capabilities.
Evidence from the last decade has shown that effective marketing can make the difference between achieving your financial objectives – or not. Executives are constantly looking for “the next best action” that will deliver the highest possible return on their existing and incremental investments. One CEO recently commented to me, “I cannot afford to leave even one dollar behind in todays’ environment.” I hear the same thing said in different ways by CEOs, CMOs and CFOs repeatedly across industry sectors.
And there is more data than ever –and more on the way every day. Today, commercial effectiveness planning analytics are more often done with many terabytes of data. The “white space” that analytic companies need to “fill in” with their statistical models is shrinking. The granularity of the analysis has been magnified and the ability to pinpoint actionable targeting is real. With access to more and richer sources of data comes the ability to measure and optimize both traditional and digital media at the campaign, customer (micro-segment), physician, agent, execution, timing and device level, – and in a dynamic manner.
While many companies are struggling to connect the dots with the deluge of data that has become the norm, leading companies see the flood of data as an opportunity and have moved quickly to capitalize on it.
“There is significant value to be realized by ensuring that we orchestrate all elements of the marketing mix using a total business lens. This is about optimizing both across and within each marketing channel while taking advantage of cross-media synergies to drive optimal topline and bottom line impact. Over-torqueing only on certain tactics almost always reduces the potential revenue and profit impact.”
–Ed Villano, GM of Global Brand Management at VF Corporation
A certain amount of pragmatism does need to be interjected into the process however. The explosion of new touchpoints and granular media and customer data has produced an increasing array of “bright and shiny objects” in the form of analytic tools and software that too often create measurement silos within an organization. In many cases these measurement silos have made it difficult to understand who and what is correct. Industry ‘experts’, analysts and pundits too often focused on those “shiny, bright objects” vs. the holistic and transparent solution that can be aligned, understood and integrated into organizations. This has muddied the water by over-focusing on new capability frameworks that place an emphasis on tools and technology solutions rather than tangible, credible approaches that can, in a dependable manner, align organizational capability in order to drive business transformation and value. Companies are facing many new decisions and investment options related to new marketing channels, strategies and metrics. Solutions to executing more effectively must focus on capabilities that enable an organization to align measurement and value in an understandable and believable manner. Doing so leads directly to incremental value for the business in the form of customer acquisition, revenue and profits.
How to get there – FIVE key learnings:
1. Gain “investment grade” confidence in the numbers
The combination of strategic and tactical data outputs need to make sense and gain buy-in. Recently a global CMO explained her frustration with some of the silo’ed analytic approaches her company was using. She said, “If I add up the results from the various analytic analyses we are implementing across the solutions we’re using, it explains 150% of my business. The only problem is that the extra 50% doesn’t exist”. This is the result of organizations not connecting the dots between MMM (marketing mix modeling), digital attribution and customer analytics. By integrating the approaches, leading companies are establishing a view of “Net Attribution” that enables each channel to be valued based on both its direct contribution to the business online and offline, and the indirect impact it has by enhancing the effectiveness of other marketing channels or campaigns. Without this, marketers are typically left with ROI metrics that heavily favor conversion channels such as email, search, affiliate, etc. This has the potential to dramatically under-value demand creation and brand building programs. Through a measure of “Net Attribution” marketers are able to accurately reflect the ROI of each channel while building very accurate predictions of the impact of each channel on sales and profit and the cross-media impact of reallocation decisions.
2. Take a Holistic View
The Marketing Mix analysis within the environment of a Commercial Effectiveness model produces an approach that simultaneously measures the impact of all business drivers including traditional media, digital media, operations factors, brand equity and external factors on offline sales and online sales at the level in which they are executed and by customer segment. Because commercial effectiveness models capture the impact and synergies related to marketing while simultaneously measuring operations, product, external and other important areas, the models do not over or under attribute success to variables. It is important to understand that while digital attribution platforms provide a powerful capability that enable granular visibility into individual digital executions as well as the ability to optimize digital programs on a real-time basis, most struggle to accurately reflect the complete business ecosystem as they often don’t incorporate offline marketing, operations factors and critical external factors such as weather or the economy. By integrating the two holistic sets of capabilities marketers are gaining an accurate, actionable view of “Net Attribution” enabling both top-down and bottom-up marketing optimization to drive gains in marketing performance (incremental revenue and profit driven by marketing) typically in the range of 20-30%.
3. Tactical, Bottom-up Optimization Capable of Producing Big Gains
When reviewing a marketing ROI metric at the total marketing channel level (e.g. total online video), it is important to consider that such a metric is the aggregate of many individual and granular ROIs at a very tactical level that vary by campaign/creative, timing, placement/publisher, duration, market and audience. Optimizing at this tactical level represents a meaningful opportunity to improve the ROI of each channel, while driving measurable increases in the sales and profit. Doing this requires a purposeful integration between the Marketing Mix Models, data from a DMP and/or On-boarder, Digital Attribution platform and a method for driving activation through media planners via a manual process or a direct link into planning tools or the current DSP.
A few weeks ago I was speaking with the CFO of a global manufacturer who credits tactical optimization for driving over $150 million in incremental revenue for their brands over the past 3 years, and believes there is still a significant amount of upside that they’ve yet to but plan on taking advantage of.
“For a marketing Analytics capability to drive value, it must be actionable. It needs to be holistic while delivering the speed and granularity to drive decision making throughout the year. Our ability to optimize marketing investments by campaign, media placement, timing and audience is driving significant improvements in marketing ROI.”
–Todd Borgerson, North American Marketing Lead at Luxottica
4. You’ve Got to Move Fast and at the Right Time
Speed kills – competition in this case. Embedding this new capability into ongoing business planning processes in order to produce high-value results requires the insights be activated and leveraged quickly. Historically it’s taken months to produce and deliver model results. Through dramatic enhancements in data automation, technology and modeling platforms, the capability to rapidly produce thousands of predictive models to test combinations of business variables at a very granular level, companies have been able to reduce speed-to-insight timing to coincide with key business planning and decision making requirements. Thinking of time though, it is important to consider that while the ROI for many digital marketing channels could change dynamically and media planners have the opportunity and capability to re-optimize these channels on a real-time basis, the ROI of many traditional media channels such as TV, Print and Out of Home are far more stable and may only require re-optimization on a quarterly basis. By aligning high-value answers to critical business questions, connecting those answers with the right decision makers at the right time in the manner than enables them to seamlessly act upon them – companies are gaining pre-emptive knowledge that enables them to get ahead of the marketplace and their competitors.
5. High-touch consulting alongside the analytics and technology
It is critical to combine software analytics platforms with an in-depth consultative program that can help drive the changes in behavior that enable a company to assimilate the new capabilities and maximize the value from the program. Focusing only on the technology platform creates the risk of not gaining the cross-enterprise buy-in and commitment to drive the necessary change management and effective activation of results. Performance is habit shaped and people are used to doing things the way they are used to doing them – sometimes for 10, 20, 30 or more years. Marketers and CFOs are asking for a unified approach to tap into that value that matches or aligns their decision-making ability and business planning cycles – usually quarterly, often monthly, sometimes weekly. This needs to come from integrating modeling and attribution platforms with the consultancy skills to best leverage them in the right way, at the right time to support cross-functional decision making up and down the organization.
Organizations that are able to adopt such approaches are best able to rapidly measure, plan and adjust their marketing strategies and realize incremental value from their existing and incremental marketing plans. These incremental benefits are being measured in the tens and hundreds of millions of dollars. The increased level of predictability and transparency is driving improved cross-functional buy-in on the roles that traditional and digital marketing programs can, working together, improve the overall effectiveness of offline and online business performance, effectively allocate investments across marketing channels, and perform tactical optimization for each marketing channel by campaign, timing, placement, audience and device to increase its overall value to the business. This value is being unlocked through the integration of granular marketing mix (commercial effectiveness) models (top-down) with digital attribution (bottom-up) and granular customer data to establish an on-demand Commercial Effectiveness capability.