1

MEASUREMENTSTRATEGY

Getting to Best-in-Class Effectiveness

2

Introduction & Scope

Why Read This Paper

5 Key Takeouts

DefiningMarketingEffectiveness

Fortitude

Journey

Ecosystem

Best Practice

What Success Looks Like

JargonBuster

Gain Theory

The Author

EffWorks

WHAT’SINSIDE

3

ThispaperhasbeencreatedbyGainTheoryandcommissionedby EffWorks,aninitiativeorganisedbytheIPAthatchampions accountabilityinmarketingandpromotesacultureofMarketing EffectivenessfromC-Suite,allthewaydownthroughorganisations.

Increatingthispaper,acrosssectionofseniormarketingandinsightprofessionalsfrom40brandswereinterviewed,representingaUK advertisingspendofmorethan£7bn.

ThepurposeofthispaperistogeneratemomentumanddirectionaroundMarketingEffectivenessmeasurementandtohelpmarketingandinsightprofessionalsmaximisetheimpactofmarketing.

INTRODUCTION & SCOPE

ContributorsInclude

Combined£7b MediaSpend

4

ManyorganisationsstrugglewithMarketingEffectiveness.Indeed,manyarestilltryingtofigureoutwhichadvertsareworking;andhowmarketinginabroadersense,beyondadvertising,ishelpinggeneratebusinessgrowth. Anorganisation’s marketingstrategycan allowittodifferentiate productsandservicesand createmeaningfulbrandsthatsupportgrowthinprofits,notjustturnover.

Toensurethatmarketingisaseffectiveaspossible,itsimpactmustbemeasured.HavingtherightMarketingEffectivenessstrategywillhelpmarketerscreatetherightculture,maketherightdecisions,avoidwastageandmaximiseimpact.

Inspeakingtomorethan40brandrepresentativesresponsibleformorethan£7bnadvertisingspendintheUK,wefoundthatnosingleorganisationwaswhollysatisfiedwiththewaythatMarketing Effectivenesswasassessed.

Forsome,organisationallimitationsareabarrier–nothavingtherightpeopleinplaceattherighttime.Forothers,itisthesheercomplexityoftheirmarketsandgainingadeepunderstandingofwhatKPIswouldgenuinelychangethedial.

ThisWhitePaperhasbeencreatedtogeneratemomentumaroundtheMarketingEffectivenessstrategyconversation.It’sdesignedtohelporganisationsfocusonwhatmattersandtosuggeststrategiesthatwillensureMarketingEffectivenessbecomesanestablishedpartofhowtheydobusiness.

WHY READTHIS PAPER?

If marketing is the engine of business growth, the boiler room of decision-making requires a ‘best-in-class’ effectiveness strategy.

No single organisation was wholly satisfied with the way that marketing effectiveness was assessed.

5

5 KEYTAKEOUTS

Getting The Basics Right MarketingEffectiveness improvements,whilesignificant, canbedwarfedbythebenefitsfrom simplydoingexistingmarketingbetter.LateTVbookingsintheUK,for example,canattractasubstantial additionalfeeand,evenifthefeeis avoided,youoftenendupwithpoor inventory.Forwhitegoodsretail, similarlybasicquestionsinclude: areweadvertisingproductsthatwill drivefootfall,orpurchasewithahigh attachmentrateandhighmargin? Issupplierfundingbeingusedinthe bestway?

Less Detail = More Impact Afloodofdatameansthatwecan bemoremicroandgranularthan ever.That’snotalwayshelpful. Asanexample,forlarge multinationalstheabilitytomovebudgetsatthemarginfromonecountrytoanotheristhebiggestpotentialwin.Inthisscenario,bigpicturemetricssuchaseconomic forecasts,marketsize,penetrationandmarketpotentialaremuchmoreimportantthanmicrochannelROI.

Match Metrics To Strategy Akeyelementofsuccessful MarketingEffectivenessistoensure thatactivityisassessedagainst therightKPI.Everyonewants profitablegrowth,butdifferentcompanieswillbetakingdifferentroutestogetthere.Themetricshouldmatchthebrand’schosenroadmap.

Anticipate Themetricsthatmatterwillvary. Best-in-classMarketing Effectivenessanticipatesand predictsthesechanges.

Stop Standard Reports Issuingpoorlycuratedstandard reportsisnotbestinclass.Move towardsaresponse-basedstyle whereanswerstospecificquestionsareavailable,notjustaone-sizefits-allapproach.Understandthehierarchyofmetricsandwhatisimportanttowhom.

Start as you mean to go on - organisations need to have the emotional and political fuel to start and stay on course for the Marketing Effectiveness journey if they want to create a best- in-class strategy. This includes having the willpower, motivation and desire, as well as the ability to collaborate.

6

DEFININGMARKETINGEFFECTIVENESS

6

7

Isitaboutjustifyingpastactionsorlearningaboutthefuture?IsitjustaboutReturnOn Investment?Doesitembracethemarket disruptionsthatarehappeningallaroundus ordoesitstrivetopresentapictureofcontrol?

Thebestapproachdeliversallofthese thingsandmore,buttheimmediategoalfor ourintervieweeswasensuringthatevery marketingpoundwasspentinthewaymostlikelytofurthertheoverallgoalsofthe company.

Mostofour intervieweesalso pointed out that MarketingEffectivenessisaboutmorethanjustmarketing.Indeed,theverytermcanputitinasilo,reducingitspowerandinfluenceacrossthecompany.Practitionersnow commonlyrefertotheprocessasBusinessEffectiveness.

WeusethisterminologythroughouttheWhitePapertoemphasisethefactthatmarketingisoneofthekeyleversthatbusinesseshaveattheirdisposaltoincreaseprofitablegrowth.Marketingis,orshouldbe,attheheartofthedebateinanycompany,whethertheexecutiveisdebatinghowbesttolaunchanewproductortryingtounderstandwhatconsumerstrulywantfromthebrand.

DefiningtherightmetricsandapproachtoassessBusinessEffectivenesswillbedifferentforeverycompany.Thekeytomeasuringit accuratelyishavingaclearideaofwhatthemarketingactivitywasdesignedtodo.

Differentcompanieswillrequiremarketingtoperformdifferentrolesbutthemeasurestodeterminesuccessmustbedeterminedatthestartoftheprocess.Indeed,thiswasakeyrecommendationinlastyear’s“CultureFirst”reportfromtheIPA.

Whiletheoverallgoalsofthecompanieswespoketowerebroadlysimilar–profitablegrowth–theirchosenpathswereoften different.

Everyone talks about Marketing Effectiveness but it’s not always clear what it means. And Measurement Strategy cannot be implemented successfully without an agreed definition.

1

2

3

ThereshouldbeatightfocusonasmallnumberofKeyPerformance Indicators(KPIs)ormetrics.

Thereshouldbeaconsistentapproachtomeasuringeffectiveness.

Thereshouldbeaconstantevaluationofthetechniquesavailableto establisheffectiveness.

DEFINING MARKETING EFFECTIVENESS

Marketing Effectiveness is about more than just marketing.

Threethingsremainedthesame,however:

8

FORTITUDE

8

9

Shared Purpose

HaveeveryoneagreeonwhatMarketingEffectivenesswilldoandwon’tdo;definesuccess;agreelanguageandmanageexpectationssothat peopleunderstandit’snotaboutbeing‘data-driven’butbeing‘data- informed’.AsoneFinancialServicesCMOsaid:“It’skeytotakeemotionoutofdecision-makingbyagreeingoncommonobjectivesandmetricsacrosstheorganisation,andthenmanagingthoseusingdataand insight.”

Collaboration

CollaborationiskeyacrossseveralfunctionsandnotjustFinance.OftenMarketingandMediateamswillnothaveadirectimpactonProduct, PricingorPlacementetcbutinevitablythesewillimpactsuccess.Beingclearfromtheoutsetwhoyouneedtobringalongonthejourneyandwhattoask,whentoaskandhowtoask,willhelpcreatebetteroutcomes.

Breaking Down Silos

OneMediaVPwasrecentlyquotedassaying:“Ourcompanystruggleswithsilos,withbrandsthataresetuptobecompetitiveentities,andthussharingisaculturalchallengetosaytheleast.”

Zero Based Budgeting TheevidenceforthesuccessofZeroBasedBudgetingismixed,andevenwhereitdoesmeetourdefinitionofsuccess–higherincrementalprofits–theworkrequiredtodelivergenuineZeroBasedBudgetingshouldnotbeunder-estimated.It’sprobablynotsomethingthatshouldbedoneevery 12months.ButamindsetofZeroBasedBudgetingisveryuseful–havinganunderstandingofexactlywhatthedifferentelementsinthemarketingmixaredoingtocontributetoprofitsisafundamentalpartofassessingeffectiveness.Ifwedon’tknowwhatit’ssupposedtobedoing,successorfailureisimpossibletodefine.

FORTITUDE

FortitudeisakeycharacteristicforsuccesswithMarketingEffectivenessprogrammes.Fortitudemeanshavingtheemotionalandpoliticalfueltokeepthejourneyontrack.

Our company struggles with silos, with brands that are set up to be competitive entities, and thus sharing is a cultural challenge to say the least.

Itmeanshavingtherightmotivation,intentanddesire.But,mostimportantly,it’sabouthavingallthesecharacteristicssharedbyeveryonenotjustMarketingorInsights.

10

No black box solutions

Everythingneedstobetransparent.Thishasimplicationsastowhethertheheavylifting/analysisisout-sourcedandhowwellthiswillwork.Italsobecomescrucialthatreportsgoingoutsidethemarketingdepartmentarecarefullycurated.

Triangulation Asinglesourceofevidenceisnotsufficient.Inretailing,forexample,thedecisionastowhetherabrandrunsTVadvertisingthatfeaturesspecificproductsandoffersvscopythatfeaturesaparticularstrength,suchasservice,productknowledgeortodeploycause-relatedmarketingisnotgoingtobemadeonjustaneconometricanalysisofpastmediareturnoninvestments.

Humility Haveawillingnesstoadmittoandlearnfrommistakes.Infact,“mistake”mightnotevenbetherightword–decisionsarealmostalwaystaken usingthebestandmostup-to-dateinformation.Butthingschange, competitorsevolveandmarketschange.Marketingteamsmustbewillingtoembracechangetoo.

Credibility Beyond Marketing: Finance

FORTITUDE

EnsuringBusinessEffectivenessmeasureshavecredibilitybeyondMarketingmeansFinancemustbepartoftheconversationasearlyaspossible.

Acrosseverybusinesstherewasarecognitionthatatensionexistsbetweenspeedof responsewhenmarketsarebeingdisruptedand“analysisparalysis”thatcanbecreated

WithoutthebackingofFinance,thereisadangerthateffectivenesseffortsaresimplyseenasjustanothertokenefforttoputa valueonmarketing.

whenseekingtolocateasingletruenorthfrommultiplesources.Nevertheless,the effortwastypicallyseenasworthwhile.

Financerequiresthattherebe:

ACEBstudyfoundthat47%ofthe18companiesthatusedZeroBasedBudgetingin2014/2015sawasignificantmarginimprovement,comparedto45%of40 companiesthatusedtraditionalbudgetingmethods.Thatsuggestsresultsarenotguaranteed.

11

THE JOURNEY

11

12

Crawl

10% 30% 60%

Walk Run

THE JOURNEY

Crawl

Effectivenesscanbeoverwhelmingforthoseatthebeginningofthejourney.Wespoketoorganisationswherelarge-scalestudieshadbeencommissionedbuttheresultshadnotbeendisseminated,norhadanychange happenedorrecommendationsbeen implemented.

Intheseorganisations,thekeychallengesappearedtobealackofexperienceinmakingdecisionsbasedaroundanalyticsandinsightand/oralackoftrustineitherthedataorthetechniquesbeingused.“It’sjustablackbox–whyshouldItrustit?”washeardmorethanonce.

ThejourneytoembeddingBusiness Effectivenessinanorganisationhasthreeclearstagesofdevelopment:Crawl,WalkandRun. Duringourinterviews,weaskedrespondentstocategorisetheircompany’seffortsin BusinessEffectivenessonascaleof1to10.

Foreffectivenessprofessionalsandadvocatesinsuchorganisations,thekeyistostartslowandstartsmall.Relyingsolelyonspecialistagenciescanbetemptingbutunwiseasitwilldonothingtosolvetheblackboxperception.

Bestpracticeistocombineanin-houseteamwithexternalspecialistsbutensurethatthein-houseteamplayastrongerrolethanjustactingasgatekeeperorprojectmanager.Resultsshouldbesharedwidelyandinternaladvocatesarealwaysrequired.

Atthisstage,effectivenessmeasurementsaretypicallylimitedtoreportingonwhathashappenedand,sometimes,whatishappeningnow.Typically,insightisbasedaround standardisedreports.Dataisoftenkeptinsilos,whetherintentionallyorotherwise.

Allrespondents,wherevertheyranked themselves,recognisedthattheycouldnotstandstill:lower-rankedcompaniesweredeterminedtoimproveandthosetowardsthetop understood that they had to continually improvetomaintaintheirposition.

It’s just a black box – why should I trust it?

13

Walk

Analyticprogrammesarewellestablishedinkeypartsofthebusinessanddecisionsarebeingmadebasedonthisresearch.Theriskforcompaniesatthislevelisthatreportingbecomesroutine,slow-movingand concentratedintobig,expensiveset-piece analyticsconductedbyexternalagencies. Often,resultsareusedtopost-rationalise decisionsthatweremadeonothercriteria.

Companiesthatwereimprovingwere beginningtoimplementquickTestandLearnstudiesinarangeofareas.Oftenthesewereinformalandthetechniqueswererelativelystraightforward,buttheyhadpower

nonetheless,andhelpedtheconceptof“test,measure,implement,testagain…”togain traction.

Whereasduringthe‘Crawlphase’,most activitywasaround“what”hashappenedorishappeningnow,activityinthisphasetendstobemorearounddiagnosis(whydidithappen)andprediction(whatmighthappenif…).

Datagovernancehasbeenestablished,andtherearenolongermultiplesourcesofthesameinformation.Also,thereisanincreasingemphasisonaction:“analyticsdemonstratedthat,weshoulddothis.”

Thechallengefororganisationsatthisadvancedlevelwastwo-fold:

Ensuring that the company moves together

Thereareoftenparalleltrackswithinorganisationsandtheseshould begintobesmoothedoutearlyintheRunphase.InFinancialServices, forexample,machinelearningmaybeusedtosegmentloanapplicantsonthebasisofrisk,withthedecisiontograntaloanbecominggraduallymoreautomated.IntheRunphase,similaralgorithmscanbeappliedto developinsightsaroundpropensityofcustomerstobuyadditionalservicesortoopenandactonanemail.

Ensuring that the company stays up to date

EnsuringthatthecompanystaysuptodatewithtechniquesandthatinnovationswithintheBusinessEffectivenesssphereareassessedfortheirrelevance.

Run

Changedrivenbyadvancedanalyticsisthestandardapproach,withawelldeveloped TestandLearnprocessinplace.Thereisagrowingacceptancethatoutsidespecialists

canusefullybringadditionalinsightsandthecompanyhasthestructureandtheculture tomakeeffectiveuseoftheseconsultants.

THE JOURNEY

14

Ofthecompaniesthatwespoketo,nonecurrentlyrankedthemselvesasa10,butseveralthoughttheywerereasonablyclose.Encouragingly,almosteveryrespondentinterviewedsaidthateachyeartheireffortswithinBusiness Effectivenesswerebecomingmoresophisticatedandhavingagreaterimpactonthebusiness.

Thejourneytowardsaneffectivemeasurementstrategyiscapturedbelow–itismuchmoreaboutrelationships,trustandcuratingresultsthanitisaboutusingaparticulartechnique.

“It took a long time to build up a good level of trust and confidence with our analytics partners. Getting them to understand the business; getting them to understand how to present the results in a way that made them important to the exec. Now, a lot of time is spent ensuring that we don’t rest on our laurels - we regularly meet with different agencies and test innovations to ensure we stay at the forefront of effectiveness measures”

Head of Marketing Effectiveness

THE JOURNEY

15

THEECOSYSTEM

15

16

The Hierarchy of Metrics

Nometricexistsonitsown.Itsplaceinthehierarchyneedstobeknownandunderstood.Peoplehavetoknowwhysomethingisbeingmeasured;theyneedtoknowwhereitsitsintheoverallhierarchyandhowitcontributestotheircompany’soverarchingstrategicobjectives.

Acleardefinitionofsuccessisknownandshared.Wehaveseentimeandtimeagainthatapoormeasureofsuccesshindersbothmeasurement(what,exactly,arewemeasuring?).

Appropriatelycuratedcommunicationexists.Aplannerneedstoknowwhichtacticandpublisherworksbestondigital.TheCMO,inmostcases,doesn’tneedtoknowandtheCFOandCEOcertainlydon’t.TheC-Suitearemorelikelytobefocusedonbig-picturedecisionsthatarelikelytomovethedialinmoresignificantways–anexamplemightbemovinganelementofthebudgetfromamaturebutwealthymarket(e.g.NorthAmerica)toonewherethecurrentreturnsaresmallerbutwheregrowthpotentialismoresignificant.

Notallmetricsarecreatedequal.Norshouldwenecessarilymeasuresomethingjustbecausewecan.Whenspeakingtobrandrepresentativestheywereveryclearthattherewasahierarchyof metricsandthat,formost,profitablegrowthwasatthetop.Ofcourse,thesemetricsdonotexistinisolationandwhilegrowthinprofitsmightbethe

keymetric,othersareimportantbecausethey ladderintoandcontributetothisultimateKPI.Whatdoesthismean?Well,profitablegrowthiskey.Butthismetricitselfdependsonanotherset ofmetrics,allofwhichneedtobemeasured. Forexample:

1

2

3

Growthinprofitsiskey.Oneroute is to increase market share

Market sharemightbedrivenby improvementsinbrand strength

Brand strengthmightbedriven by better marketing

Marketing Effectiveness mightbe improvedbyanenhancedcreative

Toembedsuccessfulmeasurementofmarketingandtogenuinelyhaveanimpactonthebusiness,theecosystemiskeytogetright.Andit’snot necessarilyaboutpickingaparticularmethodology,it’sfarmoreimportanttofocusonunderstandingthehierarchyofmetricsandhowitshouldbe definedforyourbusiness.

It’salsohowtobuildaneffectivenessteam,andhowtobalancetheneedforin-housecapabilitywiththerecognitionthatbestpracticeand innovationtendstobegeneratedmoreby consultancies.

Soforsuccessfulmeasurement,weneedtoacknowledgethat:

THE ECOSYSTEM

17

Hierarchy of Metrics

Exec / C-Suite

Profitable Growth

Market Share

Competitor Strength Brand Health

Economic and Business context

Incremental Like for Like Sales

Financial Contribution Made by Marketing

Marketing ROI

Social Listening

Saturation by Channel

ROI by Marketing Channel

Life Time Value

Short Term and Sustained Impacts

Tactic

Campaign Analysis

Value Perception and Price Elasticity

Publisher

Product / Category Analysis

Counter Cyclical Planning - for

Boom and Bust

Awareness, Consideration,

Recommendations

Marketing Directors & Managers -

Decision Makers

Analytics & Insight Teams

17

Hierarchy of Metrics

18

Thisisameasureoftheresponsiveness ofsalestoachangeinpriceandis usuallydefinedas:

Market Share

Price Elasticity

Thiswasoftentrackedcloselybyour intervieweesandtheircompaniesbuttherewasfrustrationthattheeffortrequiredtoincreasesharebyevenonepointwasnotwellunderstood.Forexample,anewretailbankwithambitionstogain5%marketshareof allpersonalcurrentaccountswouldneedtoacquire70%ofallthoseswitchingaccountsoverthenextfiveyears.

Understandingwhatthismetricissayingmeansnotlookingatmarketsharein isolation,especiallyinmarketsthatare growingordeclining,itisquitepossibleforsharetofallwhilesalesvolumesaregrowing.Whilethisisstillpoor–competitorsare growingmorestrongly–theimplicationsandremediesareverydifferenttoasituationwhereshareandsalesvolumesareboth falling.

3 COMMONMETRICS

Therelationshipisnearlyalwaysnegative becauseifpriceincreasesweexpectvolumesoldtofall.Themetricisunlikelytobea simplerelationship;theremaybeasymmetrybetweenpriceincreasesanddecreases; theremaybethresholdeffects.Andthe relationshipmightbenon-linear,where biggerpricechangeshaveagreaterrelativeimpactonsalesthansmallerones.

However,essentiallyitdescribeswhathappenstodemandwhenthepriceischanged.

WhilemanyBusinessEffectiveness measurementprogrammesfocusontheReturnOnInvestmentformediaspend,theimpactofthepriceelasticitychangingovertimeonoverallprofitabilitycanbeenormous,oftenoutweighingtheimpactofadvertisingovertheshort-term.

Thisisbecausetheshort-termimpactof advertisingaffectsarelativelysmall proportionofbrandsalesbutwhenthe pricechangeseveryoneisaffected.

Ifconsumerscanbepersuadedtoaccept apriceincreaseor,morerealistically,a constantpricewhileothersarecuttingtheirs, profitabilitywillbestrongerthanthe competition.

THE ECOSYSTEM

PriceElasticity ofDemand =

%Change in Sales

%Change in Price

19

TheabilitytochargeapremiumortomaintainpriceswhenothersarecuttingisdeterminedbyBrandStrengthandlong-term,consistentbrandadvertisingcancausethepriceelasticitytofallovertime.

CorporatesknowthisandinRetail,for example,priceperceptionistrackedandexaminedindetail,whileFMCGbrandsuseBrandStrengthasakeyindicatorofsuccess.

THE ECOSYSTEM

Imaginewehaveamid-sizeFMCGwithannualsalesof £100mandagrossmargin(justnetofproductioncosts) of40%.Thepriceelasticityhasbeenmeasuredas-2.5.

So,a10%priceincreasewilldecreasevolumesoldby25%.

Priceischangedbyasmallamount-justa3%increase. Theimpactovertheyearisforgrossprofittofallby£1.1m. Theimpactofpeopleswappingforsubstitutesisgreaterthantheimpactofremainingcustomerspayingahigherprice.

Butwhatiftheelasticityis-1.5?Now,thesameprice increaseboostsprofitbyover£1.5moraswingofaround£2.6m.Andthisisnotrevenueorturnover,butgrossprofit.Andtheeffectwillpersistovertime.

Picture This

3%priceincreasehereleads toprofitrisingby£1.5m

weeks

3%priceincreaseleads toprofitfallingby£1.1m

Consistentbrandadvertisingledtopriceelasticityfallingovertime

3%priceincreasehereleads toprofitrisingby£1.5m

weeks

3%priceincreaseleads toprofitfallingby£1.1m

Consistentbrandadvertisingledtopriceelasticityfallingovertime

20

Mostdefineitasfollows:

Return On Investment

ThisWhitePaperisnotjustaboutReturn OnInvestment(ROI)–ourviewisthatthis isanintermediateKPI.Nevertheless,itisan importantmetric,andonethatvirtuallyall ourintervieweestracked.

Theremaybeotherelementstoaddinortakeout,dependingonthetypeofbusiness,ortomakethecalculationagreewiththewayotherinvestmentsareevaluated.Forexample,WhiteGoodsRetailersmightaddinanassumptionaroundinsuranceorserviceagreements, althoughthesearelessimportantnowthaninthepast.Othersmightwanttoexcludeagencyfeesandproductioncosts.Moresophisticatedapproachesmighttakeafive-yearviewofthemarketinginvestmentandassessonacostofcapitalbasisagainstalternativeusesofthemoney.

ThechallengeforBusinessEffectivenessistounderstandwhatdrivesROI,andhowitcanbemaximisedwithoutdamagingthelong-termpotentialofthebrand.

Butwhatevertheexactdefinition,theROIisessentiallytheincreasedmarginincomedividedthroughbythecostofgeneratingthisincrementalvalue.Andtherearesomesimplerulestofollow(withoutgettingintothemorecomplexissueofdiminishingreturnstomediaweightandsaturationeffects).

THE ECOSYSTEM

Do not use ROI to create your strategy.

MarketingReturn onInvestment

SalesValueUpliftXMargin

MediaSpend+ProductionCosts +AgencyFees

=

21

THE ECOSYSTEM

Theseinclude:

Sales Value Uplift Itshouldincludeallhaloeffects,synergiesandideallyaviewonthelong-term,eitherthroughanevolvingbaseorbylinkingmarketingspendtochangesinpurchaseintentthroughtosales.IfROIistheobjective,thenmakesurethat,inFMCG,youfocusonthebigbrands.InRetail,focusonthefootfallgenerators,orthoseproductsandcategoriesthatdriveahighattachmentrate.

Margin Matters Foraretailer,marginvariesquitewidelybetweencategories.ThesameistruewithinFinancialServices.FocusingonhighmarginproductsorserviceswillgenerateastrongerROI.

Media Spend MediaSpendisakeycomponentofROI.TodrivethehighestROIensurethatmediachannelsgobeyondthosethathaveadirectimpactonsalesresponsebutalsoincludethosethatactasenablersandmakeothermediachannelsworkharder.OuranalysissaysthatTVisstillkey,withVODandSVODgrowinginimportance.

However,donotusetheROItocreateyourstrategy.Definestrategyand thenusetheROIasausefulinputtoallocatethemarketingbudgetbetweencompetingchannelstohitpre-determinedbusinesstargetsbasedonthe strategy.

22

Building an Effectiveness Team

Onceacommitmenthasbeenmadeto measuringtheimpactofmarketingonthewiderbusiness,thequestionbecomes“how dowedoit”?

Howdowebuilduptheexpertise?Howdo wefindtheteamsthatcanruntherequired analysis?Andperhapsmostcrucially,how dowefindthecommunicatorswhocantake the results and ensure they are turned into coherentbusinessrecommendations?

BusinessEffectivenessteamscanbein-house,externaloracombinationofthetwo.Thereareadvantagesanddisadvantagestoeachapproach.

ResearchrecentlypublishedbySource(2018)suggeststhat,globally,approximately75% ofallanalyticsandinsightworkisrunbyin-houseteams,withjust25%undertaken byconsultantsandagenciesofvarioustypes.

Someoftheapproachesthatwesaware setoutinthefollowingpages,eachhasitsclearcostsandbenefits.Pickingtheright approachwilldependonyourowncontext andpreferencesaseachcanbesuccessful.

Inreality,mostcompaniesadoptamixedapproachwithsomepartsoftheeffectivenessprogrammeoutsourced,andothersverymuchkeptin-house.

Duetofearsaboutpoorlycuratedresultspresentations,theoverwhelmingmajorityofrespondentsretainedahighlevelofcontroloverhowresultsarecommunicatedinternally.Findingeffectivenessconsultantswhowereconsistently“boardroomready”wasfoundtobeachallenge.

Forthosecompaniesandbrandsoperating inmorethanonemarket,therearealsochallengesoverwheredecisionsonBusinessEffectivenessweremade.Therewerebroadlytwoapproaches,whichoftencoincidedwiththelevelofbrandmaturity.

THE ECOSYSTEM

23

Thisapproachtendedtobefavouredbynewbrands,oratleastbrandsthatarenewtoparticularmarkets.WithinTech,forexample,abrandmighthavevery differentlevelsofbrandstrength,penetrationand trustindifferentmarkets.Successmeasuresneedtoreflectthis.Thestrengthsareclear–consistencyofmeasurementbutflexibilityinKPIsuccessmeasures. Ariskwiththisapproachisalackofbuy-inatthe locallevelthatrisksunderminingthewholeprocess.

Thekeyadvantageofthisisthatlocalexpertisecanalwaysbebroughttobear.Thedisadvantageisthat,unlesscentralcontrolistight,subtledifferencesintechniquesandmeasurementcanstarttocreepin,underminingtheprocess.Thisapproachtendedtobefavouredbymaturebrands,whereKPIscanbebroadlysimilarinmostterritories.

Define success centrally, measure locally

Define success locally, measure centrally

23

DEFINING SUCCESS

24

Approach What This Means Pro Con

In-House Team Datapulledfromvariousstakeholders(e.g.mediaagencies)butallanalyticsandvalue-addinginterpretationofthisdataisdonebyfulltimeemployees.

Overtime,anin-depth knowledgeofwhatworksandwhycanbebuiltupbythisinternalteam,andtheyactasvaluableinternalconsultants.

Teamsareusuallysmall,so canbevulnerabletooneor twopeoplechangingroleor leaving.Also,whiletheyhaveverygoodexperienceit’sonlyofasingleclient.Thismakes ithardtobenchmark performanceandalsoto innovate.

Pure Outsource Inthiscontext,external agencies/consultanciescoverallaspectsofoneormoreeffectivenessprogrammes.

Benefitfromwideexperiencenotjustwithinasingle vertical,butalsorelated industries.Havethe experiencetoknowwhatquestionsyoushouldbeaskingaswellasansweringtheonesthathavealreadybeenasked.Mostinnovationhappensagencysideevenifdrivenbyclientdemands.

Cansometimesseemremotefromthewiderbusinessandthequestionsthatare currentlybeingaskedandittakestimeandeffortfromclientteamstoensurethattheyareproperlybriefed.Butwithallanalytics,themaxim“garbagein,garbageout”holdstrue.Animportantriskwithoutsourcingisthesheerlengthoftimeittakesnewagenciestofullyunderstandthebusiness.ThiswasfeltmoststronglyinFinancialServicesandRetailbutwasmentionedbymanyrespondents.The dangeristhatitrisks“sticky” relationshipsandalackof innovationasbudgets remainedfixedyearonyear.

In-Source Partnership,whereby agencyteamsworknextto clientteams,typicallyat clientoffice.

Bestofbothworlds.The internalteamcan‘briefon thego’andshouldhavegreatconnections across the organisation.Theagencyteamtendtosecureaccesstoawidergroupofpeopleonamorefrequentbasis,therebymakingtheanalyticsricher,moredetailedandmorefinelytunedtowardsansweringthekeyquestions.

Thisisoftenmoreexpensivethanotheroptions.

In-House Expertise Clientteamsdon’tnecessarily“do”theanalyticsbuttheyareverycloselyinvolvedandcananswerquestionsaboutresultsandriskswithout needingtogobacktotheagencyteams.

Canbeveryeffective–havinginternalconsultantswhoun-derstandbothhowtheresultswerearrivedatandthejudge-mentsthathavebeenmade,increasingthelikelihoodthatinsightswillbedeployedandimprovementsgenerated.

Sometimesanelementofdoublingupofroles,sonotnecessarilythemostefficientapproach.

TEAM APPROACHESTHE ECOSYSTEM

25

BEST PRACTICEIN KEY AREAS

25

26

Thereisaveryclearhypothesisbeingtestedandaverycleardefinitionofwhatconstitutessuccess.

Testandcontrolsamplesareresult-neutral.Marketersneedtothinkaboutwhethermembershipofaparticularsamplewillaffectresults.Forexample,oncustomervisitstoawebsite,arandomisedtrialwillprobablyworkwell.Butforaretailer,randomlyselectingstoresis unlikelytobeeffective.

MultipleTestandLearnexperimentsarenotbeingrunwiththesamegroupofcustomers(bothtestandcontrolgroups).Setupdifferentgroupsforeachhypothesisthatyouwanttotest.

Decayedorlaggedeffectsareallowedtoworkthroughbeforefullyassessingtheresults.Alsoensurethattheimpactofonetestdoesnotaffecttheresultsofthenextone.

Takeintoaccountthatonlinetestscanbedifficulttomanage.Forexample,awebsitemaybevisitedmanytimes(andonmorethanonedevice)soitissometimesnotalwaysclearwhichversionofawebsitehasbeenseen.

TestandLearnexperimentsstartandendonthesamedaytoavoiddayofweekresponseorpurchasepatternsimpactingresults.

Test & Learn

TestandLearnisnotanewconceptbutwithadvancesindatacollection,particularlyintheonlinesphere,it’sexperiencingsomethingofarenaissance.

Theprocessisbothsimpleandpowerful.Takeanactionwithonegroupofcustomers(thetestsample),generallykeepallotherfactorsconstantforasimilarsetofcustomers(thecontrolsample)andthencompareresults.

Theseresultsaretypicallysimpletoanalyseandarestraightforwardtointerpret.Providedthatnootherfactorsaffectjustthetestorthecontrol,causalityisalsoclear.

However,thereareanumberofpitfalls. Gettingitrightmeansensuringthat:

BEST PRACTICE IN KEY AREAS

26

27

Market Mix Models and Path to Purchase

BEST PRACTICE IN KEY AREAS

MarketMixModels(MMM)havealonghistoryand,usedwell,canmakeanimportant contributiontobothunderstandinghow marketinghasworkedinthepastandhowtomakeitworkharderinthefuture.InasurveyrunbyForresterandBurtchover2017,45%ofrespondentswerecurrentlyusingMMMwithafurther18%eitherpilotingprojectsorplanningtouseinthenext12months.

MMMsdohaveonemajordrawback:theyareasingleKPImodel.

Thatis,theyfocusontheoutcomeofjustonevariable–usuallysales,whetheritbevolume,unitsorrevenue.

PathtoPurchase(P2P)approachesdifferinthattheyexplicitlyacknowledgethatmarketingismorenuancedandisoftendesignedtohaveanimpactbeyondjusttheshorttermandthatotherKPIsarealsoimportant.

ThisisespeciallyimportantforAuto,FinancialServicesandWhiteGoodsretailing,wherethenumberofpeoplein-marketatanypointintimeislimited.

Forexample,somemarketingactivitiessuchasNike’s2018Kaepernickcreativearefocusedmoreoneithershiftingorreinforcingbrandvalues.

Itisclearthatthegoalforthistypeof marketinghaslessofanemphasisonwinningcustomerstodayandmoreaboutgainingafootholdwiththecustomersofthefuture.

Andmarketsregisterthisintent.ForNike– despiteaninitialsharepricefallof3%and numerousvideosofcustomersburningtheirNikeshoesandclothing–theshareprice actuallyendedhigherthanbeforethespotwasaired.

AnMMMsolutionwouldevaluatethisspotonthebasisofitsimpactonsaleswhileitwasairedandperhapsuptwotothreeweeks afterwards.

Fine,asfarasitgoes.Butinthiscase,that’sprobablynotfarenough.

AP2Papproachwouldalsoevaluatethisshort-termimpact,butitwouldn’tstopthere.Itwouldalsoassesstheimpactonfactorslikepurchaseintentamongkeydemographicsandwouldthenrelatethesebacktosalesand profits.Thismorenuancedapproachcapturesthefullrangeofwhatmarketingistryingtodo.

Gettingitrightmeansensuringweunderstandwhateachlineofactivityistryingtoachieveandevaluatingitaccordingly.WhenmarketingactivityisjustdesignedtoaffectsalesthenMMMisfine.

Forallotherinvestments,itwillarguablyresultininvestmentreturnbeingundervaluedandP2Papproachmaybemorerelevant.

27

28

Long-Term Impact

BEST PRACTICE IN KEY AREAS

ThereareanynumberofwaysthatMarketingandBusinessEffectivenessteamsattempttobuildanunderstandingofthelong-term effectsoftheirmarketingstrategies.One popularoptionisConsiderationorNet PromoterScores.

However,theevidenceforsimplelinear relationshipsbetweenthesemetricsand volumesalesisnotalwaysstrong,partly because the data is not consistent and partlybecausesamplesizeisusuallytoo smalltopermitdetailedanalysis.

Increasinginpopularityaremoreadvanced analyticsalgorithmssuchasUnobserved ComponentModels(UCM).Theseworkby allowingthebasetoevolveovertime.This, afterall,isoftenthepointofmarketing

activity–buildingbiggerbrandssothatall futureactivityismoreeffectiveandthe productorserviceappealstomorepeople.

Arecentstudycommissionedforthe ProfitAbilityreportpublishedbyThinkbox, providescasestudiesandin-depthresearchprovingthatUCMscanbothidentifyand evaluatetheimpactofmarketingactivityoverthelongterm.

Gettingitrightmeansunderstandingwhatis drivingthegrowthinthebase.Wehaveseencaseaftercasewherethebaselineofsaleschangesovertime,independentofnormalseasonalpatterns.

Thesalesbasemightfallbecauseof competitoractivityoritmightincreasethankstomarketinginitiatives.Understandingthecauseofthesechangesisfundamentalto understandinghowtoimprovebusiness outcomes.

Forexample,inRetail,anadfocusingonashort-term offermaywellbringpeopleintostorebutwillitleadto moreprolongedsuccess?

Perhaps,buttheevidencewehaveseentodateisthat movingawayfromanexclusivefocuson“call-to-action”messagingcangrowthebusinessoveralongertimeperiod.

Picture This

Getting it right means understanding what is driving the growth in the base.

29

ThereareanumberofapproachesthatfallunderthebannerofAttribution,including:

Gettingitrightmeansthatwecancombinetheoutputsofanattributionstudywithknownbudgetconstraintstoinformoptimisationoftacticalinvestmentsovertime.

Digital and Cross-Channel (Multi-Touch) Attribution

Digital Attribution Includesoneormoretrackableonlineexposures(includingDisplay,Video,SEM,Email)againstanonlineKPI(e.g.sitetrafficor e-commercesales).

Cross Device Attribution InclusiveofMobile;requiresimplementationofUniversalUserID technologyandleveragesdeterministicandprobabilisticIDmatching.

Cross Channel Attribution (also referred to as Multi-Touch Attribution or MTA) Includesintegrationofselectofflinemarketingandsaleschannels(e.g.DirectMailorCRMsales).

BEST PRACTICE IN KEY AREAS

Fororganisationsthatinvestindigital media,thereisoftenaneedtoassign conversioncredittothedigitalchannelsof influence.DigitalAttributionleverages user-leveldataandagranulatstatisticalmodeltodetailtheimpactofdigital.Modelsanalysethedifferenceinmediainteractionsbetween‘converters’and‘non-converters’,allowingfortheattributionofimpactbeyondthe‘lastclick’,identifyingwhatactuallydrivesthesale.

Becauseofthesheervolumeofdataavailable,analyticwindowscanbeshorterthanMMM(e.g.28daysratherthanthelast2plusyears).ThismakesAttributionmoresensitiveto near-termconditionsthanMMM,makingitaneffectivetooltomeasurefast-evolving channels,suchassocial,andcampaignsthatcovershortperiodsoftime.Inaddition, granulardatameansthatchannels, publishers,sites,tactics,creative,and combinationscanallbeexploredusing Attribution.

30

Unified Measurement Framework

Regardlessoftheapproachutilized,severalbestpracticeshaveemerged:

Two-stage Modeling:MMMisconductedfirsttoidentifycontributionbychannel(e.g.TVvs.DigitalDisplayvs.DigitalVideo…)andthenAttributionisusedtofurtherallocatesalesbytactic.

Granular MMM:Regressionmodelsusingdailysalesbygeographyorstore,marriedwithgeo-spatialmedia/marketing,enablesnear-termandhighlygranularinsight.

IncorporateTotalSales–onlineandoffline.Whena‘complete’salesviewisnotavailable,ensurethatthesalesdatausedisrepresentativeofthebrandstotalbusiness.

Buildwithinaconsolidateddatainfrastructure.Thisenables deduplicationofdatahandlingtasks,anddeeperintegrationwithinmodelling.

Ensureanaccuratereflectionof‘baseline’byincorporatingall controllableandnon-controllabledrivers.

Measureimpactagainstthree-timehorizons,theimmediate,the shorter-termandthelong-term.

Operateatvariouslevelsofgranularitytosupportupstream,strategicthinkinganddownstream,in-campaignoptimisation.

BEST PRACTICE IN KEY AREAS

Best-in-classmarketingrequiresabroadsuiteoftools.MMMandAttributioncomplementeachotherwell,astheweaknessesofone arethestrengthsoftheother.Eachmethodworkswellinisolation,buttheyworkbestwhenintegrated,allowingforanaccurateapproachtoomni-channelmarketing measurement.TheoverarchingbenefitofaUnifiedMeasurementFrameworkisthattheinsightsgeneratedcaninformtheentiremarketingprocess,fromupstreamstrategicthinking(budgetsbygeography,brandandchannel)throughtodownstreamtactical optimisation(budgetsbycampaign,tacticandcreative).

AUnifiedMeasurementFrameworkbringstheworldofAttributionandMMMtogether.It enablesoneanalyticalframeworkacrossallmarketingchannels,causalparametersandKPIs.ThismeanstraditionalchannelssuchaslinearTV,traditionalcausalparameterssuchasstorepromotions,andtraditionalKPIs

Gettingitrightmeansensuringthatallresultsandplanning/buyingrecommendationscomefromthesamemeasurementsystem.Thereisnodoublecountingofresultsandeverythingisassessedagainstacommoncurrency.

Thisallowsmarketerstosayexplicitlywhichactivityisactinginanenablingroleacrossbothon-andoff-linemedia.Thistypeofsynergisticbehaviour,whereonemediaoractivityworksmoreeffectivelyinthepresenceofanother,isrelativelycommonandismosteasilyfoundbetweenpaidsearchandTV,withTVmakingsearchworksignificantlymoreeffectively.

suchasofflinesalesareconsideredinthesamemodelasdigitalimpressions,clicksande-commercesales.

JoiningAttributionandMMMintoaUnifiedMeasurementFrameworkcanbedoneusing avarietyofmethods.Examplesinclude:

31

Machine Learning

Thereasonsaretwo-fold:

Marketers have to deliver optimized outcomes to the highest possible degree withincreasingspeedinthefaceoffast-pacedconsumerneedsandshiftingmedialandscapes.Fasterdecision-makingsupportis requiredtooptimisemarketinginnear-realandnear-futuretime.

Data scientists are tasked to deliver faster, more accurate predictive insights inthefaceofanexplosionofdata;pressurefrommarketingteamsispushingthemtodelivergranularinsightsfornear-realtimeandnear-futuretimeoptimisationpurposes.

BEST PRACTICE IN KEY AREAS

MachineLearningworksbyleveraging large-scalecomputerprocessingpowertointerrogatebig,disaggregateddatasetstouncoverpatternsthatcanclassifyandpredicthumanbehaviours.Inotherwords,MachineLearningcanshinealightonspecificareasofopportunitytodeliverameasurablebusinessreturn.

Thecomplexityoftoday’spathtopurchaseposesachallengeformarketerslookingtoacquire,growandretaincustomers.

Broadlyspeaking,MachineLearningworkslikethis:feedinasetofdatawithaKPIthathasaknownoutcome,holdsomeportionofthedatabackforvalidationandthentrainthealgorithmtocorrectlypredicttheoutcome.

Forward-thinkingmarketersandinsightsteamswithadvancedanalyticsapproacheshavestartedusingMachineLearningtohelpthemsolvethischallengeandmakefaster,smarterdecisions.Andthisisasectorthat isgrowingfast–ForresterandBurtch(2017)estimatethattheMachineLearningindustry isgrowingbyaround15%eachyear.

31

32

Theadvantagesarefour-fold:

Speed

Inthenot-toodistantpast,alotofanalysiswouldtakeanumberofdays,sometimeslonger.Now,itcanbedoneinamatterofhours,sometimesminutes.

Automated

MachineLearningisnotconcernedwithunderstandingwhysomethinghashappened.Itisonlyconcernedwithaccurateprediction,enablingautomationtobedoneeasily.

Scale and Flexibility

MachineLearningcancombinedatasetsthathavedifferent structures.Forexample,textanalysiscanbeeasilyincludedalong withnumericaldata.

Real Time

BecauseMachineLearningcanautomateatscaleandwithspeed,itenablesmarketerstotakeactioninrealtime.Inpracticethatmeansbrandscanknowwhatmessage/tactictousetomaximisethechanceofconversioninonlinesales;orincustomerservice,flaggingsocialmediacasestoidentifywhichneedtobedealtwithurgently.

1

2

3

4

BEST PRACTICE IN KEY AREAS

Gettingitrightmeanshavingqualitydata. Ifthedatathatgoesintothemodelisn’t accurate or is based on hypotheticals then the predictionsandrecommendationsgeneratedwillalmostcertainlybeskewedorwrong. GarbageIn,GarbageOuthasbeentruefor alongtimeandtheopaquenatureofmany MachineLearningsolutionsmakesitevenmoreimportanttoday.

Italsomeansavoidingtheriskofconceptdrift.Wherereal-worlddatadiffersfrom trainingandvalidationdataitcanleadto poorpredictiveperformance.Conceptdrift isawell-knownproblemandisakeyreasonwhyverysimpleforecastmodelsoutperform complexMachineLearningvariantswhenitcomestolong-termforecasts.

Makingsureyouralgorithmisn’toverfittingisalsokey.ThemoresophisticatedaMachineLearningalgorithmandthebetteritpredictsthetrainingdata,themoreproneitisto confuseidiosyncrasiesinthetrainingdatawithgenuinesignals.

33

WHAT SUCCESSLOOKS LIKE

33

34

Ensurethatallquickwinsareachieved beforemovingontomorecomplextasks.

Isyourmediainventorythebestthatitcanbe?InRetail,hassupplierfunding

beenmaximisedandusedinthebestway? InFinance,AutoandTech,isthereaclear

understandingandagreementonlife-time value?InFMCG,istheimportanceofprice

elasticityunderstoodandthepotentialfor marketingtosupportandreduceprice

sensitivityrecognised?

QUICK WINS

1

WHAT SUCCESS LOOKS LIKE

34

Agreeonwhatsuccesslookslikeup front,andwhy.Understandhoweach lineofactivityfitsinwiththeoverall businessstrategyandmatchappropriatemetricstoit.Understandtherequirementsofstakeholdersbeyondmarketing, especiallywhenitcomestothethreeTs –Triangulation,TransparencyandTrust.

2DEFINESUCCESS

35

WHAT SUCCESS LOOKS LIKE

Be open

aboutwhatyoucando internallyand,whereneeded,

plantoimproveyourcapabilities. Yourpositionon‘Crawl,Walk,Run’

spectrumandthespeedwithwhichyouneed tomovewillindicatethebalancebetween

buildingin-housecapabilityversusworkingwithpartneragencies.Picktheapproachthatbest

fitsyourcompanycultureandmaximises thechanceofsuccess.

KNOWYOURLIMITS

3

35

Partner and collaborate but remembertobecourageousaswell.Focusingonlyondecisionsthatwillgenuinelymovethe needletakesfocusandcourage.

BEBOLD

4

36

Whether you build in-housecapabilities,outsourceto

specialistagenciesoracombinationof thetwoandwhetheryouareusingthelatest

MachineLearningalgorithmsortriedandtrusted MarketMixModelling,it’svitalthatyoumatchyour

analyticeffortswiththebusiness’abilitytousetheinsightsgenerated.Doestheeffectivenessworkneed

toberealtime?Ifnotnow,whenwillyouneedthatcapability?Justaseachlineofmarketingneedsto

contributetooverallbusinesssuccess,somusttheBusinessEffectivenessprogramme.

36

WHAT SUCCESS LOOKS LIKE

SELECTYOUR TOOLS

5

6TEST &LEARN

ImplementingacoherentTestandLearnprogrammeiskeyto

improvingtheeffectivenessofmarketinganditsimpacton

thebusinessnowandintothefuture.

37

JARGONBUSTER

JARGON BUSTED ADVICE

IncrementalLike-For-Like Thechangeinsalesrevenueand profitabilityinoneperiodovera similarperiod,oftenthesameperiodlastyear.InRetailmaybereferredtoas“SameStoreSales”,like-for-likesstripouttheeffectsofstoreopeningsoracquisitionsandmayalsoattempttoabstractfromcompetitoractivity.Anattempttounderstandandfocusonorganicgrowth/decline.

Akeymetricandcloselylinkedtomovementsinacompany’sshareprice.Beawarethatadjustmentssometimesneedtobemade–insomeyears,thefirstquarterwillincludeEaster,in othersitwon’t.

MarketShare Onthefaceofit,anobviousconceptandonethatshouldbetracked. However,thedefinitioncouldandshouldchange,dependingon objectives.Forexample,whatis themarketshareforCola?Just carbonateddrinks?Doesitincludemineralwater,othersoftdrinks? Actually,doesitincludetea,coffeeandotherhotdrinks?

Takecarehowmarketshareisdefined.Toonarrowanditmightnotinclude importantdevelopmentsoutsideofwhatyouthinkarecorecompetitors.Toobroadanditrisksbecomingameaninglessnumber.

EconomicandBusiness Context

Thishasamajorimpactonallkeyperformanceindicators.Forexample,thepaybackfromadvertisinginadownturnislikelytobeverydifferenttothatwhentheeconomyis booming.Somechangesmaybe permanent–forexample,thegigeconomy.

Contextisalwayskeyandmustbe overlaidonallmetricsthatmatter.

BrandStrength Iskeybuttypicallynotagood predictorofsalesnextweek,ortheweekafter.Itistypicallyaslow- movingindexformaturebrands. Weoftenfindthatitisusedto explainpasteventsratherthan helpingtopredictthefuture.

Carefullyconsiderwhichareasofbrandstrengthareimportant.Itisseldomawareness,whetherpromptedor unprompted.Considerationandintenttopurchasearetypicallymoreusefulforpowerbrands.

CounterCyclical Planning

DespiteGordonBrown’sclaimstothecontrary,boomandbuststillsurvives.Andwhileitmayvaryconsumertoconsumer,atanaggregatelevel, demandforproductsandservicesvaryinlinewithchangestothe economy.Otherthanstaples,demandwilltendtofallinaneconomic downswing.

Evenwithproductsthatpeoplebuyeveryday,likebreakfastcereal, consumersmayswitchtoprivatelabelduringperiodsofausterity.Planningtooffsetthesecyclicalmovementsiskeytolong-termsuccess.

Contributionof Marketing

Maybemeasuredindifferentwaysfordifferentbrands,dependingontheirobjectives.Thismayrangefromtestandlearn,marketmixmodelling,complexUnifiedMarketingImpactAnaytics (UMIA)throughtoanalysisofsinglesourcedata.Butplacingamonetaryvalueonmarketingiskey.

Formarketingtobeeffective,itsimpactmustbeknown.Andsuccessshouldnotbedefinedaftertheevent.

38

JARGON BUSTED ADVICE

LifeTimeValue(LTV) Referstothevaluegeneratedbyatypicalcustomeroverthedurationoftherelationship.Shouldincludeallrelevant details,includingcross-sells(e.g.sellingaloantoacurrentaccount holder) and upsells (e.g.convertingastandardaccounttopremium).

Oftendifficulttodefine– narrowmeasures(bycustom-ertype)typicallydon’tmatchwithanalyticsandbroadmeasureslackmeaning.Also insomeverticalshardtoagreeonasingleLTV.EspeciallytrueinRetailBanking.

ShortandLongTerm Oftensomeconfusionaroundtheshortandlongterm,notleastbecausethedefinitionshouldchangebyvertical.Forexample,theshortterminAutoisprobablynotfarshortofthelongterminsoftdrinksandconfectionary.

Perhaps a better phrase than a“long-termeffect”isa“ sustainedeffect”.

ReturnOnInvestment Oftenusedwithadvertisingandverysimplydefinedastheincremental(oradditional)benefitfromrunningactivity dividedbyitscost.AnROIabove1isusuallyconsideredtopaybackonitsinvestmentthoughFinanceteamsarelikelytouseamorerigorousdefinitionofthecostoffundsusedforadvertising.

Itsimportanceshouldnotbeoverstated.WhilsttheROIisusefulasamechanismbywhichspendcanbeallocatedacrossmediachannels,thesuccessofacampaignshouldnotbedefinedbyitsROI.Moreimportantisthechangein like-for-likesales.

Saturation&Diminishing Returns

Theimpactofadvertisingshouldincreasewiththelevelofinvestment,allotherthingsbeingequal.But,atsomelevelofspend,increasingweightbyafurther10%willgeneratelessthan10%incrementalbenefit.Theeffectdiminishes.

Understandingwheredimin-ishingreturnskicksinisusefulfromanefficiencyperspective–addressesthequestion“shouldweincreaseweeklyweight,orstretchthecampaignoutwithmoreweeksofactivity”?

PriceElasticity Describeshowresponsive consumersaretoprice changes.Typically,brands trytomakeconsumers unresponsivetopriceincreases(maintainorgrowprofits) butresponsivetopricecuts(gainshare).

A really key KPI and one that canbeassessedusingdifferentmethodologies.Wherepricechangesarerareorhavenottakenplaceforsometime,conjointanalysiscanprovide ausefulguide.

ValuePerception Price elasticity is key but can bedifficulttodefineforaretailerwherethousandsorhundredsofthousandsofSKUsmaybeonsaleoveraperiodofmonths.Sopriceorvalueperception,typicallyusingdatafromabrandtrackerbecomesanimportantKPI.

Oftenperceptionismore importantthanrealityand issomethingthatcanbe reinforcedbyconsistent advertising.

39

GainTheoryisaglobalMarketingEffectivenessconsultancythathelpsmarketingandinsightprofessionalshavetheconfidencetomakefaster,smarterbusinessdecisions.Itbringstogetherdata,technologyandadvancedanalyticssolutionsdeliveredwithahightouchconsultancyapproach.

AsanindependentpracticewithinWPP,GainTheoryispassionateaboutmakingameaningfuldifferencetobusinessperformance–toimprovemarketingefficiency,growmarketshareanddrivebaselineprofitsandsharepricegrowth.

Theglobalteamconsistsofmorethan200consultants,datascientists,modellers,analystsandmartechspecialistsoperatingfromthreecoreregionalhubs–NewYork,London,Singapore –andserving113marketsworldwide.

ABOUT GAIN THEORY

40

JONWEBB

JonisaManagingPartneratGainTheoryandhasmorethan25years’experienceintheMarketingEffectivenessfieldbothclient-sideandasaconsultant.

Inhisclient-sideroleatNationalSavings,hisremitasChiefEconomistsawhimplayapivotalroleinbringingtogetherthevariousdataandanalyticsfunctionstoensurethattherewasaconsistentmeasureofsuccessthatwassocialisedacrossthebusiness.

AtGainTheory,Jonhelpsclientsunderstandhowtooptimisethevalueofmarketinginvestmentsbyleveragingmarket-leadingtacticsdevisedthroughintelligentdata,analytics,insightandconsultancy.Hisworkhashelpedleadingbrandsimprovenewlaunchforecasting,optimizethemixbetweenpaid,ownedandearnedmediaaswellasimprovingcoursecorrectionin-campaign.

Asanaccomplishedauthorandspeaker,Jonisanadvocateforthepropertreatment ofclients’marketingspend,seeingitasaninvestmentratherthanacostandhas publishedanumberofpapershighlightingthedemonstrableimpactofadvertisingonshareprice,theultimateKPIfortheC-Suite.

Jonholdsabachelor’sdegreefromStaffordshireUniversityandanMAfromthe UniversityofEastAnglia.

Managing PartnerGain Theory

THE AUTHOR

41

ABOUT EFFWORKS

TheIPA’snewMarketingEffectivenessinitiativeseekstocreateaglobalindustrymovement,topromoteaMarketingEffectivenesscultureinclientandagencyorganisations,andimproveourday-to-dayworkingpracticesinthreekeyareas:

Marketing MarketingDevelopingthecaseformarketingandbrandinvestment intheshort,mediumandlongterm,andpromotingthe benefitstointernalandexternalstakeholders.

Managing MarketingProvidingawarenessandunderstandingofhowmarketingworks,howtowritethebestbrief,developthebestprocessforplanningandexecutingmarketingprogrammes,andmotivatemarketingandagencyteams.

Monitoring MarketingDeliveringthebestmodels,andguidanceontoolsand techniques,toplan,monitor,directandmeasuretheimpact ofmarketingactivity,usingholisticapproachestoreturnoninvestment.

1

2

3

42

TALK TO US

EFFWORKS

For more information contact

Janet Hull OBEjanet@ipa.co.uk

effworks.co.uk

GAIN THEORY

For more information contact Jon Webbjon.webb@gaintheory.com gaintheory.com

43

ABOUT THIS WHITE PAPER

If marketing is the engine of business growth, the boiler room of decision-making requires a ‘best-in-class’ effectiveness strategy.

ThisWhitePaperhasbeencreatedtogeneratemomentumaroundtheMarketingEffectivenessstrategyconversation.It’sdesignedtohelporganisationsfocusonwhatmattersandtosuggeststrategiesthatwillensureMarketingEffectivenessbecomesanestablishedpartofhowtheydobusiness.