But accurate marketing effectiveness can be difficult to pull off – and few companies or even agencies get it right. From the limitations of Google’s GA 360 through to the frustrations with mathematically inaccurate econometric models and fundamentally flawed rules-based approaches to attribution, the retail industry has suffered a lack of best practice marketing effectiveness for some time. So, we thought it would be helpful to look at some of the ways in which brands are approaching it, so that you can better understand the best option for you.
Econometrics
Econometrics will provide you with the insight to better understand the levers that can influence total business performance like; what happens to your revenue as macro-economic circumstances change, like consumer confidence dipping, or unemployment growing. It can also identify the influence of environmental factors, like changes to the weather, or the impact of competitor activity on sales. Most importantly, the impact of drivers that a business can influence are measured. For example, the impact of your marketing investment, or the effect of operational factors, such as stock levels or store opening hours. And crucially, how that impacts revenue gained or lost by those changes.
On top of that, sophisticated econometric models can understand not only the impact of individual sales drivers, but the combined effect of doing them together.
However, econometrics on its own often leaves marketing teams lacking granular insight for detailed media planning, such as keyword bids and their role in individual customer journeys. In these cases, we really need to track the detail of the marketing that each individual sees and how they respond to it – across all media – and at pace.
Data-driven attribution
As customers interact with different marketing messages and channels across their journey, you need to make an impact in the moments that matter. Positively. And in that precise moment. But in order to positively influence each customer journey, you need to understand the role each channel and touchpoint makes. Sophisticated models take in every click and impression, including those previously missed, for example social impressions and ATL or offline events. Something that will become even more important when Google Chrome phases out third-party cookies.
Data-driven attribution illuminates and identifies the entire customer journey - allowing brands to identify and assign value to marketing touchpoints and brand interactions, replacing guesswork with clarity. So, you know which channels and campaigns work, and how to allocate your marketing spend to enhance the customer experience and positively affect the sales outcome.
By tracking all the channel touchpoints at an individual-level you will be able to measure the full effect of a brand’s marketing investments.
A combination of the two?
Over the past few years, we’ve seen forward-thinking brands integrate both econometrics, and attribution into their strategy. This powerful combination provides retailers brands with the most accurate means of measuring marketing effectiveness. It reveals the whole picture across non-digital and non-direct activity, like TV and Radio, and individual customer journeys to produce powerful all media, all touchpoint and all sale measurement.
Another key benefit of combining both approaches is to use each model to feed the other. For example, the econometrics model will have a better understanding of ATL (e.g. TV) advertising. This can be fed into the attribution results, and the attribution baseline can be appropriately split to reflect ATL. The attribution model, which more accurately understands the effect of PPC or CRM campaigns, can then be fed into the econometric model to improve its calibration.
Know what works
While we know a lot of retailers have had poor experiences with ineffective model builds, or bias for a particular media activity, this needn’t be the case. With the right independent data science experts and the track record to prove it, you can be confident that you are optimising results. Based in facts, not assumptions.
What’s more, with time of the essence right now, we are experts in marketing effectiveness implementation, with tried and tested processes we can start to gather and connect your data sources with agility and precision.