Demystifying marketing effectiveness
Measuring marketing effectiveness is becoming more important, and yet more challenging at the same time. Gerry D’Angelo, VP, Global Media at P&G, and Co-chair of WFA's Media Forum, explains how to resolve this tension.
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Marketing is widely recognized as important to business success. But ever since the invention of modern marketing in the post-war era, many have craved greater accountability from the human and financial capital devoted to marketing.
Historically, there was a tendency to treat marketing as more of an art than a science, and operated at arm’s length from innovation, manufacturing, logistics and even sales. Since then, important contributions from John Philip Jones, Simon Broadbent, Les Binet, Peter Field, Byron Sharp and others have helped to bridge this gap.
They brought greater accountability to marketing by applying the rigor of academic discipline. Statistical modelling and behavioral science are now everyday tools and no doubt many of you have these academics’ books on your shelves at home, or in the office.
With the lingering effects of the COVID-19 global pandemic and predictions of recession, the debate around marketing accountability and effectiveness has never been more important.
There are multiple tools to help advertisers monitor, analyze, and maximize the effectiveness of their marketing, ranging from single source data, multi-touch attribution, controlled testing to marketing mix models. The most commonly used of these is marketing mix models, which can measure the effectiveness (volume response) or efficiency (return on investment) of marketing strategies, or even very specific tactics on driving incremental revenue.
However, a recent survey of WFA members found that two thirds did not feel that their analytics program was fit for use.
What are the challenges of measuring media effectiveness?
Setting to one side the challenges of measuring the effectiveness of the entire marketing mix, let us focus on the difficulty of measuring media (usually the largest component of the marketing budget) effectiveness. There are a number of challenges specific to media:
- Data accuracy, granularity and timeliness. For a marketing discipline that is largely numerical in nature, ensuring the accuracy of media data can be surprisingly challenging. Even if the data is accurate, getting access to data that is sufficiently granular is not always possible. Even if accurate and timely, the very act of collecting data, especially for substantive analytical tools such as marketing mix models, can be time intensive.
- Media fragmentation and harmonization of measures. Ensuring the accuracy, granularity, and timeliness of media data has been made more difficult by the fragmentation of the media landscape and the resulting difficulty in harmonizing measures. Television data, for example, is usually expressed as GRPs whilst digital data is usually expressed as impressions, often against a different target audience.
- Misattribution. With significant effort required simply to gain access to accurate, granular, timely and harmonized data, it can be very tempting to leverage direct attribution using data that is readily available from digital media tactics such as paid search. This can lead to an overstatement of the effectiveness these tactics, compared to the more indirect impact of television and outdoor.
- Capturing long as well as short-term effects of media investment. With the need to meet quarterly business targets and the availability of digitally enabled performance metrics, it can be tempting to focus only on the short-term impacts. However, analysis by UK research and advisory company Enders Analysis found that shifting to activation-orientated advertising led to an erosion of effectiveness and consumer trust.
Cost and resources intensive. Given the challenges outlined above, this in turn creates a need to invest disproportionately in data acquisition, systems, dashboards, and people at the very time when there increased scrutiny on costs.
How does P&G approach this challenge?
So how is P&G resolving these challenges to monitor, analyze, and maximize the effectiveness of their media investment? Here are seven high-level principles that have helped define our approach:
Understand how marketing drives business outcomes
P&G serves more than five billion consumers a year with everyday use products which are available in multiple retail formats. This means that marketing needs to drive our business by creating physical and mental availability.
Align media KPIs with business drivers
In order to create and maintain mental availability P&G needs to reach as many of our consumers as possible, on a continuous basis, and as effectively and efficiently as possible.
Focus on the parts of your business that matter
With an abundance of data available, it is tempting to try and monitor and analyze your total media investment. However, there will be certain, business units, brands and countries that will have an outsized impact on the business as a whole. Focus will help to make analysis manageable and meaningful.
Set benchmarks carefully
As much consideration should be given to benchmarks, as to which data to collect. Benchmarking year-on-year, quarter-on-quarter, or versus competitors or industry averages are all valid but can be misleading. Focus on benchmarks that drive the right behaviors.
Align frequency of analysis with frequency of activation
It can take significant time to collect and analyze media data. However, frequency of analysis should be driven by the frequency of decision making. Data scope should be tailored accordingly.
In large, complex organizations, high level KPIs may lack relevance for teams working at a more operational level. Ensure that KPIs can easily ladder up and down so that individual teams can see how they are contributing to the overall success of the business.
Automate where possible
Especially at a time of increased scrutiny on costs, invest in automation of data collection and dashboarding. This allows teams to focus on analysis, generating insights and making decisions.
Finally, it should be noted that measuring media effectiveness is not possible without one key enabler, third-party, accredited measurement. Not only does this form the basis for transacting but creates a level playing field. This was taken for granted in a pre-digital age, but in our increasingly complex ecosystem, all advertisers need to continue to insist on it.