Strong Measurement Practices Are Key for Maximizing Marketing ROI
While it’s standard practice for marketers to measure the effectiveness of their efforts, there’s a myriad of approaches they can take to do so — and some are vastly more informative than others. For example, a common pitfall for marketers is trying to gauge the success of their endeavors based solely on overall brand revenue once a campaign has concluded. Unfortunately, this approach reveals little as to which marketing activities contributed to that monetary result and, more importantly, which ones need to be adjusted to reach business goals.
With the pandemic increasing the pressure on marketers to work as resourcefully and strategically as possible, only looking at easily influenced variables like total revenue isn’t sufficient for achieving a brand’s objectives. Instead, marketers ought to devise and deploy contextualized key performance indicators (KPIs) across every leg of their campaigns, as these will afford them direction on a granular level. As retailers plan for the year ahead, now is a prime time for them to get their marketing practices in order so that they can drive business in the long term.
The Importance of In-Depth Measurements
As 2020 has shown, consumer preferences, from the products they’re buying to the platforms through which they’re buying them, can change rapidly. If marketers are only looking at blanket assessments, they may miss opportunities to adapt until it’s too late, thereby risking wasted spend. Instead, marketers need to maintain constant insights into the retail landscape by regularly reviewing metrics such as email marketing performance and social media reach.
Similarly, not every marketing activity is explicitly tied to a bottom-level outcome (e.g., retailers might run a Twitter campaign to increase followers and therefore brand awareness prior to a product launch), and therefore need to be assessed in more specific terms. With step-by-step objectives established across a campaign, marketers can conserve resources by improving individual segments instead of the entire campaign.
Having detailed insights into campaigns will also assist with media planning, as marketers can use the results of previous efforts — as opposed to gut feelings of what they predict to be successful — to inform future ones. This detailed understanding is important, as Nielsen research reveals that marketers who neglect to consider all sales drivers within a campaign can expect an 80 percent increased average error rate in forecasting ability for their strategies, leading to 47 percent inflated incremental outcomes and 68 percent misattributed return on investments.
The Need for Measurements at Scale
As they establish metrics, marketers need to ensure they’re doing so in terms understood by others within their organization, whether those individuals are in a different department or working in a different geography. Especially for multimarket or multicountry retailers, determining a consistent value set will be important for aligning goals and assessing performance as a unified brand.
Fostering a shared understanding functions vertically within the organization as well; when marketers are able to articulate their efforts’ value in terms accepted by leadership, it’s easier for marketers to justify their programs. With markets fluctuating so rapidly, business leaders expect quantifiable evidence of how every arm of the company is performing, with some opting to cut spending from areas without clear returns. Retailers would be remiss to trim their marketing budgets though, given that Nielsen research discovered that those brands that kept advertising during previous economic recessions gained 0.5 share points compared with those that cut back on their spend.
As marketers strive to keep up with rapidly evolving retail trends, they must be agile in their measurement practices to ensure they’re working as strategically as possible. By solidifying their metrics, marketers can act more resourcefully while simultaneously optimizing ROI — driving value across the brand as a whole.
Tina Wilson is executive vice president of media analytics and marketing effectiveness for Nielsen, a global measurement and data analytics company that provides the most complete and trusted view available of consumers and markets worldwide.