Think Long Term for Search Customers' ROI
Catalogers have long used matchbacks to understand the effectiveness of catalog marketing efforts. The great thing about matchbacks is they give you a window into the interaction between marketing activities. For example, if a catalog is mailed on Nov. 1, and the consumer receiving the catalog uses paid search to place an order on Nov. 15, you have a strong hunch that both catalog and search marketing played a role in generating that order.
Most marketers have bias when it comes to evaluating which marketing activity drove an order. Catalogers strongly believe the catalog is responsible for most orders. I can’t tell you how many times I’ve heard executives say, “The search would never have happened had the catalog not been mailed.” Such statements are easily verified by executing catalog mail and holdout tests across housefile segments (where orders happen all of the time without catalog marketing) and acquisition segments (where orders happen much less frequently without catalog marketing).
Email marketers also feel strongly that their marketing activities “cause searches” to happen. Once again, mail and holdout tests can validate this hypothesis. I strongly encourage email marketers to record searches in mail and holdout groups in order to understand this dynamic.
If you're a search marketer at a brand that also uses catalog and/or email marketing, you're always facing an uphill battle. Your orders — orders that you play a significant role in generating — are always being reallocated to outbound marketing channels.
Some businesses use fractional allocation techniques. If the techniques are based in sound science (i.e., multivariate testing), fractional allocation can be a good thing for channels like search.
I’ve always tried to stay away from arguments about allocating orders because, quite honestly, not a single person reading this article is in the mind of customers when they make unique and sometimes chaotic choices that lead to purchases. No one really knows what customers were thinking, so allocation strategies are just guesses.
What marketers do know a lot more about is what customers do after buying via search. Take the following example of two customers: The first customer purchases after receiving a catalog; the second customer purchases after receiving a catalog and clicking through a paid search ad. The future behavior of each customer is likely to be different.
Pay close attention to subsequent behavior. Many of the secrets to your multichannel business models are buried in the analysis of subsequent behavior. Research has shown that search customers frequently migrate to other channels, especially in businesses that have a retail presence. The future value of a search customer, across all channels, can be enough to support a more significant investment in search.
So if you're a search marketer stuck at a brand that loves to allocate orders to catalog or email marketing, fight back. Look at what customers who “use” your channel do in the future, and allocate future value back to your channel. This will allow you to more accurately measure return on investment, and likely result in an increase to your search budget.