Ian Gibbs, founder of Data Stories Consulting and data expert for the Data & Marketing Association (DMA UK), reveals why many current marketing measurement models are inadequate and what businesses must do to fix it.
The advertising and marketing industries’ have become less effective – a lack of focused and meaningful measurement metrics are central to the problem. If all you are measuring are ‘vanity metrics’ then that’s what your marketing efforts are always destined to be: mere vanity projects that have no real-world impact on your brand or your business.
If we don’t have true visibility on marketing campaign effectiveness, then the logical conclusion can only be that we’re simply flying blind with our marketing spend, without any real clue of what is working and what isn’t.
This leaves the impact of marketing to something akin to a game of roulette with no real scientific basis on which to assess the drivers and inhibitors of campaign success.
Now in its second year, the DMA’s Intelligent Marketing Databank contains half a decade’s worth of effectiveness data, covering over 1,000 campaigns from a range of sectors and media channels. Crucially, the databank is designed to answer two fundamental questions: A) How successful are marketers’ efforts at generating campaign impact? B) How successful are marketers at measuring the effectiveness of their marketing efforts?
The industry needs to get to grips with two fundamental challenges posed by both questions, namely:
Marketers are still distorting their measurement plans by placing an over-reliance on campaign delivery metrics (like reach and impressions) and vanity metrics (like clicks and open rates) in post-campaign evaluation. Rather than true measures of impact relating to response, brand and business effects. 41% of the measures being used by marketers relate to campaign delivery metrics.
Marketing effectiveness is on the decline. After an initial effectiveness boost in the early pandemic phase of 2020, the number of effects generated per campaign declined by 23% in 2021. This picture is true even when less meaningful campaign delivery metrics have been excluded from the analysis – i.e. when focusing on measures of short-term response, brand building, or overall business effectiveness.
The impact of poor campaign measurement
While there are various explanations for the decline in effectiveness observed in 2021, a handful of overriding drivers can be identified:
While the number of brand effects per campaign (e.g. brand awareness or brand consideration) has increased marginally year-on-year, this has been outweighed by a sharp decline in response effectiveness - i.e. the ability of brands to drive short-term sales, acquisitions, sign-ups and the various types of metrics usually associated with “performance” marketing. Response effectiveness actually improved in 2020 as advertisers did more with less and did what they could to sustain their businesses through the challenges of the early pandemic phase. A year later, however, and it has not been possible to sustain this type of performance in the short term.
Pre-pandemic 44% of campaigns ran in a short-term time frame (i.e. up to three months in duration). This shot up to 53% in 2020 as businesses focused on short-term survival and stayed this way in 2021. Short-term campaigns accumulate fewer effects than their medium or long-term counterparts and, without a rebalancing to longer-term activity, overall effectiveness has been on the wane in 2021.
In 2021, the 45% of campaigns that a had a pure customer acquisition objective was a record low in the five years’ worth of effectiveness data in the databank. While customer retention is a vital tool in the marketing mix, a balanced approach to retention and acquisition is key to long-term business growth, with acquisition campaigns overall recording more effects than retention-only campaigns.
The final driver of effectiveness decline is a harder one to prove but is a debate worth having. As an industry, if we’re not getting measurement right then are we optimising future campaigns as effectively as we could be? In the spirit of test and learn, campaign evaluation should not just be a box-ticking exercise.
Alongside standard media planning inputs, performance marketing targets, and, frankly, the unquantifiable experience of marketers, campaign evaluation should be a necessary input into future campaign plans rather than just a simple justification of past spend. If we believe in the mantra that “the more you measure, the more you grow,” poor campaign measurement can only have a long-term negative impact on overall marketing effectiveness.
Universal language of business metrics
Currently accounting for 41% of all effectiveness measures used, marketers need to steer away from using simple campaign delivery metrics and vanity metrics when evaluating campaign success. Some of these metrics are useful in the campaign planning phase and are sometimes useful when optimising between different pieces of digital creative. However, as true measures of campaign success they have little meaning.
Instead, marketers must evaluate campaigns according to stated campaign objectives (which may sound obvious, but for many it is easier said than done). Response objectives (such as sales, sign-ups, acquisitions and leads) currently account for 36% of all measures identified in the databank. Brand objectives (such as awareness, consideration and purchase intent) make up 17% of measures, and business measures (such as profit growth, shareholder value and market share) 6% of measures. In the future, 100% of measures should be focused on these three core groups of metrics.
Most notably, the number of business metrics reported in 2021 has declined. Business metrics transcend the day-to-day language of the marketing team. They speak the language of the boardroom and bridge the gap between CMO and CEO. At a time when consumer budgets are being squeezed, eliciting campaign response is harder to come by.
Marketing budgets are under more pressure than ever, so the language of business metrics is going to be vital for marketers to get to grips with if they are to unlock more budget.
You are what you measure, so make sure you are measuring for business success, not vanity.
