Credit by Laura Starita
Marketers are under pressure to show concrete results from their marketing spend. Three techniques help quantify ROI and focus investment on top-performing channels.
Do you know which channels are delivering the best results from marketing campaigns? Marketers are under pressure to prove their impact on revenue, and focus spending on channels with the highest returns. But how to know for sure which marketing mix brings results?
“Marketers faced with budget challenges automatically gravitate to channels that offer clear, immediate metrics, and de-emphasize channels that are expensive or touch consumers earlier in the purchase funnel,” says Ewan McIntyre, Senior Director Analyst at Gartner. “A better approach would be to use the tools available to understand which channels and marketing approaches best suit their cost optimization needs.”
Consider the following three techniques for measuring marketing return on investment (ROI):
Technique 1: Reach, cost, quality assessments (RCQ)
RCQ is a high-level framework for evaluating and comparing the impact of advertising channels. Include all the channels in your company’s marketing mix —both digital and offline — and assign a score for each aspect using available data and qualitative knowledge:
Reach: how many customers would have an opportunity to see ads through an advertising medium
Cost: the cost of each touch generated by the medium
Quality: the ability to deliver targeted engagement
RCQ assessments allow marketers to estimate the relative advantages of all channels, both used and planned. But the high-level comparison can be too general for some leaders. In particular, those with high -dollar-value advertising budgets may want a more quantitative method.
Technique 2: Multitouch attribution (MTA)
Used by 56% of B2B companies and 38% of B2C companies, MTA tools analyze the number and pattern of contacts customers make through digital channels before deciding to complete (or abandon) a purchase. The results give brands a more nuanced understanding of the customer journey and which channels had the biggest impact on conversion, as compared to first-click or last-click attribution.
MTA has drawbacks, however. It only applies to digital channels, and requires large volumes of accessible data to produce insights. Identity and privacy concerns have likewise raised complaints from consumer advocates.
Technique 3: Marketing mix modeling (MMM)
MMM leverages historical data on the full mix of channels and techniques (including promotions and seasonality) to create a holistic view of marketing’s impact on revenue. A Gartner survey found that 71% of B2C companies and 65% of B2B brands use MMM to evaluate their multichannel marketing programs. Users can buy MMM software or rely on MMM service providers to provide the historic analysis and use it to predict how future tactics can drive revenue growth.
Successful users find that the costs of implementing MMM are offset by superior marketing campaigns. Yet MMM requires intensive data resources, making this technique more useful for brands with a complex marketing mix.
RCQ assessments, MTA and MMM offer three distinct approaches to evaluating the impact of marketing investments and finding the right mix to meet the goals of your brand.