While marketing effectiveness might be rising up the business agenda, knowing how to measure and maximise ROI on spend is still a challenge.
In the fourth episode in this series on marketing effectiveness, created in partnership with Thinkbox, we speak to marketers at brands including Barclaycard, Hiscox and Direct Line, as well as experts in the field from Matthew Chappell at Gain Theory, Mark Ritson and Peter Field on measurement, attribution and long- versus short-term effects.
Diageo’s Andrew Geoghegan believes that when it comes to measurement, there is no “right or wrong answer, only opportunities to make better future decisions”. Yet that doesn’t stop there being myriad of different methods to calculate marketing effectiveness.
That is in part because attribution remains difficult. Matthew Chappell, a partner at Gain Theory, admits that while last-click attribution is the most commonly used, it is also widely criticised and sometimes ridiculed because of its simplicity.
Yet it is that very simplicity that makes it attractive to marketers. “It’s flawed and it’s criticised and yet it’s still in use. One of the reasons is due to its simplicity and ease to understand. There’s so much complexity [in marketing] that marketers tend to rely on the stuff that’s easy to understand rather than the stuff that might be harder.”
There is also a risk with last-click attribution that it focuses on short-term responses. Marketing Week columnist Mark Ritson uses the analogy of “plucking all the fruit from the tree but not watering the plant” to show the risks associated with ignoring upper funnel metrics such as awareness and focusing instead on lower funnel metrics.
“This leads to people looking at very small incremental but powerful returns and missing the bigger picture,” he adds.
That bigger picture is the long-term impact of marketing spend. To ensure it is accounting for that, Direct Line has joined up its econometrics work with its brand metrics to prove the long-term effect of brand spend.
“When you are constantly on a short-term ROI treadmill, you will look at marketing as a cost,” explains Direct Line’s Ann Constantine. “Whereas we’ve really managed to embed [the longer term piece] in the business.”
Going forward, Direct Line wants to be able to be much more responsive in its marketing by doing more frequent econometrics that enable it to “look backwards to look forwards much faster”. Whereas at Hiscox, it is about producing a regular marketing dashboard that shows how investment is performing versus the previous year and budgets, as well as regular updates on campaigns.
“[This means] you get the discussion about short-term and long-term metrics and it also gives me the opportunity to engage with people on a weekly or monthly basis,” says Hiscox’s global brand director Annabel Venner.
To find out more about how marketers are measuring effectiveness, the challenges and how to avoid “the short-term trap”, watch the video.
For more insights into the outsider’s view of marketing effectiveness watch the video above. And head here to watch the other videos in the series.
Ebiquity and Gain Theory’s report on making the business case for advertising can be downloaded here.