We’ve often posted that being able to analyze and measure the effectiveness of a marketing program is critical. We’ve also noted that industry experts say that about half of all advertising dollars spent is wasted: the key is knowing which half (few do). So, how do you know what works?
With most marketers today understandably concerned about keeping their jobs or clients, they may be loathe to actually find proof their programs don’t work or have a negative ROI. Yet knowing how to present metrics masterfully in this climate of fear can work to great competitive advantage.
Every market researcher knows that it is not the actual study findings that count but how you present the numbers. Statistics can be interpreted in numerous ways, and research firms are sure to present theirs in a manner that at least shows there is opportunity out there for their clients. Or, at least they suggest a follow-up study to ensure they will be rehired…
There is also now the element of social media, where readily-available stats for websites, blogs and tweets are daily reminders of direction. Importantly, clients can easily access those too, so marketers are no longer the lone gatekeepers of metrics.
In fact, the new social media metrics are a world unto themselves, with new lingo such as buzz rate (see post below re ambush marketing which beautifully illustrates this. We’ll address the new social media metrics in a later post. Remember: this is a “back-to-basic” series…)
We’re also not going to address complicated econometrics and regression analyses here. Leave those for the academicians or those pesky auditors.
Then, there are clever analysis programs that come under the umbrella of the “path to purchase” where each stage of the sales-actualization process is measured independently. Good stuff for the big packaged goods guys, as many of the smaller marketers don’t have the time or tools to do this effectively.
Instead, below are some planning tools, plus analyses and metrics that anyone can use to determine whether a marketing plan is delivering anything:
- COST-PER-INCH ANALYSIS. Perhaps one of our very favorites and a standard at PR agencies, it involves the counting of total inches or minutes your product/company received in “free” publicity from press releases, feature stories, PSAs etc. sent distributed by you. That is then coverted to actual dollars (based on the media’s highest card rate) to arrive at the savings from not actually buying that media. Or, how we prefer to present it: the value added to the program. Works best if your program has no advertising component…
- TOTAL IMPRESSIONS. This is another one used often by PR agencies involving the addition of the total circulation, times the projected bonus readership (i.e. most publications have what is termed “pass-along” readership). Often marketers will call this IMPACT, using the standard equation of: REACH + FREQUENCY = IMPACT. This is one that only works with specific benchmarks (i.e. you increase your goals each year).
- COST PER STORE. We kinda like this one if we are doing multi-store or chain programs where we can look at the store traffic count (# customers) and evaluate what it cost to post the POP, stage the demos or the promotional event. etc. Dividing the cost of your marketing effort by the total store or traffic count can help determine which chains/stores deliver the best ROI.
- CPU/CPM. Standard measurement of media, the cost-per-unit or cost-per-thousand (broadcast rate) is typically measured against sales gained via that media. The goal is to show you spent mere cents or fractions thereof reaching your target audience. (the “which half of the ad dollars is wasted?” quandary…) This is traditional mass media measurement, slowing going by the wayside in the wake of social media…
- COST PER CUSTOMER. This is a common tool used by sales management, where the cost of servicing the customer via visits, phone calls, baseball tickets, etc. is pitted against sales to him/her. Then, typically strategies whether to up-sell, maintain or “divest” the customer are made. (The figure varies but most companies peg the average B2B sales call today at $500+). Sales being a component of marketing, savvy marketers need to handle this delicately with the sales managers…
- ACV. We wrote about this recently: how knowing the all-commodity volume of the market and chains you are targeting makes clear sense before making a marketing investment. Lots have been spent on only few, just like some salespeople spend way too much time trying to sell widgets in Montana…(check out the state’s ACV.) Again, the key here is ensuring your efforts are in line with the potential of the market.
- BDI/CDI. Another potential-measurement tool is the Brand Development Index vs. Category Development Index. This is a more complex matrix exercise where you plot, using sales data, the position of your product’s total category sales (all competitors, including you) in the marketplace vs. your own product’s sales (your brand). The resulting matrix illustrates whether the category is saturated or whether there is hope for your brand to grow. More complicated, and deserves its own post, but suffice it to say that marketers should know about these tools even if they never (or pray they never) get to use them.
We hope you have found this small series of five posts helpful. (Selfishly, they will be part of a book by your blogger some time…time permitting) Let us know if you would like some more of these series in the future and which topics are of special interest!