Marketing effectiveness – how to make your budget go further
Companies often shy away from investing in adequate marketing control. Maren Seitz, Head of DACH at Analytic Partners, explains to us why measuring marketing efficiency should be an integral part of every strategy.
Marketing control: sales volume isn’t everything
The founder of the very first department store in the USA, entrepreneur John Wanamaker, made the observation in 1876 that: “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.” Although the methods for controlling marketing in terms of effectiveness and efficiency are more sophisticated nowadays, there is still progress to be made, even at large corporations. When measuring marketing effectiveness, businesses often limit their attention to parameters such as sales volume or market share. Sales volume may be an easy-to-measure success factor, but this variable alone isn’t enough to determine the actual marketing effectiveness – especially in the long term. Using new technologies such as a predefined KPI set, marketing strategies can be implemented more efficiently. Maren Seitz joined us for an interview to explain what that involves.
Exacerbated by Covid-19, companies are currently facing a lot of competitive pressure across all industries. When budget cuts are in the cards, marketing efficiency is a topic that frequently comes up. What mistakes should companies absolutely avoid in this situation?
Maren Seitz: The initial response is to cut back on the budget – especially with regard to brand building. The focus then quickly shifts to short-term sales and product messaging. However, that is often detrimental to the brand and thus longer-term sales. We also know from our ROI Genome database that brands which increased their media investments during the last recession overcame the crisis more successfully.
On average, they were able to increase incremental sales by 17%.
One of the biggest challenges for companies is clearly measuring the effectiveness and efficiency of marketing measures. How can that be supported by applying a predefined KPI set?
Maren Seitz: Measurements should never be “shots in the dark”, but instead be embedded in clear strategic goals. Do I want to be more efficient – or increase the sales volume at any cost? Do we want to strengthen the brand or promote a new product line? The basis of a successful strategy is to define what success actually looks like – and what KPIs should be used to ascertain it. Measurements can help here when it comes to formulating and optimizing the strategy – but you should never start off with them.
As an independent company, Analytic Partners offers marketers a comprehensive toolset for measuring and optimizing the performance of marketing and business measures. What makes this toolset unique and how can companies benefit from it in the long term?
Maren Seitz: Commercial Mix Modeling is at the heart of what we offer. It provides extensive support for data-driven marketing optimization. This core element can then be flexibly complemented with modules that, for example, integrate long-term brand effects, map CRM in the form of loyalty programs and customer segments, and optimize operations. All that comes together to form a holistic decision-making system.
Analytic Partners’ holistic technology platform integrates data collection, quick processing into complex models, and insights and recommendations through data visualization. Everything is enriched with benchmarks and thought leadership in our ROI Genome, which strengthens the models, delivers benchmarks, and makes it possible to develop future scenarios. And last but not least, we share our insights via a service model that combines analytics and consulting in one place.
Our team draws on longstanding, cross-industry experience – we don’t outsource and we develop our expertise internally.
German companies in particular are reluctant to take a comprehensive approach to the topic of marketing effectiveness. What could be the reason for that?
Maren Seitz: Measuring impact often seems complex – the technical jargon hasn’t yet been adequately translated into a universal and above all decision-relevant language. Measurements are frequently still taken care of by a team of experts and aren’t yet being made accessible enough to the rest of the company. That’s why it’s important to generate a buy-in from the outset and start with the problems and goals of all stakeholders. What decisions are on the agenda? What questions or myths need to be tested? Who will work with the results? When delivering the results, the focus should then be on answering these questions in a comprehensible language – methodological digressions should remain in the background. Another concern is often data availability. Many clients worry that there isn’t enough data, it isn’t of a high enough quality, or it will be difficult to collate.
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