Measuring the impact of marketing and advertising on revenue is the $1M question. In the era of digital marketing, when customers and prospects travel a multi-device, multi-channel journey to your doorstep, the answer has gotten even more important.
Imagine a world where you had access to de-duplicated, cross-device, cross-channel, individual-level marketing performance data. How would that change your marketing? Instead of taking the 10,000 foot view, you could know exactly what’s driving revenue, and more importantly, what isn’t.
This is the world made possible by multi-touch attribution. Multi-touch attribution lets you measure the effectiveness of your paid, owned and earned marketing initiatives at granular levels—media type, campaign, creative, placement, and audience segment—based on the key performance indicators (KPIs) that matter most to your business.
As a CMO, VP or marketing director, you know this type of information is essential to remain competitive. But getting approval for an investment in a new approach can be challenging, unless you can prove the rewards will far outweigh the time, resources, and energy to make the move.
Making Your Case
When measuring marketing and media impact, many of us have spent countless hours building spreadsheets, extracting data from our ad server, CRM, marketing automation platform and other sources, adding and manipulating the information, and creating a chart or report to share up and down the ladder. All this to prove that every dollar spent on marketing is generating more revenue than the original dollar invested.
But there’s also another side to the coin. What if you were also able to reduce costs by not spending on initiatives that are not driving results? Or even better, what if you could reallocate budget to high-performing efforts to boost revenue even higher?
According to our recent research, 25% of marketing spend is wasted on ineffective digital tactics alone. (Based on a Nielsen analysis of anonymized client data covering $2.8 billion in media spend from January 1, 2018 – June 30, 2018).
Identifying and eliminating this waste is just one critical factor that will help you make the case for an advanced marketing measurement solution to your board, CEO, CFO, CRO or other executive decision-maker.
Your pitch needs to convince your CFO of the value of your investment and demonstrate how spending that money will improve the company’s marketing effectiveness, either by increasing revenue and/or reducing spend.
When preparing your business case, start with these six points:
1. Describe the need
2. List objectives
3. Present benefits of adoption
4. List risks of failure to adopt
5. Calculate costs and ROI
6. Outline implementation and timeline
The Future of Marketing Attribution
CFOs are understandably averse to the difficulty of proving the correlation between ad spend and sales. They want you to be able to prove that marketing initiatives make a contribution to revenue. Any new approach will need to show that it can surpass the current status quo. Marketing, traditionally seen as an expense, will always be under scrutiny.
One approach is to frame your investment in terms of existing revenue. Because marketing measurement is driven by data that feeds the attribution process, it creates a predictable ROI model so you can estimate your return in advance of implementation.
According to Gartner, the typical outcome of implementing marketing attribution is a 20-30% gain in media efficiency and corresponding increases in ROI. The following ROI example assumes a conservative 15% lift in conversions based on a company with $100MM in revenue.
Even so, this sample calculation shows a substantial ROI of 4900%.
Sample Attribution ROI Calculation
Everyone knows that ROI only predicts what happens if things go as hoped. As such, your board, CEO, CFO or CRO will each have their own angle on your proposal. Try to anticipate their concerns, either by putting yourself in their shoes or by asking them directly in one-on-one meetings.
Key questions to consider:
• Does this tool integrate with our existing technologies?
• Do we have the people and processes in place to support it?
• What period of onboarding/training can we expect?
• What ongoing resources (time, people, money) are required to implement?
• Does this replace or make redundant anything we already have?
• Where will this fit in our existing technology stack?
Most vendors offer documentation and case studies around the ROI that customers have demonstrated with their solution; apply those numbers to your own situation to your best ability and explain your reasoning in your business case.
Improving Strategy and Tactics
Marketing attribution is much more than just measuring clicks and opens, it’s about measuring the impact on pipeline and revenue. Instead of drowning in a sea of siloed data, you need real-time insight into the marketing tactics and messages that influence specific audiences, so you can maximize your budget and create relevant and personalized experiences that drive results.
When marketers can do this, they are able to make important, strategic investments for their companies. Change isn’t easy, but using the points outlined in this article will help you build a strong business case for investing in a marketing measurement solution.
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