It’s not all doom and gloom for marketers as the Media Budgets Index reveals key opportunities for marketers willing to invest in marketing analytics tools.
In our previous blog post on the Media Budgets Index, we mentioned that many marketers are failing to use external insights and adequate measurement techniques as part of their budget decision making processes. Most marketers base their decisions on historical performance combined with their own beliefs on channel effectiveness.
We wanted to have a closer look at this topic to see just how widespread this issue is for marketers and where the opportunities exist to gain a competitive advantage.
ROI-based performance measurement
Only 1 in 5 marketers use an ROI-based measurement approach for marketing. The remaining marketers utilise performance measures, time spent on channel or campaign-specific metrics. This is the area marketers can focus on to see immediate improvement on results. Those who have already cracked the formula for ROI reporting are currently enjoying a significant advantage in measuring ongoing performance. Programmatic remains a problem child for this area with a lot of confusion and lack of transparency on performance, however, as more and more offline channels move towards digital (TV, radio, etc) we should see an aligning trend of marketers shifting towards ROI-based reporting.
Move beyond the last-click to custom media attribution modelling
Around two-thirds of executives understood the importance of measuring campaign effectiveness but a lot less have the capability to do so. Only 40% of those surveyed were using an attribution model. Within that 40% only 6% have a custom attribution model, meaning many are using inaccurate last-click or first-click models. Marketers who are measuring each touchpoint in a consumer’s path to purchase using a custom model have the opportunity to optimise activities for each stage of the customer journey. As a result, this small group have the best shot at balancing their media spend accurately to where consumers are spending their time.
“We have an integrated campaign and reach the customer at multiple touchpoints. How do I attribute to each channel within that? My concern is where do I put that additional dollar – upper, mid or lower funnel? We are trying many different things, including implementing attribution software, but we just don’t know at the moment how effective that’s going to be.” Will Lin, VP Digital Media, HomeAway US
Optimising on the fly
Now for some good news—most marketing execs believe they have some level of flexibility when it comes to optimising their campaign budget. Nearly half stated they were ‘quite agile’ (48%), while a little under a fifth claimed to be ‘very agile’ (18%). This means there should be no excuses for marketers and agencies to utilise live campaign performance data and optimise campaign spend on the fly. The era of waiting for the PPT deck with results to be delivered 4 weeks after the campaign has ended is well and truly finished!
Test and Learn
Whilst most organisations have some form of test and learn capability, many don’t have a formal budget structure to allow them to test and learn regardless of channel. Globally, only a third of executives identified that an allocation had been set aside for experimentation, regardless of channel. A further quarter (28%) noted that there was no such entrenched budget partition, but if a business case could be made for it, then extra funds could be found. This result is somewhat troubling as inside many organisations a business case can take a long time and siloed channels are noted as one of the main barriers to achieving success. To achieve the best possible ROI marketers need to have budget continually available that can be shifted between channels quickly.
“While it can be tempting to jump on every new media opportunity that comes along, we must start with what best delivers our business objectives. However, there is also a risk of getting left behind, so we experiment regularly, but sensibly. Specifically, we carve out a reasonable proportion of our budget for media channel agnostic ‘test and learn’.” Mark Evans, Marketing Director, Direct Line
So with only 20% of companies worldwide utilising ROI measurement, 6% utilising custom attribution, and 33% with a test and learn budget, a company with the ability to implement one or all of these solutions, stand to gain a large competitive advantage in the market.
To read the full report, download the Media Budgets Index: Comparing Media Budget Allocation to Media Consumption from Datalicious and Econsultancy.