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How To Boost Marketing Effectiveness

Forbes Agency Council

Venkata Bhonagiri, Sr. Partner, Group Director at Mindshare, is a seasoned media-analytics leader focused on driving growth for his clients.

Marketing effectiveness is the ability of a company's marketing activities to achieve its business goals, drive revenue growth and improve overall brand equity. It involves tracking and evaluating the impact of marketing campaigns on customer behavior, including their purchase decisions and stickiness. Proving the impact of marketing investments is paramount not just to weather an economic slowdown but also to build resilient brands.

The question is, how can brands boost their marketing effectiveness?

Measuring Marketing Effectiveness

Measuring the effectiveness of your marketing involves using a range of quantitative and qualitative methods. Here are a few typical metrics:

• Return on investment: This is a financial metric that measures the revenue generated by a marketing campaign relative to the cost of the campaign. This metric is an essential way to measure the effectiveness of marketing campaigns and ensure that marketing investments generate a positive return.

• Customer acquisition cost: CAC measures the cost of acquiring a new customer through media and marketing efforts. This represents how efficient marketing efforts are in driving business outcomes and is an important metric to optimize marketing investments.

• Lifetime value: LTV represents the total revenue and/or value a customer will bring to a business over their lifetime. This metric is important to measure the effectiveness of marketing campaigns in terms of generating long-term revenue growth and building customer loyalty. Oftentimes, CAC and LTV are used together as a ratio. For example, a 3-to-1 ratio between LTV and CAC means the brand should make three times what it would spend on acquiring customers.

While I see brands using a whole host of metrics, the true questions to focus on are: How are these metrics connected to the end goal, and why do we track these metrics? I've noticed that most successful brands (on the level of Nike and Apple) focus on aligning metrics with overall business goals. They track numerous metrics, yet their abilities to connect the end goals for marketing and evaluate their strategies by measuring their own specific ideas of success—rather than focusing on the typical metrics—are what typically distinguish them from the rest.

Strategies For Improving Marketing Effectiveness

WARC identifies four key areas to deliver marketing effectiveness: aligning marketing metrics with overall business objectives, seamless data and analytics, structuring to deliver growth and effectiveness, and getting the right skill sets. After working on several accounts in the agency world for over a decade now, my observations and findings on strategic approaches to improve marketing effectiveness are similar, yet these two areas offer incremental value and are worth mentioning.

Implementing An Audience-First Strategy

You can improve marketing effectiveness by leveraging audience insights, associated metrics and learnings. Everything starts with understanding your current customer and the prospect growth universe. However, with massive shifts in what data is at advertisers' discretion, data restrictions, and regulations on privacy and compliance that the industry has never seen before, the journey to understand customers has become complex. This is where first-party data plays a pivotal role in understanding the customer and their behaviors. Brands that dovetail efforts to align their marketing strategy with a deeper understanding of their current customers and then personalize activation can deliver a higher ROI on their marketing spend and lift sales. According to McKinsey & Company, "companies that grow faster drive 40 percent more of their revenue from personalization than their slower-growing counterparts."

Creating A Culture Of Testing And Experimentation

Before optimizing campaigns to drive marketing effectiveness, consider establishing an overarching unified decision-making engine to inform optimizations at scale. This will involve leveraging top-down approaches such as econometric modeling that could be built to measure both short- and long-term marketing effectiveness, as well as incrementality testing through controlled experiments.

A/B tests and holdout experiments use the controlled experiment framework, but they measure different things. Make sure you identify a role for each of these approaches and use them, as no one approach or metric can tell the full story. Triangulation is the best way to connect the dots and get the closest version of the truth. This simply means validating results from multiple approaches or methods.

Investing in a culture of testing and experimentation is the foundation for a robust feedback loop. As Les Binet said recently: "Attribution – quickly and cheaply – will give you an answer that is precise and wrong. Econometrics – slowly, laboriously and expensively – will give you an answer that is right."

Conclusion

Measuring marketing effectiveness is critical for any organization that wants to drive revenue growth and build a strong brand image. By using a range of quantitative and qualitative methods to measure marketing effectiveness, you can optimize your marketing strategies and increase customer engagement. Implementing an audience-first strategy while creating a culture of testing and optimizing campaigns can help you improve marketing effectiveness and drive long-term revenue growth.


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