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Using the Marketing Measuring Tape


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Using the Marketing Measuring Tape

  1. 1. Using the Marketing Measuring Tape Holly Grenvicz Principal and Chief Strategist Werkshop Marketing
  2. 2. Why is measuring marketing effectiveness so important? <ul><li>“… marketing has one main question to answer: </li></ul><ul><li>‘ What’s the point?’” </li></ul><ul><li>- Ron Helgeson, Sopheon </li></ul>
  3. 3. BusinessWeek , Nov 2007
  4. 4. Why is measuring marketing effectiveness so important? <ul><li>“… a new marketing era is dawning. Media fragmentation, addressability – including TV and interactivity were accelerating a dramatic shift in consumer purchase behavior…This new landscape, pioneering marketers were embracing ‘Left Brain Marketing’ practices – the rise of analytical marketing strategies, skills and processes that are centered on audience knowledge, not media.” </li></ul><ul><li>- Eric Schmitt, EVP Allant, 2004 </li></ul>
  5. 5. The Ugly Truth <ul><li>AMR International’s research study showed that 50% of marketers formally analyze data to judge ROI. </li></ul>
  6. 6. “ Unscientific” reasons why… <ul><li>Marketing blogger, April Dunford, muses in a December 2010 entry: </li></ul><ul><li>You don’t want to spoil the creativity with “icky” numbers </li></ul><ul><li>You think it can’t be measured </li></ul><ul><li>The executive team never asked you for measurements </li></ul><ul><li>You don’t do lead generation </li></ul><ul><li>You don’t want to lose your job </li></ul>
  7. 7. Why measure? <ul><li>Our competition is smarter </li></ul><ul><li>Our budgets are smaller </li></ul><ul><li>Our time is stretched </li></ul><ul><li>Our jobs are limited </li></ul><ul><li>Our compa nies deserve it </li></ul>
  8. 8. What does it look like? <ul><li>What Sopheon did… </li></ul><ul><li>Set metrics: click throughs, webinar sign ups, appointments set, landing page hits </li></ul><ul><li>Four years later: Tracking leads through the life cycle: source, region, volume per region, speed of aging, movement through cycle </li></ul>
  9. 9. Measurement Basics <ul><li>Before it gets complicated, decide WHAT you are going to measure and design a dashboard </li></ul><ul><li>Rely on marketing automation if you can, like a CRM if you can’t track what data you need diligently </li></ul>
  10. 10. What can you measure? <ul><li>ROI= (Gain from investment – Cost of investment) </li></ul><ul><li>Cost of investment </li></ul><ul><ul><li>Multiply this number by 100 to get your ROI percentage </li></ul></ul><ul><ul><li>The ratio of money gained or lost on an investment relative to what was invested </li></ul></ul>
  11. 11. Identifying Key Performance Indicators <ul><li>Customer Analysis </li></ul><ul><li>Promotional campaign analysis </li></ul><ul><li>Marketing budget versus spending </li></ul><ul><li>Marketing programs by region and territory </li></ul><ul><li>Web trends and click-stream analysis </li></ul><ul><li>Market competitive analysis </li></ul><ul><li>Product mix and cross-buying analysis </li></ul><ul><li>Leads and ROI by marketing channels </li></ul><ul><li>Sales and market share trends </li></ul><ul><li>Promotions versus sales analysis </li></ul>
  12. 12. Example of a Marketing Dashboard
  13. 13. How to Measure 101:
  14. 14. How to Measure: Mass Media Radio, Print, TV & Outdoor <ul><li>The effectiveness of mass media advertising used for “branding” has always been problematic for marketers to measure. </li></ul>
  15. 15. Where We’re Spending $8.77 $5.99 $6.98 $5.50 $4.54 $2.26 COMPARISON OF AD MEDIA COSTS (CPM) 7 Source: Media Dynamics, Intermedia Dimensions (2008)
  16. 16. Measuring Mass Marketing <ul><li>There are some measurable aspects of mass marketing that are tried and true </li></ul><ul><li>Use direct calls to action and traceability </li></ul><ul><ul><li>1-800 numbers </li></ul></ul><ul><ul><li>Unique URLs/ landing pages </li></ul></ul><ul><ul><li>Unique search terms </li></ul></ul><ul><ul><li>Promotional codes or “track backs” </li></ul></ul>
  17. 17. Measuring TV <ul><li>Pros: Reaches more households than any other mass medium; networks can deliver weekly viewer ratings </li></ul><ul><li>Cons: DVR/ TiVO are making the FFWD button a problem; One of the most expensive mediums at $8-$12 CPM not including production </li></ul><ul><li>Best practices: Taking messages visual – use written text in ads (like outdoor); preserve branding dollars for another medium; stay promotional; direct response </li></ul>
  18. 18. Measuring: TV, Example <ul><li>1. Add up all costs associated with advertising. These costs can include development, retainer fees, cost of media, equipment, air time, actors, telemarketing, shipping and handling, testimonials, etc. </li></ul><ul><li>2. Review the CPO (Cost Per Order) model. This model looks at the direct profits that are associated with each product sold and the television media costs per order. </li></ul><ul><li>3. Subtract the expenses from the revenue of each item sold. This is your gross profit for that product. Let's say you have a product that sells for $150 and costs $50. Your gross profit is $100. </li></ul>
  19. 19. Measuring: TV, Example cont. <ul><li>4. Determine media cost per order. Let's say you purchase media time for $10,000 and receive 1000 orders. The media cost per order is $10. </li></ul><ul><li>5. Subtract the media cost from the profit made. In this example the answer is $90 ($100 - $10). </li></ul><ul><li>6. Divide the profit by the cost. In our example this is $90 / $10 or 9. Multiply this by 100 for the ROI. The ROI on this is 900 percent. </li></ul>
  20. 20. Measuring: Radio <ul><li>Pros: Inexpensive at an average of $4 CPM; can target loyal listeners; most buys come with “value adds”; B2C companies do pretty well </li></ul><ul><li>Cons: There is no way to know who is actually listening to your message; B2B marketers should shy away from this medium </li></ul><ul><li>Best practices: Using contests to drive direct response; taking full advantage of value-added items like DJ reads and promos and online links </li></ul>
  21. 21. Measuring: Radio, Example <ul><li>Cost of Radio Advertising: $ 300 Number of Items Sold As a Result: 50 Retail Price of Individual Item: $ 20 Profit on Individual Item: $ 6 Gross Income on Items Sold: $1000 Gross Profit on Items Sold: $ 300 In this example, you have spent $300 to make $300. Your ROI is 100%. </li></ul>
  22. 22. Measuring: Print <ul><li>Pros: A great way to target a niche market; cost of print is reasonable at $5-$25 CPM </li></ul><ul><li>Cons: Once the ad hits, there is no turning back; can be long lead with repetition needed </li></ul><ul><li>Best practices: Incorporate a coupon code or QR code that allows you to track; make sure your ad is on-brand and professionally designed </li></ul>
  23. 23. Measuring: Print, Example <ul><li>Cost of Newspaper Advertising: $150 Number of Items Sold As a Result: 60 Retail Price of Individual Item: $ 10 Profit on Individual Item: $ 3 Gross Income on Items Sold: $600 (60 x $10) Gross Profit on Items Sold: $180 (60 x $3) In this example, you have spent $150 to make $180. Your ROI is 120%. </li></ul>
  24. 24. Measuring Outdoor <ul><li>Types: Billboards, Street furniture, Transit, Alternative </li></ul><ul><li>Terms: </li></ul><ul><ul><li>OTS = Opportunity to see </li></ul></ul><ul><ul><li>EOI = Eyes on Impression </li></ul></ul><ul><ul><li>DEC = Daily Effective Circulation </li></ul></ul><ul><li>Pros: The least expensive of the mass mediums at $2.26 CPM </li></ul><ul><li>Cons: No technology currently exists to adequately measure EOI or OTS and neither metric measures how likely the person is to recall the message </li></ul><ul><li>Best practices: Less words = better; Unique URLs </li></ul>
  25. 25. Measuring: Direct Mail <ul><li>Pros: The Direct Marketing Association claims that direct mail earns $10 for every $1 invested </li></ul><ul><li>Cons: Expensive, and costs are rising due to USPS rate hikes; lots of room for error; not all DM campaigns can be compared apples to apples; not viewed as “green” or eco-friendly </li></ul><ul><li>Best practices: Test DM with a small group before you send to a large group to gauge early response rates; soft offers (free gift) tend to work better than hard offers (free trials, free consultations); use segmentation for higher response; watch the source of your lists; collect bounce responses; use strategic creative </li></ul>
  26. 26. Measuring: Direct Mail, Example <ul><li>Measure CPP (Cost per piece) or CPL (Cost per lead) and compare with sales numbers the resulted from the DM. </li></ul><ul><li>A “good” response ranges from 1-3% </li></ul><ul><li>A “good” conversion rate ranges from 30-50% of responders </li></ul>
  27. 27. Measuring: Direct Mail, Example <ul><li>ROI = </li></ul><ul><li>((# Mailed pieces x Response rate x Conversion rate x Profit per customer) - Campaign Cost) </li></ul><ul><li>Campaign Cost </li></ul><ul><li>Example: </li></ul><ul><ul><li># Mailed pieces – 5500 </li></ul></ul><ul><ul><li>Campaign Cost – $13,750 </li></ul></ul><ul><ul><li>RR – 2% (110) </li></ul></ul><ul><ul><li>CR – 30% (33 people) </li></ul></ul><ul><ul><li>Total sales - $15,000 </li></ul></ul><ul><ul><li>Profit per customer – $454.55 ($15k/33) </li></ul></ul><ul><ul><li>((5500 x .02 x .3 x $454.55) - $13,750) / $13,750 = .0909 </li></ul></ul><ul><ul><ul><li>((15,000) – 13,750)/ 13,750 = .0909 </li></ul></ul></ul><ul><ul><ul><li>ROI percentage = .0909 x 100 = 9.09% </li></ul></ul></ul><ul><li> </li></ul>
  28. 28. Measuring: Social Marketing <ul><li>Marketing Management : Winter 2010 </li></ul><ul><li>Measuring ROI on social networking is the fastest growing concern in marketing </li></ul><ul><li>The “greatest question since the meaning of life” </li></ul>
  29. 29. Measuring: Social Marketing <ul><li>In the next year, marketers are expected to almost double their SM spending from 6% to 10% and within 5 years, 15% </li></ul><ul><li>Product marketers are more apt to try to measure SM ROI than service marketers </li></ul>
  30. 30. Measuring: Social Marketing <ul><li>“ While a lot has been written about ROI and measuring social media effects, there is little known about how to really measure social media ROI.” </li></ul><ul><li>80% Marketers do not use data-driven marketing </li></ul><ul><li>43% Do not use metrics to guide future marketing campaigns </li></ul><ul><li>69% Use “gut feel” to decide next moves </li></ul>
  31. 31. Measuring: Social Marketing <ul><li>We must define what SM costs – since it’s “free” right? </li></ul><ul><li>We must not get too comfortable with how we measure it since the future of SM is uncertain and changing faster than traditional media </li></ul>
  32. 32. Measuring: Social Marketing, Example <ul><li>Determine costs </li></ul><ul><li>Sketch rationale of user </li></ul><ul><ul><ul><li>Awareness </li></ul></ul></ul><ul><ul><ul><li>Interest in taking advantage </li></ul></ul></ul><ul><ul><ul><li>Considered taking advantage </li></ul></ul></ul><ul><ul><ul><li>Took advantage </li></ul></ul></ul><ul><ul><ul><li>Profits from D </li></ul></ul></ul><ul><ul><ul><li>Lifetime value of customers in D </li></ul></ul></ul>
  33. 33. Measuring: Web <ul><li>Pros: Websites are extremely measurable. Web analytics can be free and tell you how many page views, downloads and visits (among many other things) your site has had. </li></ul><ul><li>Cons: Web analytics do not always tell the truth about your site’s success.  “Context, context, context!” </li></ul><ul><li>Best practices: Learn from your site over time (benchmarks for others may not work best for you); Set goals for your site and measure the site based on goal achievement. </li></ul>
  34. 34. Measuring: Web, Example
  35. 35. A Note About Google Analytics <ul><li>Pros: Free, a good starting place, mapping, goal tracking </li></ul><ul><li>Cons: Only shows yesterday’s data (not real time); can be confusing to read; Google data ownership policies; if your business is web-based another analytics provider may be a better fit for you </li></ul><ul><li>Alternatives: 10 Promising Real Time Alternatives to Google Analytics </li></ul>
  36. 36. Measuring: Web <ul><li>Back to the software company – Sopheon: </li></ul><ul><li>“ One of the things we look at when we do Web analytics is to look at organic, unpaid traffic, versus paid traffic from purchased keywords,” said Tom Pick, an online marketing executive at KC Associates. “We then split this traffic into branded versus nonbranded searches. Nonbranded searches are due totally to SEO; but branded searches, when they’re looking specifically for your company, have nothing to do with SEO. They have to do with everything else you’re doing, like talks, PR and advertising. When companies slow down those activities, their branded search levels go down.” </li></ul>
  37. 37. Measuring: Online Ads <ul><li>Pros: Testing variations in copy and creative can tell you what your customers are most interested in; results come quickly; can be cost effective </li></ul><ul><li>Cons: Impressions (the number of times the ad was delivered) can’t tell who might have read or ignored your ad, CTR may not be a good indication if the click was an accident; not right for every business; may need a vendor to manage PPC activity </li></ul><ul><li>Best Practices: Consider a short-term test, if you don’t see results after 3 months reconsider moving forward; Link to specific pages with the product you mention in your ad, track analytics of this page and sales conversions </li></ul>
  38. 38. Measuring: Email Marketing <ul><li>Pros: Offers real-time information on your audience (results in 48-72 hours); Identify recipients who are most active; can be cost effective $0.01/email or based on volume (after initial set-up costs) </li></ul><ul><li>Cons: Surprisingly some companies do not utilize email analytics reporting at all for mass mailing and others underutilize the information </li></ul><ul><li>Best Practices: Build a list over time that exceeds legal requirements (quality over quantity); Learn what recipients open, click on and respond to and build future mailings around this information; Reference Google Analytics to see what clicks lead to a sale </li></ul>
  39. 39. Measuring: PR <ul><li>Pros: By tying a communications program metrics to the company’s key performance indicators, the value of PR campaigns can be shown by demonstrating trends of how the company is perceived </li></ul><ul><li>Cons: Some traditional PR measuring tools are quantitative (attendance at events, number of clips) not qualitative (don’t measure tone of clip) and may give an inaccurate depiction of value (advertising equivalence values and impressions) </li></ul><ul><li>Best Practices: Utilize surveys to measure reputation and relationship metrics before, during and after a PR campaign; Factor in 3-7% of your budget for measurement (surveys, focus groups, media analysis, etc.); Consider short-term (meeting goals) and long-term value (building goodwill) </li></ul>
  40. 40. How to Measure: A Great Summary in Steps <ul><li>Set a goal.  </li></ul><ul><li>Create a multiplatform marketing plan to achieve that goal.  </li></ul><ul><li>Identify all the touch points at your disposal to connect with consumers.  </li></ul><ul><li>Choose 5 or 6 measurement tools that allow you to confirm whether or not you reached your goal.  </li></ul><ul><li>Track these tools over time.  </li></ul><ul><li>Analyze the data. </li></ul><ul><li>Make adjustments to your new plan based on previous results.  </li></ul><ul><li>Repeat. </li></ul><ul><li>Mark Binkley - </li></ul>
  41. 41. Final Thoughts <ul><li>“ Don’t try to measure everything you can measure. Select metrics that connect to the business objective and then measure them consistently over time.” </li></ul><ul><li>– Ron Helgeson, Sopheon </li></ul>
  42. 42. Further Reading: Social Marketing <ul><li>Making Data Relevant: The New Metrics for Social Marketing </li></ul><ul><li> </li></ul><ul><li>HOW TO: Calculate the ROI of Your Social Media Campaign </li></ul><ul><li> </li></ul><ul><li>10 Twitter Analytics Tools to Investigate Your Marketing ROI </li></ul><ul><li> </li></ul>
  43. 43. Further Reading: Social Marketing, cont. <ul><li>3 Metrics to Prove to Your Boss That Social Media Marketing </li></ul><ul><li>is Working </li></ul><ul><li> </li></ul><ul><li>Hubspot ROI Case Studies for online marketing </li></ul><ul><li> </li></ul><ul><li>Twitter is releasing their own analytics tool soon in testing now </li></ul><ul><li> Raven, Simplify360 by InRev ( ), hubspot </li></ul>
  44. 44. Businesses Who Measure <ul><li>Competing on Analytics: How Pharmaceutical Companies Use Analytics to Achieve High Performance </li></ul><ul><ul><li> </li></ul></ul><ul><li>Gazelle: Metrics-driven business in under six months </li></ul><ul><ul><li> </li></ul></ul>
  45. 45. Discussion… <ul><li>Thank you for coming! </li></ul>
  46. 46. Works Cited: <ul><li>Slide 2, 8, 36, 41 – Sopheon Case </li></ul><ul><li>  </li></ul><ul><li>Slide 4 – Allant Whitepaper </li></ul><ul><li>  </li></ul><ul><li>Slide 5 – AMR statistic </li></ul>
  47. 47. Works Cited, cont. <ul><li>Slide 6 – “Marketing ROI: 5 Reasons You Aren’t Measuring it” </li></ul><ul><li> </li></ul><ul><li>  </li></ul><ul><li>Slide 12 – Dashboard </li></ul><ul><li>Unica dashboard from Google Images </li></ul><ul><li>  </li></ul><ul><li>Slide 15, 24 – Bar chart and Outdoor </li></ul><ul><li>  </li></ul><ul><li>Slide 19 – TV How to Measure Return on Investment for Television Advertising | </li></ul><ul><li>  </li></ul>
  48. 48. Works Cited, cont. <ul><li>Slide 21, 23 – Radio and Print ROI Examples </li></ul><ul><li>Slide 22 - Print </li></ul><ul><li>  </li></ul><ul><li>Slide 26 – Direct Mail </li></ul><ul><li> </li></ul><ul><li>Slide 28 – Social Media </li></ul><ul><li>Marketing Management : Winter 2010 </li></ul>
  49. 49. Works Cited, cont. <ul><li>Slide 33 – Web </li></ul><ul><li> </li></ul><ul><li>Slide 37 – Email marketing </li></ul><ul><li> </li></ul><ul><li>  </li></ul><ul><li>Slide 39- PR </li></ul><ul><li> </li></ul><ul><li>Measurement Resources by practice area and industry: </li></ul>