This article originates from Alwin’s talk at the Revenue Marketing Summit in Las Vegas.
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I'm Alwin Haensel, Managing Director & Analytics Lead at Haensel AMS, and I’ve navigated through the intricacies of marketing measurement since founding our boutique firm in 2014.
Over the years, we’ve expanded from Germany to the US, facing the unforeseen challenges of a global pandemic while continuing to grow and adapt. Through this experience, I’ve gained deep insights into the essential elements of effective marketing measurement, from multi-touch attribution to incrementality tests and first-party data systems.
In this article, I'll delve into the strategies and methodologies that are crucial for optimizing marketing performance and driving significant business growth.
What is marketing measurement?
When you look up the definition of marketing measurement, it typically states that it involves the computation of metrics to measure the performance of marketing campaigns.
However, this definition misses a crucial element: the clear focus on identifying ROI improvement opportunities.
Without this focus, we would simply be doing accounting. No offense to accounting, but marketing measurement should always aim to improve something —specifically, to improve ROI.
Key Performance Indicators (KPIs)
In marketing measurement, we deal with KPIs, not just one KPI. It’s crucial to understand the different groups of metrics we want to measure and acknowledge that they often pull in different directions.
Effectiveness
Effectiveness measures productivity in terms of revenue and conversion rates. For example, a high conversion rate indicates that your marketing efforts are effectively turning prospects into customers.
Efficiency
Efficiency relates to the cost of productivity, including metrics such as Customer Acquisition Cost (CAC) and Cost Per Click (CPC). These metrics help us understand how much we are spending to acquire each customer or click.
Scale
Scale refers to the volume of productivity, encompassing metrics like impressions, clicks, and conversions. These metrics measure the reach and volume of your marketing efforts.
It’s important to note that these groups often pull in different directions. For instance, the Super Bowl is likely the most effective event in terms of reach and impact but is also very costly. Efficiency cannot scale endlessly because resources are finite.
A useful quote to keep in mind is: "Quantity has a quality of its own." This reminds us that having a high volume of something, even if it’s expensive, is not inherently bad. It's beneficial to have a high volume, even if you don’t use it all the time because it indicates potential reach and impact. Balancing these metrics is key to a successful marketing measurement strategy.
Charley Gale
