Posts Tagged “marketing measurement”

I’d like to share a story about a time when I thought I was measuring the right thing (but wasn’t).

I had decided that paid search was the right answer for my business.  Many of my competitors were buying keywords and there was plenty of traffic in the space.  The popular terms were bid up to the $2-3 dollar price range and based on my conversion assumptions, I thought I could get the customer acquisition cost tuned to the point where we would have a strongly positive ROI.

After about six weeks of adjusting bids, killing off bad ad creative, inserting new ads, and reorganizing ad groups, BINGO, the cost per customer landed within about 5% of my target.  Needless to say, I felt pretty good and was thinking it was time to “pour some gasoline on the fire” by making a big budget request.   It seemed like a sensible thing to do given the acquisition cost and conversions rate.

Before making the “big ask” for budget I decided to take one more look at the numbers.  I wanted to make sure these new sign ups would become productive long term customers.  My back-of-the-envelope estimates prior to the campaign had assumptions for the average revenue per customer.  The real data, however, showed that these customers yielded 75% less revenue than our “typical” customers, pushing this campaign into the red.  I was relieved to discover this before dropping  a large sum of money into this medium.

The moral of the story: make sure you are measuring the right things and they are connected to real results. In most businesses, activity-based measures like leads or traffic are directional indicators.  In the end, revenue and sales are what really matter.

So, what are you doing to connect your marketing activity to bottom line results?

I think marketing people get a bad rap and often think that accountability is the root cause.  Too often we use words like “brand building” to mask the fact that we can’t connect some of our activities with tangible results.

Here are some questions to assess how accountable you are as a marketer.

• Do you do everything you can to track the results of a program (ie coded URLs, special offers, etc)?
• Do you freely admit when a program was a complete bust even if all the data is not in?
• Do you create a back of the envelope estimate for the campaign before you start with the creative?
• Have you sensitivity tested your campaign assumptions based on past program results?
• Do you ruthlessly remove the worst performing programs from your budget each year?
• Are you always looking for something that can outperform your tried and true programs?
• Is your CFO an ally?
• Does your CEO offer you more budget if you can find positive ROI programs?
• Do you favor effective over creative?
• Do you have a bias toward measurable programs?

Did I miss any others? Let me know.

Yesterday I shared a series of social media experiments we performed last summer at Firstgiving.

1. I found this interesting post last week by Peter Kim about a framework to measure social media.  It is a step in the right direction but it still makes we wonder about when we will see industry standard metrics emerge for social media (ie cost per action, cost per click, etc).

2. I’ve seen a couple of recent articles about Twitter jumping the shark.  I can’t quantify it but it feels like oversharing is down within my cohort.

3. Are we starting to see signs of the social media bubble bursting on the west coast?

4. Don’t forget about Myspace.  With all the buzz surrounding Facebook these days it is easy to forget who has more search traffic.

Over the last few years, I have noticed a division in the types of marketing people I meet. Some colleagues have referred to this as data driven vs. marcom/branding types but in my mind this view never really worked. While the increasing measurability of the web does provide an unfair advantage to marketers with MBAs and an undergraduate degree in something unsexy like engineering or chemistry, it always seemed like there was something more at play.

In recent weeks, I’ve been a part of a team that is transforming its product development philosophy from a “waterfall” (lots of time building a fixed specification followed by a long development cycle) to an “agile” approach (shorter development cycles with lots of iterations since you can’t really know reality until you try something). Software developers have employed this methodology for years but it isn’t just a more effective way to get “good enough” products out on time. It is a way of thinking that can be embraced by other  functions including marketing.

I know that many of the world’s greatest dictators/managers want to believe that marketers can accurately predict the future but they can’t. I’ve never been able to do it and as a result have resorted to an iterative approach that relies on low cost testing of media and programs. This makes the ad sales reps at the trade magazines or WBUR radio angry but the fact is that marketing is as much about science as art. I know, I know, we all have to build a brand by spending money on difficult-to-measure things like PR and advertising. By using iterative, agile tactics, however, it is possible to mitigate your risk, improve your overall marketing ROI and put a smile on your pointy headed CFO’s face.

Taking inspiration from an article on the Web 2.0 organization, I created this table that highlights what I see as some of the key differences between a traditional waterfall and an agile approach to marketing.

Did I miss anything? I would welcome any other suggestions people might have for the list as I don’t think it is exhaustive.