CMOs are getting bad information on the value of their digital ads. People online are usually exposed to more than one marketing message before their exploration of your brand converts to a transaction. But most reporting systems give all the credit for the transaction conversion to the last message the consumer saw. As a result, marketers have a hard time knowing how to wisely allocate their advertising resources because the value of some ads is overstated while the value of others is overlooked.
However, CMOs have reason to hope: marketing analytics specialists are trying to determine the value of advertising through media mix modeling and conversion attribution. It’s important to understand those techniques and align customer value key performance indicators across multiple channels.
Media mix modeling uses statistical methods to allocate promotion resources to advertising media channels (print, TV, Internet) while conversion attribution allocates channel resources to individual ads.
Media mix modeling tries to discover the baseline value and the effect of each individual channel. Advanced models go further to find the interactions between channels. TV ads, for example, can directly affect search engine queries for an advertiser’s brand name, increasing the volume of searches for a particular term, as well as the paid search channel’s cost.
While media mix modeling may provide lessons on channel relationships, it fails to leverage granular data. Conversion attribution relies on that data and moves it from channels to individual ads.
Many organizations do not yet have the data collection or business metrics in place to support these techniques. I would first ask the following questions:
- Which Web conversion tracking systems do I use?
Many websites use different systems per ad channels, making channel results difficult to accurately compare.
- Which visitor actions does each channel track?
For example, if paid search is tracking newsletter signups, are natural search and display ads also tracking it?
- What attribution schemes do the tracking systems use?
Once tracking systems and business metrics are in place, Internet advertisers can apply media mix modeling and conversion attribution to increase their return-on-ad-spend and better compete with traditional media. As this race heats up, marketers will be equipped with the insights they need to increase their business results.