In today’s economy, marketers must fully understand how every media channel that is used contributes to every sale. Our experts debate the most ideal focus for your measurement
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Young-Bean Song
Senior director, Microsoft Advertising
More than 10 years in digital marketing and studying online advertising effectiveness
The way that the vast majority of advertisers measure ads and attribute ROI is flawed. Cross-channel efforts need to account for every message a consumer sees.
Marketers base their understanding of ROI on a myopic model that by definition ignores advertising effectiveness across channels. Most reporting is based on what’s known as the “last ad” standard, where 100% credit for a sale goes to the last-ad clicked or viewed.
The fact is, consumers are reached by multiple ads, across multiple sites and channels, over an extended period of time. Thus, any model that gives only one ad the entire credit for a sale skews ROI metrics dramatically. The last ad model only captures the value of ads at the very bottom of the purchase funnel, and obscures the value of marketing that feeds the funnel.
There are ways to measure cross-channel effects. For example, we found that ad impressions to users who clicked on sponsored search ads increased their conversion rates by an average of 22%. We also know that nine out of 10 converters are exposed to ads across two or more sites.
We are seeing a growing trend of advertisers adopting more advanced reporting methodologies that go beyond the last ad. These new models associate credit to all the marketing touchpoints in the customer’s history, across sites and channels. They are far from standardized, but this alternative view of ROI is now built into many of the third-party tracking systems on which advertisers already rely.
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John Bastone
Global product marketing manager, SAS’ Customer Intelligence Solutions
More than 10 years of DM experience
Measuring and marketing to each customer on a singularly unique basis using real-time inputs is better than arriving at a single cross-channel metric against which to base a campaign.
Many marketers continue to use several metrics to triangulate an abstract concept, like “customer loyalty,” around cross-channel metrics like recency, frequency and monetary value.
An analogy that helps illustrate this is an automobile dashboard gauge and its purpose. Any gauge is useful, but without the other gauges working in concert, the necessary context to effectively get where you want to go is lost. For example, if the speedometer was the only gauge, speed is known, but what good is that if the lack of a fuel gauge left you out of gas?
Tomorrow’s marketers will rely decreasingly on “one size fits most,” cross-channel metrics lumping customers into segments, embracing true one-to-one marketing.
This analytically driven approach has yet to fully develop or see widespread adoption. The ideal metric or triangulation algorithm has yet to appear. However, it will look at all variables associated with a customer at a moment in time, and determine which are most relevant to driving a desired behavior, such as profitability.
It is only at that point when the marketing tactic is developed for that customer. To extend the earlier analogy, this brings GPS technology to the dashboard, with the ability for the device to ultimately drive the car, if you tell it what your goal is.
DMNews’ DECISION
Song’s description of tracking effectiveness through the sales funnel resonates well particularly in the digital world. However, Bastone’s conceptual outlook that takes direct customer feedback into account is truly the more forward thinking of the two metrics — he’s describing responsive marketing in its most ideal form.
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