By Bryan Karas, CEO, Playbook Media
Time and again, I talk to marketing leaders who complain about the high engagement costs on Google and Facebook – yet haven’t expanded beyond those two channels in search of more efficient options.
Martech is exploding with options for marketers looking to construct campaigns with higher, more predictable ROI. There are other tried-and-true testing measures to inform marketers how much incrementality they’re actually getting from each channel – and even individual campaigns within their channels. Yet all too frequently, I talk to brands struggling to embrace an approach that tackles the reality of today’s attribution challenges and helps them understand where they should spend the next chunk of their marketing budgets.
With Q4 approaching fast and retail marketers citing profitability as their biggest challenge, it’s the right time to set a course for a solution. In this post, I’ll lay out a few achievable steps to help you get momentum and direction toward a more optimized media mix for the long term.
These include:
- Changing your mentality
- Preparing your data
- Asking better questions
- Shifting your KPIs
Let’s dig in.
Break free from the innovator’s dilemma
The innovator’s dilemma, as explored in a seminal book by Clayton Christensen, is the state of being reluctant to adopt innovation for fear of upsetting a successful status quo. In marketers, it often manifests in stubbornly clinging to last-click attribution or an unwillingness to pull budget from Google and/or Facebook because they’ve helped provide growth in the past.
Before you read the rest of this post, you need to understand that what got your brand to this point won’t necessarily be what gets it to the next stage of growth. In today’s complex, non-cookie-based world, and with your competitors having access to a wealth of channels outside of Google and Facebook, an outdated approach means a disadvantage at best and obsolescence at worst.
Get your data in shape
Once you’re convinced that your approach needs to evolve, the first place to look is at your data. Namely, how’s your CRM set-up? Are you connecting CRM data to your advertising outcomes? Are you honestly able to analyze traffic volume and flow on your site and owned properties? And if you increased or decreased advertising budget in a particular area, could you directionally track its effects on revenue?
Often, there are two main courses of action at this step: CRM cleanup/integration and a rigorous build-out of GA4. The latter is far from perfect – in fact, the July 2023 cutoff for Universal Analytics and forced shift to GA4 brought LOTS of complaints from marketers – but it’s where we’re all headed. Familiarity with measurement not based on cookies but on events and journeys will help insulate marketers from the effects of further privacy-based regulations. GA4 has usability issues, but it’s based on a measurement framework you’d better get to know.
Get curious about incrementality
Stop asking how much {desired KPI} each of your channels – or even the campaigns within your channels – is driving. Start asking about the incrementality of each instead.
In other words, start analyzing the actual additive effects of each channel/campaign. Yes, retargeting on Facebook may have resulted in {x} conversions last week, but do you know how many would have happened anyway? If you pause branded search for a month, what’s the actual impact on your revenue?
There are linear ways to test this – holdout tests, matched market tests, and Facebook lift tests among them. If you suspect that you’re spending in areas that aren’t actually producing anything, it’s a good idea to run a controlled test to measure the difference. (Clarity of the measurement depends on the data cleanup we just discussed.)
Just remember that there’s an opportunity cost that happens when you run these tests – you’re not hitting your target audience with the full power of your media, which can decrease numbers. If you’re going to run tests to assess incrementality, make sure you’ve communicated when and why you’re doing it to your management team so you don’t get called to the carpet for an unexpected dip in volume.
Re-think your KPIs
Focus just on incrementality and advanced concepts like marginal return, and you’ll risk losing sight of the big picture of how thoroughly and frequently you’re engaging your target market. (In other words, you may cultivate the best tree out there while your competitors are gobbling huge swaths of the forest.)
Focus on basic KPIs like reach and frequency without understanding the downstream effects, and you’ll have very little control over the revenue/ROI impact of your marketing campaigns.
If you can blend relatively basic KPIs with a nuanced understanding of your approach to investment (for example, should you spend the same to acquire a new customer as to retarget one? How do you calculate the answer?), you’ll have a great fundamental base for your marketing. You’ll be able to spot your higher-leverage growth initiatives – better coverage, smarter budget allocation, audience expansion, etc. – rather than practicing an iterative rinse-repeat ROAS cycle from 2022.
You’ll notice that nowhere in here did I mention AI, media mix modeling, or predictive analytics. Those tools are all out there, but until you go through the work of changing your mentality and your approach, you won’t be able to leverage them effectively. It’s a hard adjustment to stop chasing insights from old attribution models, but your time will be better spent renovating your marketing approach for the long term.
