By Oli Dodd, Media Manager, Realtime Agency
Efficiencies are obviously important all year, every year. But in 2023 in particular, it’s especially important that CMOs are able to get the most bang for their buck given a pending recession.
While we can’t predict the future with certainty, economic experts have predicted a recession with a 60% likelihood in the next year, and it’s wise to plan accordingly.
Nielsen’s recent survey showed that companies who reduced their marketing spend during economic downturns saw an average of 2% long-term revenue loss each quarter, and noted that it could take 3-5 years to recover from this damage.
And while it’s a common knee-jerk reaction to pull back on marketing budget during tough times, history has shown that this approach can be costly and detrimental to a company’s long-term success.
Instead, companies should focus on optimizing their media mix. Bain and Company found that brands who prepared for economic downswings saw an average of 17% annual growth, while McGraw Hill’s study showed that companies who maintained or increased their marketing budgets during recessions saw an average of a 256% increase in sales.
To achieve this kind of success, marketers must prioritize efficiency and effectiveness across their media mix. Rather than slashing entire channels or funnel tactics, marketers should focus on identifying areas where they can optimize their efforts. This may include reducing waste in ad spend, refining targeting strategies, and experimenting with new channels or tactics to find the most effective mix for their brand.
But how can brands do this? While there are a few tactics advertisers can employ, measurement may – arguably – be the most important one.
It’s not uncommon for brands to tout the importance of measuring marketing performance, yet there’s often a gap in knowledge when it comes to practical implementation. While many brands rely on multi-touch attribution (MTA) to optimize their campaigns, this attribution type has been thrown into disarray with the depreciation of cookies. Without cookies, ad platforms struggle to provide complete and accurate data on which tactics are driving key performance indicators (KPIs). As a result, audience quality suffers, and algorithms become less efficient overall.
Although MTA is still incredibly useful for real-time optimization and short term planning, Marketing Mix Modeling (MMM) provides a more accurate, long-term view of campaign effectiveness. Unlike MTA, MMM doesn’t rely on tracking individual users with cookies. Instead, it provides a more comprehensive view of marketing performance by analyzing actual revenue data and broad consumer trends to determine which channels and tactics are driving success
To illustrate the point, let’s consider a home tech client who tracks sales in both Google Analytics and Meta (MTA). While these platforms can provide valuable data, there’s often a question of which platform is more accurate. Without input from MMM, relying on these signals alone can lead to suboptimal spending decisions.
In this example, Google Analytics suggests that paid social is responsible for only a small portion of sales. However, upon implementing MMM, we saw that paid social was actually driving a 25% higher return on ad spend (ROAS) than search. Without checking on this data via MMM, we would have missed out on a significant portion of ad revenue for our client.
By using MMM, marketers can gain a more accurate understanding of which channels are truly contributing to the bottom line, allowing them to make more informed, data-driven decisions. But, it’s important not to discount MTA; multi-touch attribution is the more reasonable option for real-time optimization and can serve as a great guide with learnings supplemented by MMM.