Marketers Fall Short When It Comes To Measuring Business Objectives

Interactive marketing is about driving revenue to a company’s bottom line, plain and simple. This can take a circuitous path, where the focus is on constructing a strong and recognizable brand, connecting with consumers, and building and maintaining loyalty. Or it can be very straightforward, where the promotional message is clear and the expected return is immediate. We found that:

Interactive marketers have classic business objectives . . . Of the interactive marketers that we surveyed at companies with more than $500 million in revenue, 52% cite brand awareness as important in determining how to invest in interactive marketing, and more than 40% cite sales objectives (see Figure 1). Very few — just 10% — note that “engagement,” an oft-referenced digital metric, is a key business objective.

 . . . but fail to use metrics that provide guidance . . . While these interactive marketers at larger companies certainly point to sales as their most important measurement metric, there are a broad number of intermediary digital metrics that also bubble to the top (see Figure 2). Leading analytics experts at large agencies such as Starcom MediaVest Group and Razorfish confirmed that it’s not uncommon to see marketers, in the words of Andy Fisher, executive vice president, global director of data and analytics at Starcom MediaVest Group, “substituting what they can get from the direct response path and pretending they are brand metrics.” For example, this can occur when marketers regard the download of a brochure as engagement.

. . . and rarely use multichannel measurement best practices. Fifty-seven percent of the interactive marketing professionals we surveyed measure results for each channel, but less than half, only 28%, measure the influence of one channel on another (see Figure 3). Analytics and measurement firms such as Adobe (owner of Omniture), ClearSaleing, and cross-media analytics company MarketShare Partners agreed.1 According to Wes Nichols, co-founder and CEO of MarketShare, “The industry has historically measured in swim lanes — email, search, display, TV . . . The 21st century consumer doesn’t make decisions in swim lanes”

Multichannel Measurement Can Improve Your Bottom Line

Multichannel measurement is happening — and the smart marketers doing it will beat the competition hands down. What you can gain from investing in multichannel analytics is:

Cost savings. A large online subscription site used Omniture to assess potential over-counting of conversions across affiliates, search, and display. Through the analysis, the site found that it had over-allocated its online marketing budget by more than 20%, representing millions of dollars in over-allocation. As a result of this discovery, it tweaked the mix to more effectively capitalize on its available spend.

Increased sales. A large retail client of agency iCrossing was able to see the true value in nonbranded search terms as a result of an advanced attribution study. While the traditional lastclick attribution model showed that its search program was driving $1 million in revenue, more advanced attribution proved that nonbranded search was driving an additional $800,000. This finding helped the retailer justify continued spend in nonbranded search, a tactic that otherwise was headed for the chopping block.

A more effective sales process. IBM has developed a sophisticated scoring system that assigns a specific number of points to each action a consumer takes in the purchase funnel (downloading a whitepaper, opening an email, etc.). IBM sales, which is responsible for follow up with potential customers, receives information on the cumulative point score in advance of making contact. Sales now has a rich store of information from which to draw during the sales process, a significant improvement over the old model where salespeople were passed leads with very little knowledge of the potential value of those leads.

Look To Your Partners — Internal And External — For Help

Current approaches to interactive measurement run the gamut (see Figure 6). Marketers may already have the necessary tools at their disposal, but may not be taking full advantage of them. Partnering with a solutions provider that meets your specific needs can be extremely useful in helping you move toward a multichannel approach to measurement and attribution. The answer could also lie within your organization, in the form of organizational restructuring or additional hires.

Partner with an agency. With a historic focus on tracking and measurement, agencies like Razorfish can make excellent partners in developing a strategic multichannel road map and executing against the same. In partnership with a major retail client, Razorfish created a robust measurement system that allows its client to look at how online activities affect offline sales. Other agencies with strong measurement capabilities include Rosetta and iCrossing; although increasingly, search engine marketing firms like 360i are also rolling out multichannel measurement capabilities (with a current focus on digital).

Look to a technology provider. Companies like ClearSaleing and MarketShare Partners, as well as more traditional Web analytics firms like Omniture (owned by Adobe) and Coremetrics, an IBM company, offer technology-based solutions to attribution.2 For example, a large auto insurance customer of ClearSaleing keeps an eye toward profitability across its media mix using ClearSaleing’s advanced attribution solution. If the lifetime profitability of online customers is less than that of call center customers, for instance, the mix is shifted accordingly, lifting performance overall.

Evolve your own organization. Analytics capabilities are key to moving toward more robust measurement. Where internal resources permit, it is not uncommon to see the most sophisticated marketers building out internal analytics teams. For example, FedEx recently reorganized its marketing group to create an interactive marketing center of excellence (COE). A key objective of the new COE is to consolidate and improve digital marketing analytics capabilities.

Recommendations: Make An Investment In Analytics To Improve Efficiency And Sales

The importance of accurate multichannel measurement and attribution cannot be overstated. It can mean the difference between a profitable, growing marketing budget and shrinking dollars and resources. To get started, spend the necessary time understanding your data, consider forming partnerships with agency or technology providers, and invest in analytical capabilities if you have the resources to do so.

Align your digital metrics with your stated business objectives. Digital metrics are useful indicators only after you have benchmarked which of them map to your key business objectives, such as sales or brand awareness. For example, look at your branding metrics through the lens of financial outcomes. ClearSaleing recommends questions like the following: Is this branding initiative driving people to buy? Do your branding initiatives increase average order value? Are you shrinking the customer buying cycle?

Understand your customers’ purchase path. You should have strong measurement capabilities at each step of your consumers’ path to conversion. For example, if your Web site is your primary source of conversions, focus on deep site-side analytics and customer intelligence to improve the site experience.3 If your consumers tend instead to convert offline, have a mechanism with which to tie offline sales to your digital marketing activities.

Take baby steps, but don’t get complacent. Pick the biggest contributors to your overall success and begin by looking at them in connection with one another, for example how display ad impressions might drive search behavior. However, be mindful that other channels are likely contributors as well — develop a road map as to how and when you will incorporate them into your attribution model down the line.

Talk to your current partners, be they technology providers or agencies. They may already offer multichannel measurement solutions that you’re not taking advantage of.

Think about analytics as “cost savings” not “added expense.” While it may feel like yet another expenditure, investing in smarter measurement can more than pay for itself. MarketShare Partners noted for example that their clients see 10% to 30% improvement in marketing effectiveness in the first year as a result of moving toward multichannel measurement and optimization.

Supplemental Material: Methodology

Forrester fielded its May 2010 US Interactive Marketing Online Survey to 309 interactive marketing professionals. For quality assurance, panelists are required to provide contact information and answer basic questions about their firms’ revenue and budgets.

Forrester fielded the survey in May 2010. Exact sample sizes are provided in this report on a question-by-question basis. Panels are not guaranteed to be representative of the population. Unless otherwise noted, statistical data is intended to be used for descriptive and not inferential purposes.

If you’re interested in joining one of Forrester’s research panels, you may visit us at http://Forrester. com/Panel.