Marketing budgets have been reduced but millions of dollars will still be wasted in 2021 because marketers aren’t measuring the right things – they need to get smarter, says Lana Busignani.
There are positive signs of recovery in the global advertising industry, with the World Federation of Advertisers (WFA) reporting rising optimism and a resumption of deferred campaigns. But with actual ad spend still far lower than expected this year, marketers have had to do more with less, which means a greater reliance on effective measurement.
The need to measure marketing efforts is widely understood, but millions of dollars are still wasted each year when marketers rely on incomplete data to make decisions around cross-media strategies, or invest budgets without knowing whether they are achieving their core objectives. Only one in four CMOs feels confident in effectively measuring ROI, and many still rely on rudimentary metrics such as click-through rates and page views, rather than measuring actual marketing performance and outcomes.
Now, with the pandemic continuing to constrain budgets, there is no room for waste and inefficiency, so marketers urgently need to measure real outcomes to enable them to maximise ROI. To achieve this at scale, marketers must focus on three key attributes: standardisation, holistic measurement and adaptability.
Standardised metrics and data
A lack of standardised measurement metrics across the advertising industry is causing marketers to value their efforts according to different benchmarks – a particular concern for those attempting to scale their efforts across multiple countries and brands. Truly effective outcomes measurement requires normative standards that encompass all critical elements of marketing campaigns such as brands, pricing, promotions and media platforms, delivering a common measurement language that all advertisers and agencies can relate to, regardless of their location or sector.
Marketers that operate in multiple markets will find standardised metrics particularly beneficial as ROI varies greatly around the globe. Our normalised data reveals the global median media ROI is $1.06, but this varies significantly by region – from $0.81 in EMEA to $1.32 in APAC.
Standardised, scalable metrics throughout the world will allow marketers to compare ROI across markets in a meaningful way, to close coverage gaps by leveraging a normalised dataset and to provide better benchmarking, ultimately enabling seamless, unified global marketing strategies.
A holistic measurement approach
Rather than analysing marketing efforts in channel silos, marketers must take a more holistic approach, measuring across TV, digital video, display, social, search, print, out-of-home and radio, and understanding the contribution of each of these channels to overall business outcomes.
But channels aren’t the only area needing a holistic measurement approach. There are a huge number of influences that drive campaign effectiveness, including long-term structural factors such as brand size and incrementality, short-term creative factors such as duration and copy quality, and short-term media factors such as reach, frequency and ad clutter.
Marketers need to include all possible campaign effectiveness drivers in their measurement approach to truly understand outcomes and ROI. Nielsen finds that brands that have not done so have a 80% increased average error rate in forecasting ability, which leads to 68% misattributed ROI: brands don’t know what is actually driving sales!
Adaptability to optimise spend
In the current climate, it’s not enough for marketers to understand how their budgets have performed after an advertising tactic has been used, and to use that insight to prove effectiveness. They need to use outcome metrics with agility to optimise campaigns and maximise ROI.
By using outcome data to adjust campaigns in-flight, rather than waiting for performance metrics after the campaign ends, marketers can make their budgets work harder across all channels and geographies. Our data reveals brands that leverage standardised metrics to optimise campaigns can increase the effectiveness of their cross-media investments incrementally by up to 70% more than brands that rely solely on market perception or gut feeling to influence media allocation. Effective outcomes measurement enables advertisers and agencies to move with velocity and maximise every ad dollar in their campaign with consistency, transparency and collaboration across the media value chain.
While the cautious optimism currently seen among marketers is very welcome, and a gradual rise in ad spend looks likely, the advertising industry will be operating with confined budgets for the foreseeable future. This makes it more important than ever for marketers to measure the real outcomes of their efforts, leveraging standardised metrics that are normalised around the world, taking a holistic approach that encompasses sales influences as well as media channels, and using outcome insight to nimbly adapt campaigns in-flight and achieve maximum ROI.