The recent Marketing Reformers survey showed that companies are increasingly investing in digital marketing, and at the same time their key challenges are in user data analytics and measuring the effectiveness of marketing.
Marketing analytics is the answer to getting the most out of both your user data and effectiveness of marketing campaigns. It should be in the toolkit of every digital marketer. Marketing analytics measures and analyzes marketing performance. The aim is to maximize the marketing return on investment (MROI). However, marketing analytics is not just about measuring performance. It can be used to improve marketing work and deliver better and more cost-effective campaigns. What works and what does not? Who is buying and when? Who should you contact and who shouldn’t you? Marketing analytics involves everything from optimizing the click rates of emails to company-wide marketing mix models. With marketing analytics, marketers become more efficient and companies stop wasting money on ineffective campaigns.
Marketing analytics has become an important tool in evaluating marketing efforts. The digital marketing revolution has made it easy to quantify the results in monetary terms. We can track individual customers from visiting a webpage, opening an email or clicking on an ad to the actual purchase event. In traditional marketing, it is hard to show the impact of campaigns. Performance is not easy to measure, so the results are uncertain. Marketers often claim to increase brand sentiment or something else that cannot be interpreted straightforwardly in money. This has led to a situation where CMOs do not expect to see definite numbers on actual marketing results, and likewise marketers are accustomed to not being expected to show a statistically validly calculated lift from their campaigns. However, digital marketers can – and should – report their effectiveness clearly in monetary terms.
What are the requirements for marketing analytics? First of all, every marketing campaign must a have a clear business goal. Business goals are then turned into key performance indicators (KPIs) with a clear and measurable metric. If that metric is monetary, we can proceed to calculate the MROI. If the metric isn’t monetary, it can still be given a monetary value. For example, the length of a user relationship can be turned into a user lifetime value, whereas customer loyalty and brand value are not so easily counted.
Once the goals, KPIs and metrics are defined, the next step is to ensure that you collect relevant data across all sources, and integrate, store, process and report it before using it in decision-making. Last – but definitely not least – valid control groups are the most important requirement for reliable marketing analytics. Without controls, we cannot distinguish the individual effects of different campaigns from each other and monetize them. Control groups and data gathering are so important that they will get a blog post of their own later. Stay tuned!