In this blog post, digital marketing strategist Bob Dearsley, discusses the importance of being able to measure marketing ROI in today’s diverse, multi-channel world – and how marketing automation, cross-channel analytics and attribution models come together to deliver detailed ROI reporting.
On a regular basis, marketing departments are asked by their board or CEO: “What is the return on investment for our digital marketing activity?” Too often, the answer is: “We don’t know.”
In the past, measuring marketing ROI was difficult due to the lack of sophisticated analytics and measurement tools. Subsequently, many businesses found themselves unable to justify their expenditure on marketing, advertising, and PR activity as they did not know how much new business or revenue those activities actually generated.
Things have certainly changed today. But while it is completely possible to measure ROI, the level of complexity of the modern digital landscape and different marketing channels does make it a bit more complex. Traditionally, the success of a digital marketing campaign was measured through a ‘last-click’ attribution model, meaning the channel responsible for the final sale was attributed 100% of the conversion value.
However, we now live in a world where customers can interact with businesses through a variety of channels – meaning there are multiple touch points throughout the buyer journey—making that “last click” model ineffectual. In order to accurately assess how consumers are interacting with your campaign, you need to be able to answer a new range of questions: What channel drives the greatest amount of revenue? What channel generates the most leads? What channel should we attribute to the final sale? How are consumers interacting with those channels? To answer these questions, marketers must analyse consumer behaviour across multiple sources to understand how channels are being interacted with and what value they bring to the department’s marketing efforts.
So how does one measure their marketing ROI across multiple channels? The first step is being able to report the right figures at the website level. These include:
- Web visits
- Landing pageviews
- Leads/contacts generated
- Marketing qualified leads
- Sales qualified leads
- Closed/won business
As this will enable marketers to form a detailed, website-level sales funnel. Beyond this however, they also need to be able to attribute value to each of the individual marketing channels within their marketing regime to understand how people are interacting with the website. And to do this, marketers need to combine cross channel analytics and attribution modelling.
Picking an attribution model
There are numerous attribution models - and many will have different names (yet function the same way), but the most common are:
Last Click: Last click is the most common attribution model - and traditionally, the most used. It’s also the most inaccurate. The last click attribution model assigns the entirety of the revenue generated to the last customer touch point before a sale.
First Interaction/First Click: First Interaction/First Click is the complete opposite of last click. Instead of attributing the value of the final sale to the last customer touch point, it instead allocates it to the first customer touch point. If for example, a prospect arrived on your website through a pay-per-click advert and later became a customer, that channel would be determined as the sole driver for that sale.
Linear: The Linear attribution model dictates that every touch point in the buyer’s journey is equally responsible for the final sale. It therefore assigns value to every channel involved in the overall conversion process.
Position-based: Position-based attribution evaluates all the touch points involved and combines the first click, last click and linear attribution models to evaluate the value of each touch point. With position-based attribution, the first point and last point are worth a certain percentage and the other touch points have the remaining percentage divided up evenly among them.
Time Decay: With time decay attribution, the touch points closest to the eventual sale or conversion get the most credit. As you go further away from the point of conversion, the other channels/touch points involved in the process would be assigned a % of the final value, gradually receiving less and less.
You can of course, use Google Analytics’ attribution reports as well, but if you want to compile your data in one, centralised place, it would be best to use your marketing automation platform and then leverage the insights gained from cross-channel analytics.
Utilising the power of cross-channel analytics
Rather than assessing each channel individually, cross-channel analytics looks at every channel as a collective whole to develop a comprehensive understanding of how customers behave and interact with the business. Through cross-channel analytics, marketing departments can identify what channels drive conversions, popular conversion paths both in and across channels, and develop data-driven insights into what works and what does not.
Marketing automation platforms such as HubSpot for example, collect a lot of information relating to each individual channel, allowing you to measure your marketing campaigns in granular detail, see how people are finding your website and what channels drive the most conversions.
With this information in hand, marketers can concentrate their marketing efforts on specific channels to drive conversions, engagement and revenue generation. In addition, as their data pool grows and they begin to refine their cross-channel analytics, predictive modelling can be brought into the marketing mix, allowing marketers to: comfortably predict how much activity in each channel will lead to an eventual sale, adjust their marketing mix in real-time to focus on the most profitable channels, and capture prospects earlier in the buyer’s journey.
Of course, this level of sophistication can only be truly utilised with a large data set and the right tools. For small businesses, a large sample of data would be required to develop the necessary insights. In a multi and omnichannel world though, this capability is fundamental if marketing departments are to measure the ROI of their campaigns across channels and adjust their efforts accordingly.
Success in today’s digital-first world needs to be more than just measuring the effectiveness of a marketing campaign - they need to be data-driven and directed by actionable data. As more and more customers interact with businesses through a variety of channels, being able to determine which channels drive the most revenue will allow businesses to be smarter and more efficient with their marketing spend - and generate a greater multichannel ROI.
Tip #13: Measuring marketing ROI in a multichannel world is not something to be ‘considered’, but in fact, wholly necessary. As more and more of your prospects engage with you through a variety of channels, knowing which of them are the most effective and deliver the best results will help you to make more informed decisions on your marketing spend.
If you want to learn more about measuring marketing ROI, marketing automation and how it can empower your business, measurement and how it changed everything and the best marketing automation platforms available, please see these links below:
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