What are the Challenges in Measuring Marketing Effectiveness?

By: Aidan Mark, Effectiveness & Media Strategy Consultant at CvE

Have you ever asked yourself the question, ‘why did I buy that thing’? The ‘thing’ could be anything – perhaps a chocolate bar snapped up at the checkout of the supermarket, a new top for a big Saturday night out, or perhaps even a new car, bought on a whim. As human beings, we often struggle to understand with accuracy why we make our own personal purchase decisions. So, the challenge for brands and marketing teams is even harder – they need to understand the drivers of shopping behaviour across their full customer base. Yet with the global economy set to contract in 2023, the need for marketers to understand marketing effectiveness in terms of what is working for them, and what is not, has never been greater. 

In this third post of a series on marketing effectiveness for the CvE blog, we will explore the challenges facing marketers in their attempts to accurately measure marketing effectiveness. From this series, you can find articles that explore what marketing effectiveness is, and the importance of impartiality

The Original Marketing Effectiveness Challenges Still Remain Today 

Perhaps the most famous quote used in marketing effectiveness circles relates to the challenges of measurement. A man called John Wanamaker, one of the world’s original pioneers of advertising, famously said in the early 1900s that ‘half of the money I spend on advertising is wasted, I just don’t which half’. 

Fast forward about 100 years to the present day and you will see that advances in data, technology, behavioural psychology, and marketing theory significantly help the advertiser better understand which elements of their advertising and marketing mix are working. However, many of the issues that caused a headache for Wanamaker remain, and indeed there are a host of new challenges that have been brought about by the added complexity of modern marketing ecosystems. 

Media Fragmentation Creates Issues of Measurement

Another challenge that Wannamaker was alluding to relates to multi-media advertisers, which will be an even greater challenge for marketers in 2023 and beyond. 

In the early 1900s, a marketer might have had to debate the relative contributions of press and out-of-home (the two dominant media channels at the time). Whereas modern marketers have the same conundrum, but, thanks to the rise of digital and media fragmentation across all channels (both traditional and digital), there are now with many more potential media drivers all vying to claim credit for business success. When consumers are exposed to many thousand commercial messages per day, it can be hard for the marketer to know which of those messages have resonated and connected, and which have been ignored and not noticed by the target audience. 

Ads and marketing that exist today are not necessarily responsible for the sales and revenue of tomorrow.

Wanamaker must surely have also wrestled with a correlation vs causation debate. Simply put, the ads and marketing that exist today, are not necessarily responsible for the sales and revenue of tomorrow. This is because marketing always works on two distinctive time scales; it influences behaviour in both the long and short term, no matter what the marketing channel or creative execution is. Those variables just influence the extent to which impacts are likely to be seen in the long and short term. To put this into relatable terms, unless you scrutinise correlation vs causation it is easy to assume that ads that appear around market demand peaks to appear effective. This phenomenon exists in any category with a seasonal demand peak. It affects Black Friday sales periods for retailers, January fitness drives for gyms, and additional spending at Christmas for supermarket brands etc. 

The Politics of Metrics 

A more modern challenge relates to metrics. Back in the early 1900s, there weren’t many business or marketing metrics that could be reported on. Digital has given rise to a huge variety of new metrics, almost all of which are influenced to varying extents by marketing. Businesses need to agree on which metrics success will be judged against, which can create conflict and disagreements inside marketing teams. This is especially true in larger organisations, where individual teams are tasked with measuring their own metrics. 

It is not uncommon to have a brand team responsible for brand awareness metrics, a performance team responsible for customer acquisition, and CRM teams responsible for retention. Teams inevitably compete for budget and influence to ensure campaigns payback on the metrics that matter to them. 

The result is that marketers need to agree on two crucial issues; firstly, the extent to which marketing is having an impact, and secondly where in the business these effects are showing.

Data Bias Can Distort Readings of Effectiveness

Connected to this challenge is one that is rooted in data availability. Some forms of marketing, particularly digital, have a clear record of exposure to the user. When this is added to addressable marketing tactics, it can be very easy for hyper targeted ads to users exhibiting strong purchase intent to claim full credit for converting the user that was highly probable to convert without the need for marketing and media. 

This issue first created challenges for direct marketing brands who targeted niche audiences using traditional methods like DM and outbound calls. This gave rise to lots of good best practice in terms of split testing, particularly amongst CRM teams, which allows brands to calculate incremental lift. This remains good practice today and is highly applicable to digital marketing, but has often been replaced by easier to execute (but less accurate) marketing effectiveness techniques like identity based attribution models. 

Regulatory, Browser and Media Platform Policy Changes for 2023 

But the main item in the news for the marketing effectiveness community is the death of the cookie and the rise of legislation that protects consumer identify. 

Each digital device held by a consumer has the capability to produce a powerful digital footprint, which has enabled a wealth of data and insight. This data is generally stored and enriched against digital identifiers like cookies and mobile ad IDs. But in truth, any cross-site tracking IDs are also under increasing threat and scrutiny. 

Adtech has created the ability to connect this digital exhaust to a device across the websites and content that each user visits. Identity management graphs have further allowed marketers to link cross-device and offline data to a single user or household, but external market forces are building measures to remove and restrict these practices or give users more control over its use. These may be legislative, or may be web browser based-such as those measures imposed by Firefox’s Enhanced tracking prevention, Safari’s Intelligent Tracking Protection or the future state planned by Chrome to remove third-party cookies in their entirety.

Google and Apple’s carefully constructed privacy announcements often refer to cross-site tracking as being the problematic privacy issue in the current digital landscape.

What we are seeing in this space is the means to remove a single identifier for a user across multiple sites and domains, regardless of the method. The EU’s GDPR policy doesn’t mention a cookie as a root cause of requiring consent for the processing of personal data, and Google and Apple’s carefully constructed privacy announcements often refer to cross-site tracking as being the problematic privacy issue in the current digital landscape. Direct ‘workarounds’ to the cookie problem will likely suffer a similar fate to these external market forces. Apple, Google, and most privacy campaigners are against the pooling of IDs across the web for the tracking of users – be that through probabilistic identity graphs, or deterministic people-based identifiers such as a hashed email address. This will have an impact on both the ability to target and retarget users online, but more importantly to measure the customer journey from media touchpoint through to conversion. 

These changes will force marketers to adopt new approaches to marketing effectiveness; we are already seeing incomplete journeys and segment profiles, a fragmented view of reach, and a reliance on less-precise metrics to fill the gaps left. The once relied upon focus on measuring last-click (or even multi-touch attribution) attribution is in steep decline and requires reformative ways of measuring digital and omnichannel performance. 

Marketing Effectiveness in a Global Recession 

Marketing Effectiveness - Marketing Winners - CvE
The marketing winners of the recession will be those that best adapt to the modern challenges of marketing effectiveness.

It remains to be seen what 2023 and beyond will mean for marketing effectiveness in full. With renewed focus and understanding of the challenges of marketing effectiveness, this will force marketers to think more intelligently, creatively, and credibly to convince businesses to invest in marketing. With budgets being tight and targets steep, it remains imperative that brands really do understand and can quantify why you bought that thing. The marketing winners of the recession will be those who best adapt to the modern challenges of marketing effectiveness.  Those marketers who have assessed, identified and understood the measurement challenges and headwinds facing them in the future, will be best placed to plan and build suitable measurement roadmaps for change.

This is my third post of a series on marketing effectiveness for the CvE blog. From this series, you can find articles that explore what marketing effectiveness is, and the importance of impartiality

Get in touch to learn more at contact@controlvexposed.com.

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