I’m not a handy guy, but I know how to use a tape measure. If I use the tape measure to figure out the height of my fence, I can determine the value of my house, right?
Well, no, of course not.
Yet when it comes to measuring the effectiveness of marketing, we often make these kinds of leaps. We look at some arbitrary measurement – like page views or downloads – and try to link it to a return on investment.
In the latest episode of Marketing Makers – the series for those who make marketing work, I delve into the sometimes-mystifying process of measuring the return on investment for marketing – and, more specifically, the content that feeds the marketing machine. I walk you through the art and science of putting together all those arbitrary numbers to tell a story about helping business performance.
Why is marketing measurement so hard?
The Management of Marketing Costs, written in 1948 by James Culliton, introduced many ideas of the marketing mix, which I talked about in the first episode of Marketing Makers.
I love this book, in part, because of Culliton’s introduction. In the foreword, he writes:
Discovery of the fact that I could not find what I had started out to seek – useful figure data on what manufacturers spent for marketing – made the preparation of this book disturbing.
Chapter 1 starts with the subtitle “I Wish I Knew…” and ends with these observations:
The management of marketing costs is a job of ‘intelligent artistry.’ The job is not completely scientific and many believe simultaneously that it never will be completely but that it should be more than it is now … Yet emphasizing either the artistry or the intelligence to the detriment of the other would not yield true progress.
Almost 75 years later, marketers are still in the same place.
It’s not as though we’ve suddenly lost some capability we had when the Don Drapers of Madison Avenue roamed the earth. Marketers have struggled to find the return on marketing investment for as long as the practice has been around.
But the idea of marketing as an “investment” is a relatively new development. The concept of return on marketing investment (ROMI) became widespread in the late 1990s and early 2000s as digital technologies began to promise more granular analysis of marketing-related transactions.
Whatever acronym you prefer – whether it’s ROMI or ROI or even ROC (return on customer) – the goal is the same: to maximize the efficiency of each marketing expense.The goal of #ROI, ROMI, or ROC is to maximize the efficiency of the #marketing expense, says @Robert_Rose via @CMIContent. #Measurement #MarketingMakers Click To Tweet
HANDPICKED RELATED CONTENT: Is Proving Content Marketing ROI an Impossible Dream?
Are you measuring a campaign or an asset?
In one view, a marketer’s job is to combine the elements of the marketing mix in the least expensive way, using the cheapest ingredients.
But here’s the trick. This view orients marketing toward one very specific goal – efficiency.
Efficiency is a simple ratio of the useful output to total input. It’s P/C – where P is the amount of useful output (product) and C is the cost of resources consumed.
This approach to measurement is fine if marketing is simply a cost in the overall investment in a business’ success.
But there is another side of the marketing measurement coin. How do you measure an investment in an asset whose value increases over time?
Remember our ratio for measuring marketing efficiency? It’s the amount of product (i.e., media, campaign, or event) divided by the cost to produce it.
In most cases, you have little control over costs (physical space, wages, and so on) and every company has to pay for them. Your effort goes into getting the best of those things and making the most of them.
But you can affect the product that’s produced.
Traditional marketing and advertising involved campaigns that exist as a set of activities at a specific time. Think of a television commercial that aired for three months, a digital campaign that ran for a month, or an event sponsorship that lasted a week. Those things stop being investments once the period ends.
Content marketing aims to create an asset that increases in value over time as the cost – in relation to the value the product provides – goes down as a percentage.
For example, think about the value Monster.com created with its Career Advice Center. In its first year, the site – which took real budget to launch – saw a few hundred thousand page views. But by the end of its second year, it drove 48,000 new leads, 22% of which were acquired organically. It also created a $3 million efficiency on paid advertising spend..@Monster’s Career Advice Center led to a $3 million efficiency on its paid ad spend, says @Robert_Rose via @CMIContent. #MarketingMakers Click To Tweet
Essentially, you have two ways to make the company more valuable: You can drive more revenue or you can create more efficiency.
From a measurement perspective, campaign-based marketing almost always focuses on creating efficiency and saving the organization money.
With content marketing, the focus is on creating effective content products (fueled by audience engagement) that drive increasingly profitable actions.
Marketing campaigns are a cost that provides value at a moment in time. Content marketing is an investment that – if done well – provides increasing value over time. That’s why it should be measured as an asset.#Marketing campaigns provide value at a moment in time. #ContentMarketing provides increasing value over time, says @Robert_Rose via @CMIContent. #Measurement #MarketingMakers Click To Tweet
The content marketing measurement pyramid
Marketing measurement for either approach involves agreed-on reference points.
I like to think of marketing measurement in terms of an inverted pyramid:
Here’s how it works:
- Set a goal. The goal represents the investment value achieved by a shared purpose. It will be something like “Drive $10,000 in new revenue this year.”
- List your key performance indicators. The agreed-on aggregate measurements are the standard for assessing progress. Depending on your goal, these might be average conversion rates, number of leads, quality of leads, revenue per new customer, or another measurement. Decide how often to review the KPIs to see if you need to course-correct. It might be monthly, weekly, or daily depending on the timing you set for achieving the goal.
- Agree on metrics. Metrics are more granular measurements of things that may help you achieve or optimize any of your KPIs. Think of these as the “what-needs-to-be-true” numbers to optimize your KPIs.
Do you need more traffic to reach your goal? Do you need more conversions from existing traffic? Almost certainly. Do you need better content? Do you need to test the creative? Do you need to try different paid media? Do you need to spend less money on PR? List out all the things that you will track.
This approach gives you a very organized and discrete set of measurements to help you measure progress toward your specific goal.
Then, you can assemble a measurement pyramid for each goal of your marketing or content team.
The pyramid below shows four goals – two campaign goals (a 10% increase in qualified leads and a 20% increase in lead form fills in a year) and two contribution goals (a 10% increase in addressable reach and a 10% decrease in content costs.)
The metrics to watch because they affect the KPIs are likes/followers, sharing, traffic, time on site, cost of content production by platform, cost of traffic, and SEO rankings.
What’s next? Measuring intent
What can we expect for marketing measurement in the future?
One thing that won’t change is the need to understand what matters for your business so you can focus on measuring and refining based on what you find. Lately CEO Kate Bradley Chernis explains how her team measures what matters in this segment of the episode.
So, what is changing? For one thing, artificial intelligence will be used more and more to process the mountains of data generated by digital content consumption.
In most cases, this measurement is used to understand who is entering our spheres of influence – and the intent they have while there.
The idea of intent data is to identify who should be targeted with specific campaigns and when.
For example, many companies use a website visit as a trigger to retarget the visitor with ads.
Technology exists to track what visitors do on the website and target only those people who took an action you defined as showing purchase intent. Intent data goes into decisions about showing specific visitors a different ad or no ad at all based on the actions they took or didn’t take.
There will be many artificial intelligence and algorithmic ways to measure marketing in the years ahead.
Remember, though, you don’t have to measure everything just because you can. Set the standards for measuring success and make sure to get agreement to measure progress toward something important.You don’t have to measure everything just because you can, says @Robert_Rose via @CMIContent. #MarketingMakers Click To Tweet
Don’t fall into the trap of making things matter because they’re measurable. Make them measurable because they matter.
Cover image by Joseph Kalinowski/Content Marketing Institute