Is our day of reckoning coming soon? Measuring the effect of direct and indirect marketing channels

How do marketers measure the impact direct and indirect marketing channels have on the success of their campaigns?

At a recent conference organised in London by the Institute of Fundraising we asked an audience of around 70 people, all of whom work for charities, whether any had developed a reliable view of how different aspects of their marketing spend impacted their donations. Not a single person present was able to say yes.

In the distant past, before the internet had been invented, and when mail was the only direct channel, it was a whole sight simpler; all you needed to do was to create control groups that you didn’t mail, and then measure how they performed compared to those that you did.

But in today’s multi-channel world, measuring the effect of direct and indirect marketing channels is a problem of great complexity.

Our concern is that, because of the number of different channels and influences that can precede a customer action, like making an order, marketeers may have, to a large extent, given up.

But to do nothing leaves us with a £26bn per annum unanswered question just for the UK alone.

Clearly, there are in fact two very different questions to answer:

  1. First how to infer the effect of non-direct media like outdoor advertising and most of TV
  2. And second, how to measure the effect of those channels that are direct like Google PPC, direct mail or Facebook?

Measuring direct and indirect marketing channels

Most practitioners who want to measure non-direct channels use some kind of time series modelling, and this works reasonably well when we are just looking at summarised data, such as the overall sales value of an organisation in January.

But there are big limitations in that it’s relatively expensive to develop the models, they cannot get into the detail of campaign performance rather than looking at aggregated channels, and they rely on the advertiser varying the amount of spend each month in each channel.

When looking at the outcome from a time series model there is also always a large proportion of sales whose cause cannot be explained by the model, and this has to be assumed as being due to the influence of the brand.

However, where marketeers appear to have thrown in the towel unnecessarily, is in respect of measuring the effect of direct media, looking at online and offline channels in combination.

We don’t believe that any organisation selling goods or services to identified individuals, such as home shopping companies or travel or financial services to name but three, has to give up on measuring the impact of their direct channels.

But to do this measurement one needs to work back from each order, rather than forward from the spend in each channels, to unravel what is actually going on in the real world.

We approach this by looking at all the known interactions between an organisation and a customer in a 90-day window before an order is received.

We ignore all clicks, opens, opportunities to view etc. etc. indeed anything that cannot be directly related to an actual order event, and treat these just as noise.

What then comes to the surface is much more complex that any last click proponent would like to admit; we find ourselves looking at a unified view in which emails, PPC, social, natural search, mobile SMS, direct mail, OBTM and any other direct channel employed can each play their part.

This table is a real example of just five individual orders received by a home shopping company, and counts the times each different channel played a role in the 90 days before the order:

Customer type Catalogues received emails received Google PPC Direct entry Phone in Total
Existing 2 3 1 1 7
Existing 2 1 3
Existing 8 2 10
New 3 3
New 3 13 1 17

Even in this relatively simple example the first thing that become apparent is the wide diversity of the routes taken by customers before they actually placed their order.

The good news though is that once you have joined the online and offline data together, and considered the weighting to give to different channels, and to different time intervals prior to an order being received, you have here the solid building blocks for attributing actual value to the channels being deployed.

You can then allocate the value of each order across the channels that influenced it, and end up with an overall value contributed by each channel in a particular time period.

We are not suggesting that this is rocket science, but it does need attention, and technology, to make it happen.

We have built the technology to automate this kind of attribution, and would be interested to discuss it with you if you felt it could help.

Please CLICK here for a short PowerPoint explaining in a little more detail how we do it.

 


UniFida logo

UniFida is the trading name of Marketing Planning Services Ltd, a London based technology and data science company set up in 2014. Our overall aim is to help organisations build more customer value at less marketing cost.

Our technology focus has been to develop UniFida. Our data science business comes both from existing users of UniFida, and from clients looking to us to solve their more complex data related marketing questions.

Marketing is changing at an explosive speed, and our ambition is to help our clients stay empowered and ahead in this challenging environment.


Why your own first party data is so important

There are many reasons why first-party data is so important, but your recognition of it may be at risk of being drowned out by the clamour of people selling recruitment media, particularly digital and programmatic media.

To us the case for first making best use of your own customer data trumps all other media purchase decisions. Here are just four reasons why first-party data is so important.

  1. It’s free and uncontrovertibly yours (as long as it’s properly permissioned)
  2. It allows you to develop very personalised relationships with each of your customers, and hence unlock as much value as is possible from them
  3. It can help you understand what is really driving your new customer recruitment, particularly when multiple online and offline channels play a part in your recruitment marketing
  4. It can support your overall business planning based on understanding the longer-term value provided by each customer segment

To allow you to obtain that customer value you need to ensure that your single customer view contains all your customers’ online and offline behaviours, linked by all the available personal identifiers.

You also need marketing technology that joins all this together, so that there is one complete version of the truth about each customer that can be used by all your marketing applications.

 

This is why we suggest you need to consider installing a customer data platform or CDP

To help develop an understanding of what a CDP can do for your marketing we offer three complimentary services.

  1. Data duplication testing: Identify how many duplicate customer records you have. Understand the impact of wasted spend on marketing.
  2. Suppressions run report: Identify and suppress individuals who have moved away or deceased.
  3. Business casing exercise: Identify and develop use cases and financial evaluation. See the opportunities and map out the ROI prior to any commitment.

Contact us to find out how UniFida’s Customer Data Platform could add value to your business.

 


UniFida logo

UniFida is the trading name of Marketing Planning Services Ltd, a London based technology and data science company set up in 2014. Our overall aim is to help organisations build more customer value at less marketing cost.

Our technology focus has been to develop UniFida. Our data science business comes both from existing users of UniFida, and from clients looking to us to solve their more complex data related marketing questions.

Marketing is changing at an explosive speed, and our ambition is to help our clients stay empowered and ahead in this challenging environment.


Do you prefer working in a kitchen, or sitting in a restaurant?

As a marketer, do you prefer working in a kitchen, or sitting in a restaurant?

We have noticed that the way marketers operate is changing, and the trend is firmly towards working in the kitchen!

Looking back a decade and more, agencies liked to own most marketing functions, and that went way beyond strategy, planning and creative; they liked to manage the production as well. This would mean that they would buy media, manufacture direct mail, and even take control of data. The full lavish restaurant experience.

Marketeers have gradually woken up to the fact that eating in restaurants is both very expensive, and puts control in the hands of someone else. If campaigns flop, they have to switch agencies, and this means listening to the whole nine yards of pitches and flummery.

Now that we are firmly in the data age, we find that marketeers like to get down among the weeds, and understand what is really going on. This way they can own that precious commodity, a true understanding of the customers on whom their fortunes rely.

That does not mean that there is no role for agencies, rather that, in addition to creative work, they are increasingly providing the technology environment in which the marketers can do their own cooking.

Nor does it mean that marketers have to start learning how to write their own code; instead they want a ready-made technology environment in which they can take control of understanding customer behaviour, and make sure that they are delivering, as far as possible, the right personalised experience to each individual customer.

At UniFida we are very aware of this trend, and have chosen to go down the route of delivering the technology (kitchens) in which marketers can operate.

In practical terms this means providing a cloud-based environment in which all online and offline sources of customer data are tied together, identities are resolved, marketing metrics are provided, and personalised campaigns can be planned and executed.

We don’t expect to tell marketers what they should do; rather we like to provide the most refined possible tools to help them do it themselves.

Our toolkit is a combination of UniFida Technology and UniFida Data Science. It’s reasonably priced, fully serviced, and the result of five years of continual development.

We hope that it’s what you will want to enable you to cook things up that your customers will really appreciate!

 


UniFida logo

UniFida is the trading name of Marketing Planning Services Ltd, a London based technology and data science company set up in 2014. Our overall aim is to help organisations build more customer value at less marketing cost.

Our technology focus has been to develop UniFida. Our data science business comes both from existing users of UniFida, and from clients looking to us to solve their more complex data related marketing questions.

Marketing is changing at an explosive speed, and our ambition is to help our clients stay empowered and ahead in this challenging environment.