How to Navigate Marketing Effectiveness in an Uncertain World

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Or delve into the key takeouts below.

#1 Data Shows That Marketing Is A Strategic Investment. But Budget Sign Off Is Still A Challenge.

Hanna Wade, Strategy Director of Data Science, sets the stage by exploring the current marketing landscape.

Marketing impacts virtually every aspect of a business, from acquiring new customers to re-engaging existing ones, and from fostering brand strength to creating a tolerance for price increases.

In fact, recent research by Ian Whittaker indicates that brand strength has surpassed factors like leadership and reported profit in the eyes of City Analysts when assessing a business's worth. In fact, 89% of analysts view marketing as an investment rather than a cost.

But securing budgets for marketing initiatives is becoming increasingly challenging.

In the face of a cost-of-living crisis, escalating media costs and diminishing brand loyalty, businesses are relentlessly seeking effective growth strategies and want proof of the impact of every pound spent. This isn’t surprising given that only 8% of marketing metrics in the DMA database mirror real business impact figures that CEO’s want to understand.

In this ever-evolving landscape, where all marketing budget must be accounted for, we’ve seen a resurgence of interest in effectiveness, particularly marketing mix modelling, a type of econometrics model, which holistically measures what is truly driving demand. This type of modelling can become a catalyst in a business – providing confidence to make decisions that will impact growth and secure marketing investment.

#2 To Begin Your Effectiveness Journey, Start With The C-Suite.

Hanna Wade explores how marketing teams can foster a culture of effectiveness.

McKinsey estimates that only 10% of Fortune 250 CEOs have marketing experience, highlighting the urgent need for alignment and understanding between marketing and C-suite colleagues.

The key lies in democratising marketing across the business, translating marketing language and metrics into tangible business effects that resonate with leaders. This doesn’t mean that elements such as awareness and reach aren’t important, but unless these can be linked to financial terms, they are perceived as fluffy and not understood.

By aligning teams across marketing, sales, and finance, companies can achieve increased growth in annual revenue, awareness, and overall size, leading to 27% faster profit growth over a year.

Econometrics has supported this democratisation, as it can act as “a mixing desk that the board can huddle around and play with the faders”, as said by Media Strategist, David Grainger.

#3 Harness Measurement Techniques, Like Marketing Mix Modelling.

Matt Triggs, Head of Analysis and Modelling, unpacks how brands can start their effectiveness journey using econometrics.

In an ideal world, all businesses would know exactly what drives their key goals, whether that’s sales, revenue, applications, or even footfall.

They’d be able to understand:

• whether different things drive different outcomes in different populations
• what the optimal spread of activity would be to drive successful outcomes
• what the future would look like under different scenarios, different budget constraints, and different economic circumstances.

Marketing Mix Modelling, a type of econometrics, answer these question. It can quantify the impacts of internal and external activity on outcomes.

At a simple level, an MMM might assess various marketing channels, promotions, partnerships, and PR efforts. It can then factor in external elements such as macroeconomic conditions, seasonality, or even the impact of events like COVID. However, businesses can elevate this simplicity based on their unique needs. This could involve delving into segments like different product groups, brands, or customer categories.

But before delving into the intricacies of these models, crucial questions need answers:

• Who should build the model – should it be in-house, outsourced to a media agency, or entrusted to a third party?
• How are you building the model - are you leveraging an open-source MMM package, coding it yourself, or opting for a dedicated platform or software?
• What do you need the model to tell you - does it need to dissect the ROI of individual shops worldwide, or perhaps evaluate the performance of various media channels to guide future investments?

One thing that the model can’t do is answer questions about things it hasn’t seen. This underscores the importance of involving all stakeholders in the project. Their insights and perspectives ensure the model aligns with the diverse and evolving needs of your business, capturing the unseen nuances that shape success.

#4 Lessons Learned From Chris Other’s Effectiveness Journey

Customer and Marketing Director, Chris Other, shares advice on how to drive a culture of effectiveness in your business. Watch the recording to hear the real-life examples from his time at Studio Retail and Tesco on how he’s navigated this in his previous roles.

As a marketing director or leader, your primary responsibility is to propel sales, necessitating both the justification and the allocation of a budget. This task, however, cannot be undertaken in isolation. Building a cohesive team and accessing the right data-driven insights is crucial, and the approach can be divided into three key phases as per Mark Ritson's teachings: diagnosis, strategy, and execution.

Delving into examples from his time at Tesco and Studio Retail, Chris outlines the importance of:

• Being crystal clear on who your customers are, what they want, and the markets you inhabit, this can involve both qualitative and quantitative data.
• Using measurement tools, like econometrics, to understand the key drivers of your business and ensuring that, if your econometrics modelling is being done by a third party, that all teams are being transparent and aligned with each other.
• Using the analysis you’ve done on your customers to work out who you want to target (And who you don’t want to target), what you are going to deliver to them and, based on what you know about your customers wants and needs, how you can distinguish yourself in the market.
• Considering both your long-term, brand-building goals, and your short-term, performance-based goals.