The high price of inflated marketing metrics
Relying on inflated numbers can lead you down a slippery slope. Columnist Matt Nitzberg outlines some strategies to help marketers focus on more valuable audience and sales metrics.
Marketers are hooked on inflated numbers, and it’s time for everyone to come back down to earth. Much of the issue started with a “use it or lose it” marketing budget strategy. If marketers didn’t spend everything they had, they didn’t get it come the next budgeting cycle. Marketers told their agencies to spend all of the money, and so that is exactly what the agencies did.
As many brands started to switch to a “prove it or lose it” marketing strategy, things didn’t always improve due to channel silos and other turf battles. Many marketers still wanted to keep their whole budget, so rather than redirect agencies to find the best-performing options, they often asked agencies to find the cheapest options, but to still spend all of the money.
This is where many marketers are today. Media buyers and channel managers spend billions on low-priced advertising and mass messaging so marketers can show that they drove a lot of volume at a good price.
The combination of forced spending and a focus on high volume has led to serious problems for marketing teams. They have fallen victim to fraud, like bots and non-viewable advertising.
They are also confronted with performance metrics that don’t add up. Reliance on inflated numbers leads to a scenario where marketing has lost sight of how many customers it has and how many sales it has actually generated, sending their marketing strategy off the rails.
When these marketers do try to assess the size and scope of their audience, they often find that it is totally out of sync with the rest of their metrics.
How to get your marketing metrics to add up
There are several important changes marketers can make to deflate their numbers and focus on more accurate, valuable audience and sales metrics.
First, and most importantly, company leaders must emphasize a clear focus on understanding the value marketing drives for actual human beings. Mid-funnel metrics like impressions or emails sent should never be used to determine the performance or relative value of their marketing spend.
Companies like P&G use a demand-side platform that houses first-party audience data every advertising channel can compare performance against. They emphasize universal frequency capping to ensure that teams can’t go crazy with inflated volumes. In this regard, even the most complicated and technical marketing strategies are tethered to reaching real people the right number of times on the right channels.
Second, each channel manager often takes more credit for sales than they actually earn, so channel activity, added together, is often a bigger number than total sales. Goals that reward cross-channel synergy and total sales growth can help stop unhelpful internal competition.
A focus on understanding omnichannel audience behavior over other metrics can also encourage managers to more accurately assess their contribution to the whole.
Third, marketers need to emphasize their audience-focused approach to their partners, many of whom are trained only in the law of inflated numbers. Media buyers should be held to sales and audience penetration goals rather than CPM and impression goals, for example.
Ideally, partners should be assessed by their contribution across many channels, understanding that each channel was only a partial contributor to an outcome. This will also help third parties work together if they realize that their work will be recognized fairly.
When marketers push inflated numbers aside, they can be freed to try new things without worrying about paying a hefty penalty come budget planning season. Pepsi executive Brad Jakeman explained at a conference last year that companies that are focused too much on marketing spend metrics and other traditional metrics lose sight of important new marketing opportunities like user-generated content and social sharing.
Companies that focus on the omnichannel effect on audiences can also be more creative with their team structure, encouraging groups from disparate teams to come together for important product launches or events like the Olympics without the worry of a metrics backlash.