The Art and Science of Measuring Marketing’s Effectiveness

Summary: Overcoming Marketing Measurement Challenges from Brand to Demand

As marketing success metrics become harder and harder to measure, many marketing leaders are struggling to prove their effectiveness to the C-Suite. Andy Hasselwander, Chief Analytics Officer at MarketBridge, joins Lee Kantor from the Business RadioX studios for Richmond Business Radio to explore how MarketBridge is able to help clients overcome these challenges.

Discussed in this episode:

• The measurement paradox
• How marketers can best prove marketing effectiveness to the C-Suite
• The history of marketing measurement
• The current standings of marketing measurement and what data is available to marketers

Podcast Highlights:

[00:00:27] Tell us a little bit about MarketBridge. How are you serving folks?

Andy: MarketBridge is a marketing analytics consultancy. We’re based in Bethesda, Maryland. So just an hour, hour and a half, North Richmond. We work with Fortune 500 companies in the US and internationally to help them understand how effective or ineffective marketing and promotions are to their acquisition efforts. They’re just in customer efforts. Taking a look at that buy channel, for example, how upper funnel advertising is contributing versus demand generation or digital marketing type things. And we do that in a very scientific way. We’re open codes, so our clients get all the code that we write to analyze their data. And we’re extremely scientific. So basically everything we’re doing is provable and reproducible. That’s sort of what we do in a nutshell.

[00:01:29] How do you help the clients that are maybe overwhelmed by the amount of data that exists and how to prioritize? Just because something can be measured, is it worth measuring? How do you help them kind of navigate those waters to identify the priorities in terms of the metrics that matter?

Andy: I think for the last 20 years, there’s certainly been an imperative to measure marketing effectiveness. I think before maybe 2000 got a bit of a pass in terms of measurement. The accounting functions and financial functions might not have been as worried about what marketing specifically was doing. And then I think in the last 20 years as direct marketing and digital data just got bigger and easier to gather it became really important for CMO’s chief marketing officers to say, “hey, this is what we’re driving.” The unintended consequence of that has been for channels that don’t have as much data or for channels that take longer to work, like upper funnel television advertising or now over-the-top video advertising. Those channels might get short shrift because it’s just easier to say, “Hey, we have these digital channels, these direct channels where I can actually measure a click” and I can say, “Hey, that click cost me $30 or $40,” whereas advertising might not be. We try to help clients put some of those tougher-to-measure channels on an equal footing because they actually do work differently and it’s really important to understand the value that they drive. I think that’s one of the most important things that we help with.

[00:03:21] Now, what about kind of the saying that maybe there’s some art and science when it comes to these creative arts. Like, just because you want to measure or you can measure something – it seems difficult to measure creativity. Why is that one ad outperforming this other ad? Can you scientifically tell me the 14 reasons why this ad is a successful ad and an ad that looks it looks similar or sounds similar is underperforming?

Andy: Daniel Kahneman is a very famous economist and psychologist. He wrote the book Thinking Fast, Thinking Slow. And in that book, he posited that the human brain kind of works in two ways. The first way is it thinks slowly and through rational decisions, which he called system two thinking. And then the system one, the quick decision making is more primitive. What’s interesting about the system one thinking, that we find, is the more emotional thinking. That’s really what good creative advertising does. It’s memorable. It activates emotions. It’s not necessarily pushing the viewer or the clicker to do math in their head. You’re really trying to build an attitude. That good creative, good upper-funnel creative, or creative that’s designed to change minds over time does a really good job on that system one mechanism. There are all kinds of ways advertising can be effective. I mean, it can be memorable. Memorability is really important. This is why for years and years and years, jingles have been so important. Visual cues are really important. Mnemonics are really important.

The reason celebrities or spokes animals like you’re seeing a lot of in property and casualty insurance, whether those be geckos or emus or whatever, those create those memorable pieces. So, yeah, there are ways to sort of scientifically understand how that mechanism’s working, but you’re never going to be able to scientifically create perfect advertising. There’s always going to be the role for that for creatives. And what you can do is you can certainly say some of these upper funnel ads are more memorable, they do a better job activating the system one side, and we can see that that mechanism work against measured attitudes over the course of months or years. You see brands that understand this do it very effectively. Consumer packaged goods companies like Coca-Cola have been doing this for decades. I think property and casualty insurance companies that I mentioned earlier have figured this out now for a couple of decades. Retail banks, I think, are doing a good job. And you’re seeing those scientific pieces, I think, come through in some of the creative that you see upper funnel.

[00:06:40] But does that? I don’t know. I think luckily if you take Coca-Cola, they don’t really create brands. They buy existing brands that are out there. There’s a million brands going out there, doing what they do, taking shots, being crazy. Coca-cola waits for some of them to be successful, then buys a stake in them, and then eventually takes them over. And then in a lot of cases, they fail once they’ve got in the hands. I mean, that’s their R&D program.

Andy: Coke is I mean, that’s their certainly their line extension strategy. I’m more talking about the core brand, right. Which is the brands that are successful and how you make sure that when a consumer walks into a grocery store, or walks into a convenience store, that they don’t think about it. They just they just choose. And that is a huge piece of what they’re doing. And so when they’re running their media mix modeling, they’re very intentional on making sure that their share of voice and their core attitudes are doing what they need to do to drive all the way down to retail. I think for the line extension piece, you’re right. I mean, they’re definitely buying brands, and not all those brands are going to succeed. They’re only going to invest marketing against those brands where they think they have a decent shot of, you know, of getting shelf space and of activating the shopper marketing side.

[00:08:08] But are they succeeding because of their marketing or are they succeeding because of their distribution?

Andy: Well, both. I mean, distribution is a part of marketing. I mean, upper-funnel advertising is probably the beginning of the funnel and distribution is the end. Ultimately if a consumer has an attitude, that attitude is only going to be activated when they get to all the points of distribution they can activate. That’s going to be there. So, if you had to say to Coke “what’s more important: shopper marketing, distribution, or advertising?,” they would just say both because they’re both absolutely critical, but one sort of top of funnel and the other’s bottom of funnel. But the key is understanding how those are valued ultimately.

[00:08:55] Do any of these tactics that these mega enterprises use trickle down to small to midsize firms? Those that don’t have the resources or the distribution?

Andy: I think what you’re seeing right now on the consumer side, if we’re talking about consumers and there are all these other industries as well, Is it’s become much easier for upstart to enter. And that’s for two reasons. Going back to 1) marketing and 2) distribution:

• From a marketing perspective, it’s much easier to put together long-tail marketing strategies. I think Instagram and a lot of digital media, a lot of digital video has made that far more easy to do. It actually has made it more difficult for large, large firms to compete, because you can no longer just buy huge pieces of viewership on broadcast. You have to actually play a little bit of small ball, which can be hard for larger firms. So that’s made it easier.
• And then I think the other thing from a distribution perspective obviously is e-commerce has made things much, much easier. But that gets back to⁠—for small firms⁠—they need to think the same way big firms do about segmentation, targeting, positioning, and the four P’s⁠—just like marketing 101.
  1. Segmentation is if I’m going to compete and I’m going to win as a small firm, I need to pick a very specific segment.
  2. I need to be able to target them very effectively, which I can now do with digital media.
  3. I need to position myself in a way that is really differentiated from the larger firms that are out there.

And then maybe going back to your previous point, maybe Coca-Cola will pick me up, right? Maybe their business development team will go out and put an offer out there. But I mean it’s much easier for small firms to compete because those barriers to entry on the upper funnel side, on the advertising side, and on the distribution side have come down so much, but they still have to do it right.

[00:11:01] So the fundamentals are still the same.

Andy: Oh, yeah, the fundamentals are still the same.

[00:11:07] So nothing has changed from that standpoint. Now you can measure better and more effectively. So you can invest your dollars wiser.

Andy: Yeah, absolutely. Marketing and distribution generally have become a much more scientific discipline because they can be instrumented. I mean, all the money that’s gone to marketing technology. If you just look at all the multiples of software as a service martech firms, Salesforce was kind of the pioneer there before that was Siebel. But all the money that’s gone in there, the reason that’s going there is it’s for everything from a small 50-person firm or a 25-person firm to do content marketing all the way up to a gigantic firm trying to create digital CRM, sort of customer management pathways that are really measurable and delight customers. That’s hard to do, but the technology now makes it certainly much, much more measurable than it ever was.

[00:12:07] There’s always friction between sales and marketing. Has that has this influx of data helped, hurt, or made it grayer?

Andy: Well, you know, my marketing professor a long time ago used to say that marketing was defined simply as the entirety of all of the customer-facing or outside-facing functions of the firm. I’ve always believed that. And I think sales was simply the highest cost per transaction, most personalized piece of that. And I think that holds together logically. But obviously, that being said, the sales function generally is a very, very different culture than marketing. In-person sales selling is in COVID accelerated this with digital transformation is becoming harder. And what you’re seeing, we used to actually say telesales was different or inside sales was different than field sales. Now it’s really not. If you look, for example, at Medicare selling Medicare Advantage, a lot of these agents are selling digitally over the phone, whereas even three years ago they would have been across the kitchen table. It’s made selling more digital, more measurable, more data-driven. I think sales is always going to be the toughest thing to measure because it ultimately depends on an individual keying in an activity or an individual keying in a disposition.

And that’s hard to do. I mean, if you talk to anyone who has Salesforce, a Salesforce.com, and they say what’s the base challenge. The challenge is data cleanliness. And it’s just getting people, for example, to pick the right thing out of a pick list or enter the date a call happened. I don’t know if that’s going to get better. Honestly, I think it might, but that’s been a tough one for a long time. The tension used to be between sales and marketing. You know, ultimately what sales wants for marketing is they weren’t really high-quality leads and what marketing wants from sales is they want good data. That tension is always going to be there. I think in organizations that have integrated sales and marketing organizations, those tensions tend to work themselves out. But where you have executives running each department who are very different. and sort of run them in silos that can be tough.

[00:14:46] Now what is your ideal client look like?

Andy: Well, for MarketBridge we’re primarily focused on Fortune 500 space. We work over multiple years with clients building out data science and data infrastructures with them and delivering long-run solutions. Eventually, our goal is to leave, right? Our bench our goal is to teach clients how to build these systems and operate these systems so we don’t have to be there anymore. I would say our ideal client inside of that kind of company is a company:

1. Who wants to take a scientific approach towards sales and marketing
2. Who wants to have reproducible data stack and reproducible technology stack. In other words, one that we know exactly why things happen.
3. One that wants to have their data science team and their data engineering team bring these things in-house.
   We’re not a software reseller, so we work with all the MarTech stack, but we intentionally don’t choose one or the other or partner with one or the other. We’re very agnostic in that respect. So I think we can fit into whether somebody has an Adobe stack or a Salesforce stack or Oracle or whatever we can fit in. It’s more the ethos of the executives and making sure that they really want to be very scientific in how they do marketing and sales.

[00:16:19] Now, what are some symptoms that they’ve got a problem? What are some of the things going on? What are some of the things that they’re dealing with where they’re like, “Hey, maybe we should be calling MarketBridge?”

Andy: Anyone who says “I’m pretty sure that half my marketing is working, but I’m not sure which half.” That would be a classic one.

[00:16:39] People are still saying that because they were saying that 50 years ago.

Andy: Yeah, they’re saying it probably more. The most classic one we get is “I know upper funnel or brand is important, but I can’t prove it.” Or somebody that might say something like, “We’re spending all this money on promotional paid search and my CPAs look good, but I think I’m overspending. I think I might be just doing demand capture that would be happening anyway.” Those would be the kinds of questions we would get most often from CMOs. Another one might be, “Hey, we’re in new product launch mode and I don’t know how much of my new product launch is being driven by marketing and how much would have happened anyway.” Those kinds of hypotheticals tend to get asked. Another one on the data side would be, “Hey, I don’t really have a good sense of my marketing P&L. So really, the P&L being what I’m getting and what I’m spending for it. I don’t have a good data stack getting from my source data systems up to that sort of almost accounting or financial reporting view of marketing’s effectiveness.” Those would be some of the things.

[00:18:13] Can you share a story? Don’t name the name of the client, but maybe the problem that they were having, that you came in and were able to take their business to a new level, maybe get a result that maybe they didn’t even dream possible.

Andy: Yeah, sure. One that’s fairly recent, I’d say, we had a client who had a good business. The business was from a market share perspective, stagnant or declining, direct response marketing looked effective. In other words, the cost per acquisition was lower than the customer lifetime value. Yet they were declining and they had a strong hypothesis that they weren’t spending enough upper funnel and that they were losing mindshare. And what we were able to do for them is we were able to build a two-stage model where we proved that advertising was driving affinity, comprehension, and awareness of the products where those system one attitudes I mentioned earlier, we showed mathematically what that relationship looked like. And then secondly, we showed that those core attitudes were⁠—over the course of months and even a year plus⁠—driving customer acquisition at rates that they were basically refilling the top of the funnel. And we were able to instrument all that, put that together, and then they were able to change their advertising strategy and turn that decline around. It’s not like we’re talking about you go from -10% to +10, it’s more like -2 to +2. Understanding that and understanding that relative market share is the mechanistic link to share voice⁠—or the basically the percent of messaging, upper-funnel marketing⁠—and proving that mathematically, I think is really important in this case. Helped the client a ton. I mean, this was a major impact on their ability to tell a compelling story to investors. So that would be a pretty good one.