Three reasons for measuring multichannel marketing campaigns
12/10/2010 | Written by | Categories: Analysis and Insight

My original blog post on measuring multichannel marketing campaigns was focused on optimising future marketing performance across all marketing channels for an organisation and I made recommendations on what I believe are the best ways of achieving this goal.  However I didn’t mention or discuss other reasons for wanting to be able to allocate revenue generated (or alternative goals achieved) between different marketing channels.  While the aim of the organisation should be maximising value across all marketing channels, for practical business purposes, there are other reasons for wanting to be able to measure or calculate that revenue split.

As I see it, the three key reasons for wanting to be able to attribute revenue to the different marketing channels (and broken down further within channels as required) are:

  • Optimise future marketing spend
  • Calculate payment for past marketing activity
  • Internal business performance reporting

Optimise future marketing spend

As detailed in the previous post, I recommend:

  • Evaluate the campaign based on the business bottom line (e.g. revenue for ecommerce sites) rather than trying to calculate revenue generated by channel
  • Evaluate each channel based on success actions that are relevant to that channel
  • Ideally all evaluations should be made by comparing actual performance against a forecast
  • Use results from testing and previous campaigns to guide and improve future marketing performance

Calculate payment for past marketing activity

One of the factors that prompted me to write on this topic originally was the focus by so many companies, both client side and agency side, on campaign attribution just so that each channel could claim the appropriate amount of credit.  This allows the internal staff or the external agency in control of that channel to receive an appropriate level of compensation for their work.  But as I have said, I don’t think calculating revenue generated by a marketing channel/campaign is possible to do accurately.

In good news though, I don’t think that should matter when it comes to calculating the payment for that marketing channel/campaign.  Value is something defined by the two parties so what matters is that an agreed methodology/formula is used.  For example, for a paid search campaign being run for a client by a search marketing agency, the agreement could be made around one or more of the following areas:

  • A set fee
  • A proportion of total spend
  • An hourly rate for managing the paid search campaign
  • A set fee per search engine click
  • A set fee per visit as measured by web analytics tool of choice
  • A set fee per visit in which predefined actions occurred as measured using the web analytics tool of choice
  • A proportion of revenue generated through visits that originate with a paid search click as measured by the web analytics or campaign measurement tool of choice using a last touch campaign attribution method
  • A proportion of revenue generated through visits that originate with a paid search click as measured by the web analytics or campaign measurement tool of choice using a first touch campaign attribution method

As long as both parties are happy that the payment method chosen reflects the value provided by the search marketing agency, then there shouldn’t be any problems.  The client will need to ensure that the method does relate to the impact of the marketing on their business.  And the agency will need to ensure that the method sufficiently rewards them for time and effort.  For both parties, it would be ideal that the better the agency performs in creating value for the client (as opposed to just working more hours), the higher their reward.

Internal business performance reporting

I am quite aware of this requirement due to the time I have spent creating dashboards for weekly performance reporting for clients.  Most top line summaries within my dashboards will include some data on the performance by traffic source (including non marketing traffic sources such as direct).  While these might not be the Action Dashboards that Avinash recommends, I still believe this information is useful for understanding performance – with a view to using this understanding to take actions.

And if you are going to include a single metric per traffic source, the best metric of course would be revenue (or equivalent goal for a non-ecommerce site).  So how do I recommend doing this if I believe you can’t accurately attribute revenue to traffic sources?

I would still go ahead and report this performance in terms of revenue or equivalent end goal using an attribution method of choice, which for me would ideally be last touch.   The reported number is not the revenue generated by the traffic source but if last touch attribution is used, the data will show the revenue generated during visits that originated with click from that traffic source e.g. a click on a sponsored listing.  As with most web analytics analysis, the focus here should not be on the absolute numbers but the trend over time, highlighting sudden spikes or falls and/or the general direction for each traffic source.  This information is relevant and actionable.

Summary

It would be great if we could accurately measure or calculate the revenue generated by each marketing channel and element within a marketing channel.  Life would be a lot simpler and indeed a happier place.  But it’s not possible and life is not simple.  So what’s the next best option?  To just use what data you can get anyway acknowledging that it will be somewhat inaccurate?

I say no on the grounds that the inaccuracy will be of a sufficient level to lead to poor strategic decisions.  Instead I have recommended different approaches to be used for the three key reasons for which it would be incredibly valuable to be able to match a revenue number against a marketing channel.

What do you think?  Do you agree with me?  Feel free to leave comments here or, if you are going to be at JUMP, look me up there and I will be happy to have a chat in person.

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