Marketers today have many options to invest their budgets in, creating something of a challenge. Which combination will drive the best results for their brand? What is the optimal mix of marketing investment and when is the best time to spend it? These questions are top of mind for the many chief financial officers, chief executives and company directors who must approve those budgets. And they are also keen to understand the degree of certainty behind the marketer’s final decision.
For example, marketers have long understood the relationship between hot weather and ice cream sales, and cold weather and roast and gravy sales. But does additional marketing investment at those times further spike sales, or is the marketing effort better used at other times?
During the past two decades some businesses have relied on econometric modelling to prove their marketing mix has been effective, and to understand which marketing efforts have worked best, so that future investments can be made more wisely. Initially, econometric modelling was a somewhat time-consuming process, with economists ingesting and analysing the data before coming to a conclusion. These modelling exercises were like large bespoke research projects and, as such, done only once every few years. Today, data analytics software and artificial intelligence have made this process a lot faster, with some marketing technology companies claiming to be able to do it in real time, day in, day out.
While marketers can invest their budgets in anything from research and development to product extensions and customer experience technology, more often than not their largest annual investment is media ads. And today’s media provides a further breadth of choice for marketers, particularly in the digital space.
To help marketers understand which combination of media delivers the best returns against their key performance indicators, there are software solutions that can analyse media investment. Some do this in the digital media space, attributing sales results to the various online steps a consumer has taken to buy something. And given that many of these online steps involve brands trying to outbid each other for ad space or search terms, quite a few of these software tools now have AI assessing the data and buying the best combination of online media while assigning the most appropriate creative messaging, all without human intervention.
Marketers also need to understand the impact of traditional, offline media, in combination with digital online media. Again, econometric modelling can examine what has happened historically with a brand’s media spend. The more interesting models take this information and predict the best media mix, using AI and machine learning. And this has seen the rise of media investment analytics software companies: if marketers are going to invest a large proportion of their budgets in online and offline media, they need to be confident of the impact specific media channels will have. This is the kind of robust analysis that boards and senior executives are looking for.
All three media mix analysis techniques (media attribution, econometric modelling and media investment analytics) can certainly help marketers better understand which combination of media works best. But the complication is that many of the companies that have invested in this software are the media and advertising agencies themselves. So, while they correctly try to help clients make better decisions with their media spend, when they are auditing campaigns they are effectively marking their own homework.
In more recent times, consulting and accounting firms have begun acting as more independent providers of these services, as have a number of independent media technology companies.
To be best prepared to take advantage of marketing or media mix analytics technology, marketers first need to ensure they are capturing and tagging all data appropriately and accurately. They also need to be open-minded to the learnings from the insights uncovered by the data.
And, finally, there is a real opportunity for marketers to use this more scientific approach to change the conversation on the power of marketing at the board and executive levels. The goal should be to switch the discussion from one of spend and cost, to one of a necessary investment to drive results.
With many brands suddenly finding their marketing budgets reduced in this recovery period from COVID-19, understanding which combination of marketing levers will drive the optimal results has never been more important. The good news is that it has never been quicker to do these sorts of analyses, with the various expertise and technology now available. –