Digital Marketing Optimization

  |  March 4, 2008   |  Comments

How customer acquisition, conversion, and retention fit into digital marketing plans.

My last column examined the concept of "data-driven marketing" and four key components for its success: philosophy, processes, data, and technology.

At its heart, data-driven marketing underpins the drive towards optimization. But optimization's one of those words that's used a lot but often means different things to different people. It's a bit like segmentation, engagement, and so on. So here and in upcoming columns, I'll offer my take on optimization, what is means, and how it can be achieved.

I first came across "optimization" as part of my college degree course. It was presented as a mathematical problem; how do I maximize a desired outcome given a set of certain constraints? This is the way I've tended to think about optimization ever since, particularly when it comes to marketing optimization. My desired outcome will be things like orders, revenue or profit and my constraints will be things like money, time, and resources. The challenge is to maximize the return on investment in marketing.

The problem with this purely mathematical approach to optimization is that often the problem is too large or complex to solve easily. You must understand and define the relationship between all the variables (such as sales and advertising) and then use the mathematics to determine the optimal allocation across the various inputs. Often, there are too many variables and the relationships are too complex to be solved easily. The approach then is to chunk the problem down and iterate towards a solution. This is where data-driven marketing's components come into play.

In the digital world, the ultimate goal of many marketers is to maximize customer lifetime value and to allocate resources available in such a way to achieve that. Things like customer lifetime value can be difficult to define and to measure and marketers may not have the ability to efficiently manage all the resources appropriately. The intent may be there but the ability to execute may not. As a result, we break the overall process into smaller processes and we need to begin to think about how we can optimize individual separate processes rather than the complete value chain in one go.

We already think about digital marketing as three separate processes, namely:

  • Acquisition

  • Conversion

  • Retention

Sometimes these processes can be too separated with little joined up thinking between the three. Having said that, for the purposes of optimization and given the constraints of data and technology, it probably makes sense still to use them separately as the basis for our optimization strategy. Keep in mind, we're ultimately trying to maximize the allocation of resources and investment across the whole customer lifecycle.

So what problems are we trying to solve? In acquisition, we are trying to optimize our campaigns to increase the propensity of people to visit a Web site and engage. This is an area where there's been a lot of focus over the years and where technology has made a significant impact in either allowing marketers to iterate through the cycles more quickly or where the technology effectively automated the optimization process. However, the goalposts are moving and the problem set is changing. Increasingly, marketers need to be looking to optimize in a different way.

For conversion, what we're trying to do is to increase the likelihood of some desired outcomes, whether that's an order, a registration and download or telephone call. Here there has been a lot more attention given over the past couple of years and where analytical technology has evolved to help marketers understand how to improve site architecture and design. There's more work to be done in this area though and the technologies and the processes to manage them need to be more widely adopted.

With retention marketing what we are looking to do is to increase customer value. Here we are talking about maximizing on investments that have already been made in acquisition and conversion so we don't have to make those investments again. With a few notable exceptions I don't think that many organizations are focused on this area at the moment.

In upcoming columns, I'll look at optimization in more detail, examining acquisition, conversion, and retention and the philosophy, processes required, and data and techniques available to maximize the effectiveness these individual processes. Till then...

ClickZ Live San Francisco This Year's Premier Digital Marketing Event is #CZLSF
ClickZ Live San Francisco (Aug 11-14) brings together the industry's leading practitioners and marketing strategists to deliver 4 days of educational sessions and training workshops. From Data-Driven Marketing to Social, Mobile, Display, Search and Email, this year's comprehensive agenda will help you maximize your marketing efforts and ROI. Register today!

ABOUT THE AUTHOR

Neil Mason

Neil Mason is SVP, Customer Engagement at iJento. He is responsible for providing iJento clients with the most valuable customer insights and business benefits from iJento's digital and multichannel customer intelligence solutions.

Neil has been at the forefront of marketing analytics for over 25 years. Prior to joining iJento, Neil was Consultancy Director at Foviance, the UK's leading user experience and analytics consultancy, heading up the user experience design, research, and digital analytics practices. For the last 12 years Neil has worked predominantly in digital channels both as a marketer and as a consultant, combining a strong blend of commercial and technical understanding in the application of consumer insight to help major brands improve digital marketing performance. During this time he also served as a Director of the Web Analytics Association (DAA) for two years and currently serves as a Director Emeritus of the DAA. Neil is also a frequent speaker at conferences and events.

Neil's expertise ranges from advanced analytical techniques such as segmentation, predictive analytics, and modelling through to quantitative and qualitative customer research. Neil has a BA in Engineering from Cambridge University and an MBA and a postgraduate diploma in business and economic forecasting.

COMMENTSCommenting policy

comments powered by Disqus

Get the ClickZ Analytics newsletter delivered to you. Subscribe today!

COMMENTS

UPCOMING EVENTS

Featured White Papers

BigDoor: The Marketers Guide to Customer Loyalty

The Marketer's Guide to Customer Loyalty
Customer loyalty is imperative to success, but fostering and maintaining loyalty takes a lot of work. This guide is here to help marketers build, execute, and maintain a successful loyalty initiative.

Marin Software: The Multiplier Effect of Integrating Search & Social Advertising

The Multiplier Effect of Integrating Search & Social Advertising
Latest research reveals 68% higher revenue per conversion for marketers who integrate their search & social advertising. In addition to the research results, this whitepaper also outlines 5 strategies and 15 tactics you can use to better integrate your search and social campaigns.

WEBINARS

Jobs

    • Customer Service Representative
      Customer Service Representative (Common Sense Publishing) - Delray BeachDo you thrive on chaos? Love to multi-task? Enjoy a fast paced work environment...
    • Business Intelligence and Reporting Analyst
      Business Intelligence and Reporting Analyst (Stansberry and Associates) - BaltimoreStansberry and Associates is seeking a driven individual to fill...
    • Internet Marketing Campaign Manager
      Internet Marketing Campaign Manager (Straight North, LLC) - Fort MillWe are looking for a talented Internet Marketing Campaign Manager to join the...