“One of the biggest pitfalls for performance measurement is to measure the ‘part’ with ignorance of the ‘whole,’” wrote Pearl Zhu, author of the Digital Master book series. Her quote perfectly reflects the growing realization of marketing measurement’s critical role. We see a requirement to evolve beyond attributing the value of a conversion to single customer touchpoints (the ‘part’) toward an understanding of marketing effectiveness throughout the ‘whole’ customer journey.
Multi-touch attribution delivers change through modeling all of a brand’s customer interactions to attribute fractional credit for each conversion to each unique touchpoint.
Here are six of the key drivers of the change for 2018:
1. The data opportunity
Marc Benioff, Chairman and CEO of Salesforce, believes the convergence of powerful forces—including social, mobile, cloud, big data and community—is reshaping the world. “The combination of these technologies unlocks an incredible opportunity to connect everything together in a new way,” as he puts it.
For the first time, silos are actually collapsing, allowing access to integrated, end-to-end customer data: the basis for multi-touch marketing measurement. In November, Google and Salesforce announced a global partnership enabling GA360 clients to integrate online and offline customer touchpoints.
The significance of making this online-offline join can’t be overstated. Our clients without it haven’t been able to attribute more than an average of 17% of revenue to a marketing activity, compared with more than 80% when the link is made.
2. Faith in digital
The opportunity that this interconnectivity provides has helped businesses shine a brighter light on the tangible role that digital advertising is playing anywhere in the customer journey… and some of them don’t like what they have seen.
Procter & Gamble has been causing a major stir all year, starting in January when Chief Brand Officer Marc Pritchard called upon P&G’s agencies to clean up transparency and demand that all platforms provide third-party measurement. Pritchard threatened to pull spend if they failed to comply, and was true to his word. In Q2, the company cut $140 million in digital advertising spend, identifying and eliminating ineffective ads. P&G experienced no drop in revenue or sales volume.
At first glance, there’s a staggering contrast with L’Oréal’s confidence in digital. While P&G cut 65% of their year-on-year Q3 spend, L’Oréal ramped theirs up 76% over the same period. Having carried out a similar crackdown on wasted spend, L’Oréal renewed confidence by better placing digital spend to measure the returns.
3. More ways to communicate with customers
It’s been a fascinating year for marketing channel innovations. For retailers, we’ve seen the emergence of Amazon as an advertising channel, with Martin Sorrell predicting it could threaten Google as the biggest benefactor of ad spend. Amazon CFO Brian Olsavsky also declared it a ‘meaningful’ portion of their overall business.
Developments at Facebook continue to enable more cohesive cross-channel campaigns, particularly leveraging the full suite of their platforms: Instagram, Facebook and AI-driven engagement on Messenger.
These represent great opportunities for marketers to acquire customers at a sustainably low cost and increase their lifetime value. However, for most, these new opportunities are not only executed but measured exclusively within the same advertiser’s ecosystem. With most marketers using more than one ad channel, this inevitably creates data silos across an organization, a less coherent view of the actual customer journey and the risk of each channel reporting total credit for the same conversions.
This increasing complexity is combined with spiraling costs. We’ve witnessed a 65% increase in average cost per click in paid search since 2015. As a result, businesses are challenging these partisan tools for measuring marketing effectiveness to gain a holistic view of the customer, their touchpoints, costs and value.
4. The need for independent measurement
Last-click attribution typically overmeasures paid search as a converting rather than discovery channel. At the same time, organic and client-initiated channels like email are often under-represented. It’s fascinating to see clarity in how credit is redistributed by the multi-touch models.
Many Fospha clients spent most of their budgets in paid search, relying on Google Analytics and last-click attribution. They wasted up to 50% of their budgets on ineffective keywords, as multi-touch attribution revealed.
5. Better marketing measurement as a company-wide initiative
It feels like multi-touch attribution is now just as imperative for the CEO and CFO as the CMO. The CMO Council and Deloitte found that more than 70% of CEOs now expect marketing to drive revenue growth. What was once a creative brief must now evolve to fully engage with data, science and technology.
Marketo expects marketing to grow revenue and acquire new customers, while improving the customer experience. By contrast, the survey found that nearly one-third of marketers don’t measure their contribution to revenue. Even fewer (14.8%) say they contribute to more than half of company revenues. When pushed on the matter, half admitted to guessing the number.
The biggest barriers to successfully implementing multi-touch attribution are organizational. Many companies are unwilling to treat data-driven marketing measurement as a business change rather than a project. With mature measurement practices, the CMO must work closely with the CFO while driving business growth at a manageable cost.
6. AI and machine learning
Data helps us predict where the highest value opportunity exists to invest marketing spend. Additionally, we can calculate the true incremental value of marketing activity and incorporate external events into modelling.
For example, Starbucks leverages weather data so granularly that they can predict tiny variations in demand, street by street. They then adjust stock and display, and drive sales, accordingly.
Not long ago in my ecommerce past, the closest we came was praying for the rain gods to ruin a sunny weekend. The profound advancements here are a real cause for excitement in the immediate future.
Summary
These are some of the major themes driving change in 2017. I believe they will continue to dominate the marketing measurement debate in 2018.