Get a grip of your ROI in the Real World

Monday, June 27, 2011
Dan Temby
SEM

Coming out of the SMX Advanced conference in Seattle earlier this month, a few things stood out to me as patent certainties…

  1. Early June in the Pacific North-West rarely delivers consecutive days of sunshine
  2. The conference backpacks are getting fancier every year
  3. Advertisers and marketers are seeking, more than ever, the magic formula behind understanding the impact of every penny in their advertising arsenal

As an Australian ex-pat, my tolerance for mediocre climates is low, but then again I voluntarily live in Toronto now so I really shouldn’t spend any time complaining about lousy weather. Similarly, I would enjoy waxing oratorical regarding my opinion of the correlations between SMX Advanced backpack quality and the sophistication of the search-marketing industry, but I’ll keep that to myself (for now), too.

More importantly though, if you’ve ever spent a dime on marketing of any kind then you have probably asked yourself (or rather, the dime) ‘What have you done for me lately?’ Understanding the return on investment (ROI) of your efforts is pivotal to any strategy and never more so than today as we wade neck-deep through a sea of digital performance marketing tools and techniques; trying our best to consume large helpings of word-salad featuring tasty morsels like ‘algorithmic modeling’ and ‘last-click channel attribution’. But what does it all mean and why should you care?

This is all about giving credit where credit is due. Many technology platforms exist today that will enable digital marketers to gain broader visibility into the ‘experience’ path that a consumer has leading up to a purchase and then award appropriately divided amounts of that sale revenue to each marketing channel that generated a touch-point (or, influencer) along the way. These amounts can get calculated based on lots of different configurable rules that look at factors like elapsed time, number of influencers, value of sale and the type of media responsible for the touch-point… It’s really quite fancy.

For example, a typical experience path for a particular consumer might look something like this:

PPC Ad Click –> Display Ad Impression –> Organic Search Click –> $90 Online Purchase

As opposed to awarding the Organic Search channel with the full $90 sale, a (very) simple attribution model might award $30 of revenue to each of the three channels, thereby influencing the ROI of each channel accordingly. Nothing too controversial there and definitely a great method for more effectively understanding what is driving your results.

Now don’t get me wrong; I am a BIG believer in this type of channel attribution, but unfortunately, not all people fit into a marketing box where 100% of advertising efforts are focused online and where every conversion is an ecommerce transaction with a nice juicy sale value stapled to it. Not to mention being in an environment where our greasy digital fingerprints can be reliably smeared on every single user experience across all web properties and advertising mediums. In the real marketing world things are (sometimes) slightly more chaotic.

Take a deep breath, if you will, and imagine the following scenario …

You’re an agency working on a campaign for a client with a marketing team and a technology department both actively involved in the process. They get on well at company parties and use words like ‘collaboration’ and ‘cooperation’ in meetings, but we all know what’s really going on, right? RIGHT?

There are three corporate web properties, each owned by different sections of the business and used for different purposes. Did I mention that they are underpinned by completely different web analytics platforms? Oh, well… they are. Throw into this mix a new web property that the agency just built to support the core lead generation campaign and the framework for our ‘real-life’ little scenario is set.

Now, our marketing team isn’t just into digital.  They know it’s a big part of what makes them successful but they’ve still got active investments in the Yellow Pages, some direct mail and a quirky little radio spot they run seasonally on a few local stations in their prime markets.

Toss into the mix that they don’t actually sell anything online. You are all about getting the lead for this particular client, preferably a phone-call so they can really do some selling. I should also point out that those calls go directly to one of 200 or more locations around the country. I mean, having a nice centralized call-center would just be too easy, now wouldn’t it?

Oh, and before I forget, throughout the campaign there are two or three major news events that surged interest in your client’s industry segment.  You’re not complaining of course, but some of your numbers went pretty screwy there for a while.

The scene is set… There is an annual review meeting and everyone is at the table. It isn’t long before the CMO is asking some really smart questions like “So what should we be spending our money on next?” and “Where should we be focusing our efforts?” The answers are in there somewhere… You just know they are.

So, it doesn’t take long to illustrate how in the real world, relying on digital attribution alone can leave you with just a fragment of the story and often a distorted one at that. Let’s take a look at our previous experience path example once again. When we underpin it with our new scenario, it isn’t too difficult to see how this:

PPC Ad Click –> Display Ad Impression –> Organic Search Click –> $90 Online Purchase

Could quickly, and very feasibly become this:

Radio Ad Spot à Evening News Story –> PPC Ad Click (Site 3) –> Direct Mail Piece –> Display Ad Impression –> Radio Ad Spot –> Organic Search Click (Site 1) –> Web Form Submission –> 5 Minute Phone-call.

But wait! How do you know? How can you know that all these things happened and accurately attribute portions of revenue to each of them? The truth is, you can’t. However, with the vast array of data sources at your disposal, there is a LOT you can do with some pretty clever know-how and some competent analysis.

Think of it as determining your media mix allocation as opposed to purely your channel attribution. What patterns emerge across your media channels that could suggest a secondary or even tertiary influence that is not visible to a traditional digital attribution platform? Do different types of demand generation factors coincide with statistically significant fluctuations in search and conversion volumes? Do these fluctuations have a positive or negative impact on your overall conversion rate and ROI? What can you glean from the last month of data to better equip you for the next?

Aggregating and correlating this type of data in order to understand the influence of your efforts against one another at a macro level can be a supremely powerful decision making tool. Remember that there is NEVER one categorically right way of evaluating this information. All you can do is work to become consistently and progressively more informed. Couple this with some well thought out attribution plans and you will be well on your way to understanding and acting on your marketing results in a new, productive and exciting way.

Ok. I used the term ‘exciting’ a little loosely there, but if you made it this far then you probably enjoy this stuff as much as I do and let it slide!

Contact us today to find out more!

Dan Temby, VP- Digital Platforms