Last month, The CMO Survey released a report detailing results from its bi-annual study gathering insights and opinions from America’s top marketers. Topics covered include growth strategies, firm performance, and several strategic-marketing topics. The strategic-marketing aspect is what I’m most interested in discussing; particularly comparing marking spending for social media vs marketing analytics.
The horizontal lines represent how much (%) of a company’s total marketing budget is spent on Social Media (blue) and how much (%) is spent on Marketing Analytics (green). Notice that in 2016 the gap widens with Social Media increasing in spend while analytics decreases in spend. On average, Social Media spend is almost 4 points higher than analytics.
Now look at the vertical bars which represent the respective performance impact of Social Media and Marketing Analytics. A score of 1 is the lowest impact; a score of 5 is the highest impact. The CMOs included in this study indicate that analytics continually have a stronger impact on company performance despite having a lower spend percentage than Social Media.
This exercise is not meant to single out Social Media and say it’s not worth its currently level of investment. Rather, the point is that marketing performance analytics are proven to have a significant impact on company performance and it’s worth examining your own marketing budget breakdown to see how resources are being distributed.
Looking objectively at successful companies, they aren’t taking the “spray and pray” approach where they implement a variety of marketing initiative hoping one works. While this may yield success at times, those occasions are few and far between. Instead, successful companies are developing a marketing plan, implementing strategic campaigns, and assessing the effectiveness of their marketing campaigns by tracking, measuring, and analyzing key metrics that reach beyond standard revenue figures.
So, what’s to be done with this information?
Think of marketing in terms of a personal investment portfolio. Of course you’re watching the bottom-line performance of the portfolio, but there should also be an eye on each individual investment. This way you can identify the strong and weak performers which allow you to make necessary adjustments to maximize overall ROI. This same concept applies to strategic marketing where the success of the whole is a result of individual performances, and the best way to maximize marketing ROI is to audit, track, measure and analyze the individual marketing activities.
Since there are too many moving parts within strategic-marketing for a single metric (dollars) to validate, a more detailed approach must be taken; and a more detailed approach typically means more resources allocated. However, according to insights gathered from some of the country’s top marketers, it seems the general marketing budget spend on analytics continues to lag – which leaves many brands unable to effectively track and measure the impact of their varied marketing initiatives.
As a market research and data analytics company, we are always encouraging marketers to validate their marketing effectiveness byway of statistical analysis – and we genuinely believe this is a strategic marketing best-practice. In fact, the investment in marketing analytics should at the very least be correlated to that of channel spending because the more ways you’re reaching out to customers, the more marketing metrics there are to be measured.
What’s great about the CMO Survey referenced at the top is that you don’t have to take our word for it. The top CMOs are seeing the impact of marketing analytics and the result is a shift in marketing budget spends.
The traditional metrics for determining marketing effectiveness have historically been sales and revenue. If the product or service is selling, the marketing is working. While sales performance is obviously directly linked to marketing effectiveness, the ever-expanding list of communication channels, brand messaging platforms and personalized promotional variations have complicated this relationship. The simple cause-and-effect outlook no longer applies because the question has become, which action is causing which effect?
There’s only one way to find out.
Ready to start measuring the success of your marketing campaigns? Assessing effectiveness will identify areas of strength on which more can be built, and highlight areas in need of attention that might be causing serious damage. Give us a shout and let’s chat!