John Wanamaker (July 11, 1838 – December 12, 1922), courtesy of the United States Library of Congress.
“Half the money I spend on advertising is wasted; the trouble is I don’t know which half.” — John Wanamaker.
I first heard this quotation in my MBA program, and for the first few years of my career, I would have had a tough time refuting it. Until I could invest in search and pay-per-click ads, I, too, struggled to know what part of my marketing budget actually drove sales.
Today, thanks largely to Facebook, Google, innovation in TV media buying, and other people-based advertising platforms, marketers don’t have to languish amid such uncertainty. That’s because these new or evolved channels, delivered increasingly via mobile devices, can give marketers a very precise idea of which ads (and therefore how much of their marketing budgets) contribute to revenue.
Putting yourself in the position to know what parts of your marketing budget perform well requires more than just reallocating dollars. There are three ways in which marketers must adapt in order to avoid Wanamaker’s frustration.
Understand that all marketing can be performance marketing. Prior to people-based advertising, marketers had to accept proxy metrics for marketing performance. Reach, frequency, and impressions served as proxies for awareness. Not so today. For example, marketers can upload their database of customer information to Facebook and instruct the platform to find “lookalike” audiences that resemble these customers or exclude them from new campaigns. They can tie their ads to purchases, both online and offline. Digital ads aren’t the only ones able to deliver such certainty. TV and even print and out of home (e.g. roadside billboards) all can support performance goals, so abandon proxies and embrace performance.
Treat media dollars as experimental. Used to be that marketers had to allocate fixed budgets to media months in advance of that media running. If after two weeks of a TV campaign an advertiser saw no change in consumer behavior, she’d be hard pressed to back out of the campaign or change which ad ran and in which time slots and programs. Today, marketers have so much more flexibility, which is why they should treat their media budgets as experimental. Rather than allocate $2 million to digital, for example, they can run a series of $20,000 tests to see which platforms deliver the best results. If something doesn’t work, advertisers can keep their powder dry and look for a better opportunity.
Map the customer journey. With a proliferation of marketing channels and touch points, marketers need to develop some sense of how their customers go from being in the dark about a product or service to coming back as a loyal customer. Advertisers shouldn’t concern themselves too much with precision. This stuff is hard to gauge. Establishing even a basic model can help a marketer integrate and resource her investments, setting goals by channel that recognizes TV, social, out of home, and word of mouth all can impact search, which itself can impact how customers engage the products and services they buy.
Each of these three mindset shifts comes with its own set of requirements, so the message here isn’t “Knowing marketing performance is as easy as 1-2-3.” Still, it should comfort marketers of all stripes to know that they don’t need to operate in the dark.