Let's crack the code on which channels truly drive sales, how to optimize your budget, and where to find those game-changing opportunities.
This 3-part journey transforms complex measurement challenges into a strategic advantage. From mapping your measurement vision in Chapter One to mastering methodologies in Chapter Two, you'll build a comprehensive framework that connects spending to results. It all comes together in Chapter Three, where you'll learn to balance quick wins with breakthrough experiments in a practical quarterly plan.
Join data scientist Jim Lenskold as he shares battle-tested approaches to measuring and maximizing marketing ROI. Whether you're struggling with attribution or hunting for your next big win, this series equips you with tools to make smarter, more confident marketing decisions.
Hello and welcome to the strategic measurement planning webinar. Today's webinar is brought to you by E29 Marketing in partnership with Lenskold Group. My name is Jim Lenskold and I work with E29 in the role of a data scientist helping clients measure and maximize their marketing ROI. The goal of this webinar series is to expand your mindset of measurements and have you consider a more proactive and strategic approach to planning your measurements in advance, much like you do for annual marketing.
The strategic measurement planning webinar is going to be split into three different sessions. Today's part one, we're going to focus on building insight objectives. So this is the why we're measuring, what we're trying to accomplish, and how we'll use it ultimately as well. In part two, we're going to focus on measurement methodologies. And so this is the how-to, the kind of mechanics of it. And then in part three, we're going to bring the outputs from these first two and talk about how to prioritize. And in a sense, whatever time horizon we're looking over, quarter or a year, we're going to have limited resources. So it's really important to make sure that how we use those resources gives us the best payback.
Let's first talk through the key challenges that make it difficult to measure marketing contribution. In the chart we have here, we have the weekly impression levels of each media channel stacked up toward the bottom here. And then along the top, we have the trend for dollars sold and units sold. And with so many media channels running concurrently and sales changing every week, it's not easy to determine the impact of the media on sales, which is what we ultimately want.
So all this current media happening at the same time creates a complexity. We also have non-media factors which include pricing, promotion, and distribution. They influence sales. There's external factors such as the category trends, seasonality, the economy, and even the weather. And then you can also factor in competitive activity, their media, their promotions. And of course, one of the bigger hurdles that we often neglect too is that organizational barriers, the cultural barriers that dictate whether the time and the cost for learning is valued enough to justify it.
But that's where the opportunities come in. And so as marketers, I think we enjoy any insight that helps us boost effectiveness. We always want to find some indicators of ROI contribution. We'd love to be able to justify our spend and take it further and optimize our mix. And we ultimately want to guide good strategies. Like how do we motivate purchase behavior in such a way that has a financial impact?
All right, let's look at this in a slightly different way and kind of frame out our vision of measurements. So of course we have our key decisions and highlighted here just as what we do with our channel spend and ultimately ultimately put channel impressions out there in the marketplace. We know that we're intending to impact key outcomes, ultimately incremental units sold or dollars sold. And then out of that, we know we'll have some margin. And then it's the piece in the middle is connecting the dots. It's the cause and effect that we're after here. We've got a factor in those non media external and competitive factors. And then also consider the insights into the buyer's journey in particular, but then also anything else that's strategic. The impact of tactics offers messaging, targets, the intensity levels. All of this is where we zero in and say we've got a lot of insights we need to know, a lot of unknowns, but if we could connect in some way the spend to the margin, there's ourROI.
Our first output in building a strategic measurement plan can be considered kind of a wish list of all the insights we'd love to have if we had unlimited resources. So I'm going to take you through three approaches that will provoke different insight objectives, and there's overlap between the three, but this is how you get fresh ideas to emerge, which is ultimately what you want.
So the first category is you call it decision support. This covers your day -to -day insights that marketer needs. So support for our primary marketing decisions, performance reporting we need, maybe there's some things in terms of declining performance or upside potential that we're trying to deal with and then even just the things like upper and lower funnel synergy, right? This is putting all these pieces together. So a lot of things that we have to sort out on an ongoing basis.
And the next category, let's call it experimentation. And this is one that maybe is neglected in an area and yet it's probably the most interesting. And it's really because no one's asking for it, right? But this is where we get to uncover new opportunities and find alternatives that drive sales and ultimately look for some big wins.
And the third area is where there's a little bit more disciplined process and that's in the annual planning or maybe that's more frequent but it's where you're making your request for budget and kind of explaining how you're going to allocate that across channels. I think at the same time you're looking at year -over -year so where are their higherROI potential to improve on the performance from last year.
So I'm going to mention that a key theme of measurement planning is asking questions the right way. We wantto ask questions that align to viable business decisions that we can make as opposedto those that are nice to know. And I'll emphasize that our focus is on firstimproving marketing impact and secondarily on proving our impact.
So we often start with the media mix. If we look at this example of how our spend has been allocated, we might ask if we need to add or remove a media channel. And if we wonder about a if a media channel and I'll just use in store media as an example,but does it belong in our mix, then we would pursue measurements that compare a mix with and without in -store media. There's only so many marketing channels, so we'd rather identify improvements before eliminating them from the mix.
So maybe our question on in -store could start more with scalability, that's a key area. Should we be increasing or decreasing our spend to see if we get a better impact? Because it does happen where we're spending below a certain threshold or above and the sweet spot is in the middle. We can also consider insights that help improve in terms of effectiveness. So that's looking within the channel, right? Our targets, our tactics, other aspects of our media, and so if we zero in on some questions there and some insights needed, that's going to be a big help.
And then the category of integration relooks at synergy across channels. So we want to make sure the collective impact is performing well. And that might be where we propose a question such as does my upper funnel media generate a lift in conversion rates for certain channels, and that would queue up certain measurements that go with that.
Now, reporting is part of our ongoing job. Executives wanna know as much insights as possible on marketing's financial contribution. And if we think about it, it's because that helps them with their decision -making at the next level up. We can consider insights into that help with projections, and that's because sometimes we the early indicators of what's happening in the short term to really project out what's happening longer term, whether that's future customer value or future sales. And so that would lead us to measurements and analyses that are more focused on getting good leading indicators.And then we also need a good set of KPI metrics. And those are the ones that provide us with the insights that maybe help diagnose why certain channels might be performing above or below
You know, one of the most important is that we're going to be asked to set goals. We want to be able to get insights along the way to tell us, are we achieving those goals and make sure that we really get the chance to proactively design the right measurements in advance of spending.
All right. Well, experimentation is often the neglected category and probably the most fun, right? We're so busy keeping up with the day to day. We don't always get the chance to explore the what if strategies, yet that's where the big throughs come through. There is a long list of possibilities of what would fall under experimentation, but I'm going to just mention a few in terms of new initiatives or alternatives just to give you some examples and set the stage, right?
But there are always new media channels emerging and so at some point in time there might be one that could be a fit or could be very different from your type of business. And there's different forms of engagement and maybe we have an idea of some engagement that might be able to increase the conversion to purchasing. Alliance is a different one and the term is just a generic-term but it's meant to be like you know are there different forms of joint marketing opportunities. It could be like a celebrity spokesperson that is an association and an alliance. Maybe it's a product collaboration. Just strategies just strategically looking completely different at your business and and how it's traditionally done.
But then in alternatives you know it's just more of what we talked about. What if we could we increased our increased our budget by 20%, 30%, could we simulate that? So what questions would we have there? So a big shift like positioning, could we test some things out and learn there? Is there targeting that we haven't, and segments we haven't considered? Something innovative with offers.
So those are the things we kind of jot down and we think about when we are framing out the insight questions and the what ifs, and then we're gonna take it a few steps here. It's thinking big, higher but also more risk. So we want to break this down and say how can we implement those shifts in strategy and execution on a small scale, find out what works, figure out how to refine those strategies to improveROI, and ultimately end up with some winners that we could scale up and that becomes our new base plan. So that's what we're looking for in this area.
Now this last approach concentrates our questions around budget requests. It doesn't matter if it's a formal annual process or a periodic request you're making, we wanted to find the insights needed to make a solid business case for our use of the company funds.So we'll start here with kind of the category of budget insights. There are certain requirements that we have to answer in terms of annual plans. So what insights are needed for that? We certainly want to stretch ourselves and figure out the best, what questions can we get to give us the best estimates of the financial contribution. And in some cases where our marketing might have non -financial outcomes or different metrics, we might be able to establish and figure out how to make connections between the non -financial and financial outcomes. So we write those down, those are our insights, they go on our wish list and we look for measurements that could support those.
Besides the budget itself, there's the allocation. So I think anything that could help us get the relative performance by channel, right, we don't always get to ROI and some of the more granular sales contribution, but what are good measurements that give us good comparisons by channel? And then another topic we've talked about is diminishing returns is how do we look at and understand may be there's channels that have great upside potential. Can we test those and measure those and what are the insights we want to know there?
And then there's the area of full funnel so that we make sure we can balance upper funnel, lower funnel that we are well integrated that people complete the journey and we don't get through the journey or something where it's we're not converting to sales. So any insights there help and then the performance insights meaning you know when we're doing our annual plan there's goals associated with that. So we have to be able to figure out to what level can we track our actuals versus goals and to tie to the KPIs in our plan and we want to be real proactive in this planning right to anticipate the diagnostics that will help us understand why we might be falling short right some metrics doesn't matter if they're higher low, but they might explain why the goal is off.
And then think about as we're going through the budgeting now and the answers we don't have, let's take those and make sure we have the insight so that next year we can have those measurements completed our analyses and it'll help the next planning cycle. And then as this, this is kind of formulating the idea that we want our measurement plan to be incorporated as part of the market plan and the goal setting.
That takes us to up here for this section, you know, our final output is that we have this consolidated wish list of all possible insight objectives, consider it like a long list, we're gonna, while we're doing this, let's, let's note the ones that are the must haves and the big wins because we're going to get to this point where we're going to have to sort out our resources and that's where the next two sessions come in. We're going to talk about designing measurement methodologies, what we have to work with there and then we're going to end with prioritizing the measurement so that we can come up with a strategic measurement plan.
And that concludes part one. If you're interested in seeing parts two and three you could visit e29marketing .com. You'll also be notified of updates and lots of other great content if you sign up for the newsletter there on the website. And my name is Jim Lenskold. My contact information is there. It's been a pleasure, looking forward to parts two and three.
Welcome to the strategic measurement planning webinar. Today's webinar is brought to you by E29 Marketing in partnership with Lenskold Group. My name is Jim Lenskold and I work with E29 in the role of data scientist, helping clients measure and maximize marketing ROI. The goal of this webinar series is to expand your mindset on measurements and have you consider a more proactive and strategic approach to planning your measurements in advance, much like you do for your annual marketing plan.
In part one, we outlined how to generate insight objectives. The outcome from that top-down approach to measurement planning was to create a wish list of key insights that you're looking for. So now in this part two session, we'll review the measurement methodologies that are available to us. We'll talk through the techniques and then we'll end by asking how you could best leverage these to generate new insights. We'll follow this session with part three, where we'll bring together the ideas from the first two sessions and then give you steps to prioritize what gets measured using the limited resources we have available.
In the graph we have showing, we're actually looking at the outcome generated for marketing over time. So the outcome is typically unit sales or revenue but it could be an indicator such as leads or engagement, and the time period could be weeks, months, or quarters depending on the duration of marketing impact over time for your particular business. Now we have the green line here that represents the actual outcome and the bottom red line is considered the baseline which represents the level of sales expected in the absence of marketing. It's the difference between these two that is considered incremental contribution from your marketing and our measurements are actually focused on getting the best estimate of that baseline number so that we could actually calculate the difference.
Now at the bottom here I've listed out the four categories of measurement which is the focus of what we're talking about today. There are many variations of measurements within each category, but it helps to focus in on the high level so we can explain the differences and you can sort out which ones make the most sense for different measurement objectives. These categories are listed in order from basic to advanced starting with the left side. So you have results tracking and pre-post analyses, which are the less sophisticated and lower cost measurements. Then you have market testing and modeling, which are the more precise measurements that can be implemented when a higher cost is justified and we're going to go through each.
Results tracking is the most basic and accessible of the four measurement categories. The data typically comes from channel reports that include outcomes that are directly attributed to specific media. This graph shows that the assumption is a zero baseline down at the bottom there and that everything reported is incremental and it appears as a nice clean answer to our measurement question. However, that is the key disadvantage that we have to live with and that's that it's not truly incremental, right? Some of those sales could have come in anyway, this also may be capturing sales that were helped by other media in the marketplace at the same time if this is kind of a last touch.
So we have to be conscious of that; however, there is a key advantage here in that this is quick ongoing insights that we can monitor and if we acknowledge the imperfection we can still use this method when we're comparing similar types of marketing, so either within the same media channel or across similar channels. The assumption is that any margin of error that would come into our estimated contribution would apply to all of these different campaigns or tactics that we're measuring.
Let's use an example to understand this. One approach is to take an outcome such as add to cart and apply some assumed benchmark values, hopefully measured through another analysis that we've done in the past. By applying the average conversion rate to sales, revenue per sale, and a margin percent to both equally, we can estimate an ROI. This shows us that ad one in a sense is more effective because it shows that 79% ROI versus 44%. And as a quick note, there could be other advertising running at the same time that's not getting captured here, but it is assumed to impact both of these equally. It is also the possibility that this media is having a positive impact on other media channels that is also not captured here. So it's a limitation of results tracking that we're willing to accept for the purpose of choosing which is the better performer.
The next methodology is pre-post analysis. This is used to compare a period with a specific marketing initiative against a period without it. You might use this to get a read on a new campaign, a new channel, or a new level of spending. I find it particularly beneficial when you have access to total sales count, but not necessarily data attributable to specific channels as we have with results tracking. Now the baseline is calculated using pre-marketing period to project an average that would continue during the marketing period and the difference is considered to be incremental and you can see that straight line there versus the higher number and again that's what you're looking for, the lift in sales.
Now key disadvantages is that this does not eliminate the influence of non-marketing factors that happened only in your marketing period but not in your pre-period. As quick examples, a competitive promotion can hurt sales while a competitive increase can help your sales. And general demand might shift up or down for different reasons. So you take a little bit of risk in that the change from the pre to the post period is not entirely from marketing.
Like results tracking, we're using available data with very basic analyses that give us some insight, don't require much budget, but the margin of error is higher. While not perfect, it tends to be a reasonable approach when you're trying to examine high impact marketing and by that I mean when sales are likely to go up five or ten percent, something you could detect as opposed to some small increment.
There are some steps you can take to make this more predictive. You can factor in seasonality using trends from the prior year. You could remove outliers meaning a portion of your sales data that includes products or services that tend to fluctuate a lot or might have had a disruption. Also by running the analyses to determine how to make the pre-period more predictive. Is it better to have more or fewer weeks? Are you capturing monthly cycles such as the number of weekends in each period? Just make sure you do some quality checks.
For the pre-post example, I want to also include the prior year adjustment because this is one of the more common enhancements. So if we look at the results for this example, the campaign period at 10.6 million in sales is much higher than the pre-campaign period at 5.7 million, you'd have to say, you know, did something else happen or was that all the campaign? And so if we look at the prior year, the same weeks gives us a little bit of insight, and now this only works if there was no campaign during that time.
So last year, the pre-period was at 6.3 million, and it increased to almost 10.3 million. So something's happening, right? Like there's seasonality or some increase in demand, maybe a holiday period or businesses that have a seasonal demand such as plants for gardens in the spring. This is not entirely caused by marketing and so we're going to make an adjustment. We're going to look at the pre-period and see that sales are down this year. They are about 90% of what the prior year was so we could calculate a baseline that says in the absence of any marketing we would have expected this year's sales to be 90% of last year's sales and that gives us the 9.3 million.
So now we calculate the incremental is the actual sales 10.6 minus the baseline sales 9.3 and we get roughly 1.35 million in sales that's a 15% increase and some extra steps we could take just to finish this off right we calculate the increase take the average dollar per sale and the margin and run the numbers through and compare the margin numbers to the spend, we can figure out that this is an ROI of 86%.
Now we're stepping up into the level of more sophisticated measures that are statistically trustworthy when we're trying to capture true incremental contribution. And market testing is the first of these next two methodologies. This requires more effort and some cost, but it should be in your mix of methodologies that you're using. You'll need to establish a control group that helps us get to the baseline level of marketing.
So in the graph here, the top line, as with before, represents our actual sales, and then we have a control group. And we adjust that size, right? Because we might be using geographic markets, not getting treatment compared to the test cell that is. We might be splitting a target list, but that control group represents what would have happened in the absence of the marketing. And now we get this advantage that this baseline measure captures all the other marketing and non-marketing impact. So it doesn't matter if there's competitive activity out there, if the conditions change, it should ideally happen to both your tests and control equally.
The disadvantages here are that we can only run so many market tests in a given period. It does take some time and you have to be running more than one type of marketing at a given time. So there's geographic splits or taking your target list. And I say here, the test has to be defined by a specific viable alternative. And what I want to encourage is, you do not need that control group to be a no-contact control group to measure marketing. Unless you think it's quite possible, you may do no marketing.
I really encourage that you go for some big wins here because this is an opportunity to be more strategic in your measurement. And that's one of the key advantages. So we have the higher level of statistical confidence, we get to be real strategic in our insights because we can look at perceptions, behaviors, and outcomes, which we can't do in every other measurement methodology that we're looking at. So this is going to give us a real solid measurement of incremental sales and incremental ROI.
So let's look at an example here. The image here is meant to reinforce this idea that we have the opportunity to get strong strategic insights from market testing and this is the purchase funnel here which represents the buyer's journey from the initial awareness through a purchase and loyalty and so our test actually gives us a chance to the degree we want to dig in to measure across the buyer's journey into where we're making an impact.
So let's bring up the numbers to kind of tie into this. So here you see the control group that's business as usual we have the test group which is the new marketing whatever we're putting in place there. And if we choose, you know, if it's a big enough initiative and we have the resources and we could do some level of market research, we could get into, did we lift awareness, consideration? What happens when you lift consideration but not awareness or vice versa? This is very strategic to understand that.
We can look at engagement and how engagement relates to sales. Sometimes we get a lift in engagement and not sales. So all that's valuable. And here, not just the quantity of sales, but the buyer's behavior might also include changing the value per sale that we're increasing. And so that nets down to the profit, and the profit might actually be extended further if we look into repeat sales. Our measure is really on the incremental, what that marketing had a certain spend created all this different lift. It gives you both the assessment and incremental impact and the diagnostics of understanding what's happening at the same time.
So really again, the process belongs for big wins, you could then take your lessons and come back and test another variation. So it's an ongoing process and one that really has a lot of power.
We are finally at modeling which is the most advanced of the measurement methodologies. We're going to focus specifically on the most common technique which is marketing mix modeling. Our graphic here shows a simplified input where we see the baseline sales at the bottom and incremental sales by channel stacked on top. That is the output and I'm going to take you through the steps to get here in a moment.
Modeling is very focused on media channels so it's not as strategic as market testing. The other disadvantage is the lag time since it could take two to three months after the modeling period ends and the high relative cost makes this measure run less frequently often annually to support annual planning and budgeting.
Now a key advantage is that we're effectively quantifying the positive and negative impact on sales from non-media factors while then capturing the contribution by media split down to the channel level. This makes it very precise and predictive to support our most significant questions about the marketing mix, budget allocation, and optimization.
We're trying to simplify this complex methodology with the following graphics. We'll start with pulling together a dataset that ideally has weekly impressions or comparable metrics for all of your paid media channels for a full two years, which gives you 104 weeks of data, this is all of the investment we're making with the intention of impacting sales over time.
Let's add to this other factors that could also influence sales. You could see here pricing, product changes, promotional offers, and organic and earned media all have to be considered. If available we want to include indicator metrics for distribution, inventory issues, and economic trends. Add to this indicators of market conditions such as weather, social or other disruptive incidents, and competitive activity if available.
So each model has a single outcome. It's typically sales units or revenue, and then all these variables help us improve the measures of media contribution as we filter out the non-media factors. The model looks at how all of the media and non-media activity changes over time and how that can be statistically associated with the changes in sales over time. Now the math for this would require a lot more time. What we really care about is this is a widely accepted technique that's considered to be predictive if done correctly.
I want to share some highlights of model outputs starting with the weekly split of sales by channel which was our original graph. So we have the channel contribution layered over the baseline of sales that is not attributed to any media. Now in this simplified example we are only looking at 12 weeks and also are showing a base that includes the non-media contribution. That's normally split out.
Now let me add some other charts here. First of all, we have a summary view of the portion of sales generated from media and other factors. You see 21% media, some distribution trade and some negative impact from competitive inventory and the economy. And the next chart here is showing the split of contribution from different media channels, each one kind of stacking up on the next. And finally, we do care how that contribution relates to the amount of spend required and that's where ROI comes in. And so we get the ROI for the total media and for each of the media channels. Now we're getting to the point where we can start prioritizing where to put our media going forward.
We'll now briefly touch on diminishing returns analysis because this is a complementary analysis that you often run with marketing mix modeling. And the curve shows how the sales increases as weekly spend increases and you can see the bend in the curve that eventually higher spend delivers less and less incremental sales.
So now I want to add to this an ROI analysis so you can see that each increment of spend generates less sales, less revenue, less ROI. And so the solid line is the total ROI at that point in time where spend and sales intersect and the dashed line is the incremental meaning you spent $100 more, did you get $100 more in margin to generate the break-even, and eventually you reach the point where it hits the x-axis and that is your break-even point where ROI is zero, a place where some people actually optimize their spend.
And here are a few examples of outputs from an optimization analysis. We can determine the optimal spending levels on a weekly basis and extend that out to the allocation of the total spend for the time period we're optimizing. These other charts here show the increases or decreases of spend between the prior year allocation and the optimized allocation. So some are increasing, some are decreasing. And besides the optimization that's run here, right, the recommended weekly spend, you'll also want to factor in media channel availability, your campaign strategies over the years. So this is not necessarily the end, but part of the inputs you're going to use to get the most out of your media.
This wraps up our high-level overview of the methodologies which you'll use as part of the planning process that we're going to continue in part three. Thanks again for your time. You can find part one of this series in the Academy section of the E29 Marketing website and keep up to date on the release of part three and future web sessions by signing up for the E29 newsletter. Thank you very much.
Hello and welcome to the strategic measurement planning webinar. Today's webinar is brought to you by E29 Marketing in partnership with Lenskold Group. My name is Jim Lenskold and I work with E29 in the role of a data scientist helping clients measure and maximize their marketing ROI. The goal of this webinar series is to expand your mindset of measurements and have you consider a more proactive and strategic approach to planning your measurements in advance, much like you do for annual marketing.
The strategic measurement planning webinar is going to be split into three different sessions. Today's part one, we're going to focus on building insight objectives. So this is the why we're measuring, what we're trying to accomplish, and how we'll use it ultimately as well. In part two, we're going to focus on measurement methodologies. And so this is the how-to, the kind of mechanics of it. And then in part three, we're going to bring the outputs from these first two and talk about how to prioritize. And in a sense, whatever time horizon we're looking over, quarter or a year, we're going to have limited resources. So it's really important to make sure that how we use those resources gives us the best payback.
Let's first talk through the key challenges that make it difficult to measure marketing contribution. In the chart we have here, we have the weekly impression levels of each media channel stacked up toward the bottom here. And then along the top, we have the trend for dollars sold and units sold. And with so many media channels running concurrently and sales changing every week, it's not easy to determine the impact of the media on sales, which is what we ultimately want.
So all this current media happening at the same time creates a complexity. We also have non-media factors which include pricing, promotion, and distribution. They influence sales. There's external factors such as the category trends, seasonality, the economy, and even the weather. And then you can also factor in competitive activity, their media, their promotions. And of course, one of the bigger hurdles that we often neglect too is that organizational barriers, the cultural barriers that dictate whether the time and the cost for learning is valued enough to justify it.
But that's where the opportunities come in. And so as marketers, I think we enjoy any insight that helps us boost effectiveness. We always want to find some indicators of ROI contribution. We'd love to be able to justify our spend and take it further and optimize our mix. And we ultimately want to guide good strategies. Like how do we motivate purchase behavior in such a way that has a financial impact?
All right, let's look at this in a slightly different way and kind of frame out our vision of measurements. So of course we have our key decisions and highlighted here just as what we do with our channel spend and ultimately ultimately put channel impressions out there in the marketplace. We know that we're intending to impact key outcomes, ultimately incremental units sold or dollars sold. And then out of that, we know we'll have some margin. And then it's the piece in the middle is connecting the dots. It's the cause and effect that we're after here. We've got a factor in those non media external and competitive factors. And then also consider the insights into the buyer's journey in particular, but then also anything else that's strategic. The impact of tactics offers messaging, targets, the intensity levels. All of this is where we zero in and say we've got a lot of insights we need to know, a lot of unknowns, but if we could connect in some way the spend to the margin, there's ourROI.
Our first output in building a strategic measurement plan can be considered kind of a wish list of all the insights we'd love to have if we had unlimited resources. So I'm going to take you through three approaches that will provoke different insight objectives, and there's overlap between the three, but this is how you get fresh ideas to emerge, which is ultimately what you want.
So the first category is you call it decision support. This covers your day -to -day insights that marketer needs. So support for our primary marketing decisions, performance reporting we need, maybe there's some things in terms of declining performance or upside potential that we're trying to deal with and then even just the things like upper and lower funnel synergy, right? This is putting all these pieces together. So a lot of things that we have to sort out on an ongoing basis.
And the next category, let's call it experimentation. And this is one that maybe is neglected in an area and yet it's probably the most interesting. And it's really because no one's asking for it, right? But this is where we get to uncover new opportunities and find alternatives that drive sales and ultimately look for some big wins.
And the third area is where there's a little bit more disciplined process and that's in the annual planning or maybe that's more frequent but it's where you're making your request for budget and kind of explaining how you're going to allocate that across channels. I think at the same time you're looking at year -over -year so where are their higherROI potential to improve on the performance from last year.
So I'm going to mention that a key theme of measurement planning is asking questions the right way. We wantto ask questions that align to viable business decisions that we can make as opposedto those that are nice to know. And I'll emphasize that our focus is on firstimproving marketing impact and secondarily on proving our impact.
So we often start with the media mix. If we look at this example of how our spend has been allocated, we might ask if we need to add or remove a media channel. And if we wonder about a if a media channel and I'll just use in store media as an example,but does it belong in our mix, then we would pursue measurements that compare a mix with and without in -store media. There's only so many marketing channels, so we'd rather identify improvements before eliminating them from the mix.
So maybe our question on in -store could start more with scalability, that's a key area. Should we be increasing or decreasing our spend to see if we get a better impact? Because it does happen where we're spending below a certain threshold or above and the sweet spot is in the middle. We can also consider insights that help improve in terms of effectiveness. So that's looking within the channel, right? Our targets, our tactics, other aspects of our media, and so if we zero in on some questions there and some insights needed, that's going to be a big help.
And then the category of integration relooks at synergy across channels. So we want to make sure the collective impact is performing well. And that might be where we propose a question such as does my upper funnel media generate a lift in conversion rates for certain channels, and that would queue up certain measurements that go with that.
Now, reporting is part of our ongoing job. Executives wanna know as much insights as possible on marketing's financial contribution. And if we think about it, it's because that helps them with their decision -making at the next level up. We can consider insights into that help with projections, and that's because sometimes we the early indicators of what's happening in the short term to really project out what's happening longer term, whether that's future customer value or future sales. And so that would lead us to measurements and analyses that are more focused on getting good leading indicators.And then we also need a good set of KPI metrics. And those are the ones that provide us with the insights that maybe help diagnose why certain channels might be performing above or below
You know, one of the most important is that we're going to be asked to set goals. We want to be able to get insights along the way to tell us, are we achieving those goals and make sure that we really get the chance to proactively design the right measurements in advance of spending.
All right. Well, experimentation is often the neglected category and probably the most fun, right? We're so busy keeping up with the day to day. We don't always get the chance to explore the what if strategies, yet that's where the big throughs come through. There is a long list of possibilities of what would fall under experimentation, but I'm going to just mention a few in terms of new initiatives or alternatives just to give you some examples and set the stage, right?
But there are always new media channels emerging and so at some point in time there might be one that could be a fit or could be very different from your type of business. And there's different forms of engagement and maybe we have an idea of some engagement that might be able to increase the conversion to purchasing. Alliance is a different one and the term is just a generic-term but it's meant to be like you know are there different forms of joint marketing opportunities. It could be like a celebrity spokesperson that is an association and an alliance. Maybe it's a product collaboration. Just strategies just strategically looking completely different at your business and and how it's traditionally done.
But then in alternatives you know it's just more of what we talked about. What if we could we increased our increased our budget by 20%, 30%, could we simulate that? So what questions would we have there? So a big shift like positioning, could we test some things out and learn there? Is there targeting that we haven't, and segments we haven't considered? Something innovative with offers.
So those are the things we kind of jot down and we think about when we are framing out the insight questions and the what ifs, and then we're gonna take it a few steps here. It's thinking big, higher but also more risk. So we want to break this down and say how can we implement those shifts in strategy and execution on a small scale, find out what works, figure out how to refine those strategies to improveROI, and ultimately end up with some winners that we could scale up and that becomes our new base plan. So that's what we're looking for in this area.
Now this last approach concentrates our questions around budget requests. It doesn't matter if it's a formal annual process or a periodic request you're making, we wanted to find the insights needed to make a solid business case for our use of the company funds.So we'll start here with kind of the category of budget insights. There are certain requirements that we have to answer in terms of annual plans. So what insights are needed for that? We certainly want to stretch ourselves and figure out the best, what questions can we get to give us the best estimates of the financial contribution. And in some cases where our marketing might have non -financial outcomes or different metrics, we might be able to establish and figure out how to make connections between the non -financial and financial outcomes. So we write those down, those are our insights, they go on our wish list and we look for measurements that could support those.
Besides the budget itself, there's the allocation. So I think anything that could help us get the relative performance by channel, right, we don't always get to ROI and some of the more granular sales contribution, but what are good measurements that give us good comparisons by channel? And then another topic we've talked about is diminishing returns is how do we look at and understand may be there's channels that have great upside potential. Can we test those and measure those and what are the insights we want to know there?
And then there's the area of full funnel so that we make sure we can balance upper funnel, lower funnel that we are well integrated that people complete the journey and we don't get through the journey or something where it's we're not converting to sales. So any insights there help and then the performance insights meaning you know when we're doing our annual plan there's goals associated with that. So we have to be able to figure out to what level can we track our actuals versus goals and to tie to the KPIs in our plan and we want to be real proactive in this planning right to anticipate the diagnostics that will help us understand why we might be falling short right some metrics doesn't matter if they're higher low, but they might explain why the goal is off.
And then think about as we're going through the budgeting now and the answers we don't have, let's take those and make sure we have the insight so that next year we can have those measurements completed our analyses and it'll help the next planning cycle. And then as this, this is kind of formulating the idea that we want our measurement plan to be incorporated as part of the market plan and the goal setting.
That takes us to up here for this section, you know, our final output is that we have this consolidated wish list of all possible insight objectives, consider it like a long list, we're gonna, while we're doing this, let's, let's note the ones that are the must haves and the big wins because we're going to get to this point where we're going to have to sort out our resources and that's where the next two sessions come in. We're going to talk about designing measurement methodologies, what we have to work with there and then we're going to end with prioritizing the measurement so that we can come up with a strategic measurement plan.
And that concludes part one. If you're interested in seeing parts two and three you could visit e29marketing .com. You'll also be notified of updates and lots of other great content if you sign up for the newsletter there on the website. And my name is Jim Lenskold. My contact information is there. It's been a pleasure, looking forward to parts two and three.
Learn to identify key marketing measurement challenges including media mix complexity, external factors, and organizational barriers. Develop a strategic framework for defining insight objectives across three core areas: decision support for daily operations, experimentation for innovation, and budget planning for resource allocation.
Master the four categories of measurement methodologies that connect marketing spend to business outcomes. Understand how to design measurements that track performance, prove ROI contribution, and identify opportunities for optimization across channels. Focus on creating a balanced approach between ongoing tracking and targeted experiments.
Transform your measurement insights into actionable quarterly plans. Learn to prioritize measurements based on available resources, balance different methodologies, and create a mix of ongoing tracking and experimentation. Develop frameworks for connecting measurements to strategic decisions and budget allocation.
Jim published the book Marketing ROI, The Path to Campaign, Customer and Corporate Profitability (McGraw Hill), which was named one of the top 5 most influential books of 2004 by the American Marketing Association. He is an international speaker and has built a global reputation as a leading authority on measuring and optimizing marketing strategies toward maximum financial contribution. Since 1997, Lenskold Group has delivered his unique solutions to global corporations and emerging mid-market clients including Cisco, HP, Mastercard, Starz, MD Anderson Cancer Center, Land O’Lakes and McKee Foods.
Results Tracking: Most basic measurement methodology using direct channel reports and attributed outcomes, assuming all reported results are incremental
Marketing Mix Modeling: Statistical analysis quantifying impact of multiple marketing channels while accounting for non-media factors. Checkout Episode 3 for more!
Upper/Lower Funnel Synergy: How upper funnel media impacts conversion rates of lower funnel channels.
Pre-Post Analysis: Comparison methodology measuring performance by comparing periods with and without specific marketing initiatives
Diminishing Returns: Analysis showing how sales/ROI increases diminish as weekly marketing spend increases
Performance Drivers Analysis: Lighter version of mix modeling that's more affordable but less precise
Checkout our other related resources!