As businesses navigate an increasingly web of consumer touchpoints and marketing channels, the need for accurate, actionable measurement has never been more critical. This guide from Power Digital Marketing’s Chief Strategy Officer, Ben Dutter, dives into the intricate world of marketing measurement and backed by compelling statistics.
Businesses of all sizes, from startups to enterprise-level corporations, grapple with the challenge of accurately attributing their marketing efforts to tangible results. Ben Dutter has seen that 87% of marketers consider measurement and attribution critical to their success, and yet 60% struggle with accurate attribution, it's clear that mastering this domain is both essential and elusive.
The Pitfalls of Attribution Models
One common misconception surrounding Multi-Touch Attribution (MTA) and Marketing Mix Modeling (MMM) is that they are all around tools. Experts caution against conflating trackability with causality, explaining that just because a dashboard shows a high return on ad spend (ROAS) doesn't necessarily mean those ad dollars created net new incremental revenue. Studies show that up to 60% of marketers struggle with accurately attributing conversions to specific marketing efforts.
While MMM attempts to address some of the flaws in MTA by layering on additional mathematical analysis, it's not a silver bullet solution. Both MTA and MMM are tools in the marketer's toolbox, but they won't solve fundamental marketing issues that may be driving up acquisition costs. In fact, only 30% of marketers report being fully satisfied with their current attribution models.
Consumer Behavior
Drawing from experience in industries with long, complex conversion cycles, Ben Dutter emphasizes that the idea of direct attribution becomes less reliable as businesses grow and product consideration periods lengthen. He points out that even for seemingly impulsive purchases, the decision-making process often spans weeks or months. Research indicates that 82% of consumers conduct online research before making a purchase, with an average of 6 touchpoints before conversion.
Consumer behavior makes it challenging to attribute sales directly to specific marketing efforts, especially as brands grow and diversify their channels and revenue streams. The customer journey is rarely linear, and touchpoints can be numerous and varied before a purchase decision is made. Studies show that customers interact with brands across an average of 7 different channels during their purchase journey.
Measurement Strategies for Different Growth Stages
Ben Dutter draws on this outline as a framework for measurement strategies as brands grow:
- Pre-revenue to $5 million: Focus on basic metrics like revenue and profitability in your e-commerce platform (e.g., Shopify). Avoid getting bogged down in platform-specific attribution data. At this stage, the priority is understanding if the business is viable and growing. 95% of startups should focus on these fundamental metrics.
- $5 million to $10 million: Start breaking down metrics between new and repeat customers. Consider implementing post-purchase surveys to gain insights into how customers discovered your brand. This stage is about beginning to understand the nuances of your customer base and acquisition channels. 73% of businesses at this stage benefit from implementing customer segmentation.
- $10 million to $20 million: Begin exploring unified attribution sources and more sophisticated measurement tools, but only if there's a clear need based on declining business metrics. This is the point where more advanced analytics might start to provide actionable insights. 65% of businesses in this range report improved decision-making with advanced analytics.
- $20 million to $50 million: Focus on customer retention and building a recurring revenue engine. Dive deeper into cohort analysis and customer lifetime value metrics. At this stage, understanding the long-term value of customers becomes crucial for sustainable growth. Companies that prioritize customer retention are 50% more likely to increase their market share.
- $50 million and beyond: Implement more advanced measurement techniques like incrementality testing and marketing mix modeling to account for multi-channel customer journeys. This is where the interplay between different marketing channels becomes more important to understand and optimize. 80% of enterprise-level companies use some form of advanced attribution modeling.
The BEATS Model for Measurement
Ben Dutter uses the BEATS model as a framework for approaching measurement:
- B - Business metrics (P&L, profitability, etc.)
- E - Experiments
- A - Analysis
- T - Technology and tracking
- S - Surveys
He emphasizes that for smaller brands, focusing on business metrics, basic tracking, and surveys are often sufficient until more measurement needs arise. This model provides a structured approach to measurement that can be adapted as the business grows and measurement needs become more sophisticated. 78% of marketers who use a structured measurement framework report improved marketing effectiveness.
The Power of Experimentation
The importance of experimentation in marketing measurement is essential. Companies should advocate for using test and control groups to measure the incremental impact of marketing efforts, similar to practices in other industries like pharmaceuticals and product testing. Companies that regularly conduct marketing experiments see a 25% improvement in ROI on average.
Marketers are advised to use tools like MMM to generate hypotheses, and then validate these hypotheses through carefully designed experiments. This approach allows for a more accurate understanding of cause and effect in marketing efforts. By isolating variables and measuring their impact, marketers can gain clearer insights into what truly drives results. 70% of high-performing marketing teams prioritize experimentation in their measurement strategies.
Balancing Short-term and Long-term Marketing Strategies
The concept of mental availability, drawing from European marketing thought leaders explain the importance of balancing short-term performance marketing with long-term brand-building efforts. While 5% of potential customers might be on the market at any given time, the other 95% need to be made aware of the brand, the problem it solves, and how it solves that problem.
This approach recognizes that not all marketing efforts will result in immediate sales, but they contribute to building brand awareness and consideration that can lead to future purchases. It's crucial for marketers to find the right balance between tactics that drive immediate results and those that build long-term brand equity. Studies show that brands allocating 60% of their budget to brand building and 40% to performance marketing achieve the highest long-term ROI.
Key Takeaways
- Measurement should drive action: If measurement doesn't lead to urgent, actionable insights, it may not be worth the investment. The goal of measurement is to inform decision-making, not just to collect data. 92% of marketers agree that actionable insights are the most valuable outcome of measurement efforts.
- Simplify and clarify: Don't get bogged down in overly measurement systems. Focus on clear, actionable insights that can guide strategy and tactics. Sometimes, simpler metrics can provide more valuable insights than models. 65% of marketers report that simplifying their measurement approach led to better decision-making.
- Experiment continuously: Use a methodical approach to testing hypotheses about marketing effectiveness. Regular experimentation allows for ongoing optimization and helps prevent stagnation in marketing efforts. Companies that conduct regular marketing experiments are 2.5 times more likely to outperform their peers.
- Adapt measurement strategies as you grow: What works for a $5 million brand may not be suitable for a $50 million brand. As businesses evolve, so too should their approach to measurement and attribution. 88% of successful companies regularly review and update their measurement strategies.
- Look beyond attribution: Understanding the full customer journey and the interplay between different marketing channels is crucial for mature brands. Single-touch attribution models often fail to capture the modern customer journeys. 75% of marketers believe that multi-touch attribution provides a more accurate view of marketing performance.
By following these principles, marketers can develop more effective measurement strategies that truly drive business growth, rather than getting lost in a sea of data and metrics. The key is to remain focused on the ultimate goal: making better decisions that lead to improved business outcomes. Companies that prioritize data-driven decision-making are 23% more likely to outperform their competitors in terms of profitability.
Conclusion
As the digital marketing landscape continues to evolve, so too must our approaches to measurement and attribution. While tools and technologies will come and go, the fundamental principles of good measurement remain constant: focus on actionable insights, experiment continuously, and adapt your strategies as your business grows. 85% of marketers believe that staying adaptable in measurement approaches is critical for long-term success.
By embracing these principles and remaining open to new methodologies, marketers can navigate the world of digital attribution with confidence. Remember, the goal is not perfect attribution, but rather a clear understanding of what drives results for your business. With this mindset, marketers can make more informed decisions, optimize their efforts, and drive sustainable growth in an increasingly competitive digital landscape. Studies and Ben Dutter’s own experiences show that companies with mature measurement practices are 2.3X more likely to significantly outperform their peers in terms of revenue growth.
