Marketing Effectiveness Measurement replaces Budget Envy

Paul Laughlin, Managing Director, Laughlin Consultancy

Marketing Effectiveness Measurement replaces Budget Envy

#CAI2015

© Laughlin Consultancy Ltd, not to be used without permission.

Klondike Goldrush


Klondike Goldrush


Two types of marketers


One type of size comparison


Our digital goldrush

❖ How many Twitter Followers?

❖ How many Facebook Fans/Likes?

❖ Has your video ‘gone viral’ on YouTube?

❖ How many downloads of your latest app?

❖ How many site/blog visits?

❖ How many people saw your commercial?

❖ Are we being recommended?© Laughlin Consultancy Ltd, not to be used without

permission.

What a business should measure

❖ Turnover is vanity…

❖ ROI before investments

❖ Return On Marketing

Expenditure


❖ ROME = ( ΔRevenue – ΔCosts) / ΔMarketing Spend

Measuring profit


• Fully costed marketing

• Sales caused by marketing

• Historical data on sales from different levels of marketing spend

• Max increase in sales achievable by marketing

• Marketing spend needed to achieve 50% of max

• Gross margin on sales

• % of costs that are fixed

From “Marketing Payback” Robert Shaw & David Merrick:

Two types of Marketing


• Brand building

• Awareness & Consideration

• Maintaining Share of Voice

• Social normally TTL (from LinkedIn ads to broadcast YouTube)

ATL

BTL

• Targeted communications

• Personalised & timed

• Driving action, often to buy

Econometrics for ATL


• Statistical technique(s) to help assess which of many possible factors are key drivers of sales results, combine them in a quantitative model and then use to predict the future

• Business input

• Base

• Ad-stock

• ‘Halo effects’

Experimental Method for BTL


You need insight

CustomerData

Customer Research

Customer Analysis

Database Marketing

Feel &Measure

TargetMarketing

ConvergeEvidence


Marketing Attribution


Incremental Modelled

FinancialReporting

Market Position

Media Tracking

Budget Allocation step 1❖ Annual Marketing budget:

❖ functional unit allocation

❖ share of revenue

allocation

❖ share of voice allocation


❖ ‘Rightsize’ the budget

❖ Optimising ROME

Budget Allocation step 2

❖ Optimal allocation across:

❖ Products/Markets

❖ Brands

❖ Purchase Funnel


❖ Comparing ROME contributions

❖ Consider evidence for media interdependencies

Credibility requires Accountability

❖ Use the language of profit

❖ Use ROME with Finance

❖ Converge evidence

❖ Rigorous budget allocation


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