What is Media Measurement?
For years, marketers have been searching for the answer to media measurement; a single framework that ingests all online and offline data and automatically generates reports and insights to guide budget reallocation decisions in real-time with no friction.
We once thought Multi-Touch Attribution (MTA) was the answer to this desired state. However, it failed to fulfill its promise due to many factors, such as the collapse of the third-party cookie, identity resolution gaps, severe data reconciliation issues, and perhaps the biggest blind spot of all, no access to walled gardens. For all intents and purposes, MTA is no longer a viable exercise.
The types, frequency, and availability of user-level data limit the universe of advanced measurement techniques that can be used to measure marketing effectiveness. The types of decisions that the measurement informs also play a big role in how useful marketing measurement is. Marketers looking to make tactical decisions, like optimizing between creative A versus creative B running on a specific audience within a specific media channel, can use data made available by that channel.
There are advanced measurement methods available that can answer the cross-channel attribution problem statement but are not subject to the limitations of MTA. For more strategic decisions, like budget allocation across multiple media tactics based on incremental sales and incremental ROI, you would have to use advanced marketing measurement techniques such as incrementality measurement to get to an answer. For other big strategic questions, like the impact of weather, competition, interest rates, or government policy on sales would need to apply Media Mix Modeling (MMM) for long-term planning.
Why is it Important to Measure Marketing Effectiveness?
How do you measure your organization’s marketing effectiveness? Essentially, you’re measuring how well your marketing strategy and efforts drive revenue while lowering costs. This is a measure of success: increasing revenue while lowering cost is the goal of any marketer.
Measuring marketing effectiveness is crucial for any business looking to maximize their ROI and understand the impact of their marketing strategies. However, several challenges can complicate this process.
Key Challenges in Measuring Marketing Effectiveness
There are many challenges to measuring marketing effectiveness. Factors include the type of data available for each channel, the frequency of data available, the different types of methodology used in various attribution and incrementality models, and more.
The impact of diverse marketing channels
The type, richness, and quality of data vary widely from channel to channel. For example, with programmatic display advertising, marketers can get user-level and impression-level data to track the user all the way to a conversion, regardless of whether a conversion occurs or not. However, on TV, marketers would only get reports of when their ads were flighted on air. On Facebook, marketers collect rich aggregate data reporting about their targeted audience but can obtain almost no user-level data.
Another issue is the frequency of data: Some media channels offer data on a real-time basis, whereas others only offer data post-campaign, and reporting may only be delivered weekly or monthly.
Extended customer journeys and data overload
As the customer journey becomes more complex, it becomes longer and more difficult to track. Gone are the days of users clicking on your website and converting; with multiple touchpoints and user journeys, there is now much more data for a marketer to track.
Issues with attribution models
Not all attribution models and incrementality studies are created equal. Depending on the type of methodologies used, the channels under test and a host of other factors can lead to limited inputs for a media measurement framework. Gauging the contributions of each media channel, tactic, or audience without an always-on test and control experimentation practice in place is very difficult to execute in an apples-to-apples way.
Effective metrics for marketing evaluation
Some of the key metrics you should be tracking, among others, include return on investment (ROI), customer acquisition cost (CAC), and customer lifetime value (CLV).
Customer acquisition cost
Customer Acquisition cost, or CAC, is the total cost your organization spends to acquire a new customer. This includes the cost of sales and marketing efforts, such as advertising costs, the cost of your sales and marketing team members, etc. Dividing this cost number by the number of customers acquired gives you the CAC.
Customer lifetime value
Customer lifetime value, or CLV, is the total amount of money a customer is predicted to spend with your organization over the whole period of their relationship with you. This accounts for any potential transactions you think they will make over the duration of your business relationship.
Lifetime value, or LTV, is often used interchangeably with CLV. However, LTV is more general; while CLV focuses on each customer’s lifetime value, LTV provides is an aggregrate view and gives you the average value across your customer base.
Return on investment (ROI)
Return on investment, or ROI, is how you determine the effectiveness of money spent on marketing initiatives. It is calculated as the ratio of incremental contribution to sales from a marketing channel divided by the spend in that marketing channel.
Measuring the return on investment (ROI) of marketing campaigns can present a significant challenge. It is difficult to quantify the financial impact of marketing efforts, especially for brand awareness and engagement campaigns.
Media Mix Modeling
Media Mix Modeling (MMM) is a measurement method used to estimate the impact of media on a business's sales. It involves observing how variations in media exposure week-to-week (or day-to-day) relate to changes in sales.
Where MMM shines in a marketing measurement strategy is that it provides coverage for holistic measurement for a wide variety of media channels that can otherwise be difficult to address with similar methods, such as radio, print, influencer, etc.
The main benefit of MMM is its ability to measure all business drivers for which historical data is available, including offline channels and non-addressable media as mentioned above, in addition to non-media factors.
Overcoming Measurement Challenges
Measuring marketing effectiveness can be a challenge, but there are different methodologies that can be used together to provide a holistic view of your media spend and its performance. This practice of combining different methodologies into one is called triangulation.
Triangulation for measuring marketing effectiveness
In marketing measurement, "triangulation" refers to the systematic approach of combining multiple measurement methods into one cohesive, integrated system.
Measured has developed the industry's most advanced and precise method for incrementality experimentation.
Our approach starts with a holistic MMM which offers a top-down view of the entire marketing portfolio and sets a performance baseline by considering all marketing vehicles.
Results from incrementality experiments are integrated into this MMM framework as “priors,” establishing performance benchmarks for channels with reliable incrementality measurements based on actual data.
This combined MMM and incrementality system calculates calibration factors (multipliers) to adjust vendor reporting to reflect true performance. These adjustments are applied at a detailed level and can be used to refine platform attribution based on true incrementality.
By merging these three methodologies, Measured delivers real-time, dynamic, and continuous causal measurement for hundreds of brands, optimizing growth and efficiency across various industries and markets.
Interested in seeing how it works? Sign up for a demo today.