When it comes to measuring the effectiveness of your marketing, most marketers will say that the ultimate metric is the return on investment (ROI).
However, ROI itself is not an indicator of effectiveness. The change in ROI, otherwise known as the Return on Marginal Investment (ROMI), measures effectiveness and whether you should invest more in a campaign. Here are some ways to measure your marketing campaign effectiveness.
Attribution Models Require Subjectivity
Attribution is a way of assigning credit for conversions to different channels. Attribution models require subjectivity because you have to decide how much weight each channel gives. For example, if you are trying to determine if an ad or a blog post drove a conversion, it's not easy to say which one was more important.
You can use historical data or A/B tests to build models. Using attribution models is particularly tricky regarding social media and content marketing. These channels are often not directly measurable, so that no historical data may be available.
Even if there are historical data points, they may not reflect the actual value of social media and content marketing efforts on your website because they don't always result in conversions immediately after they occur.
There's no right answer for attribution modeling, but there are some wrong ones that you should avoid:
- Linear attribution: This is where all sources of traffic are given equal weight. In reality, different channels deliver different quality leads and customers, so they should not be treated equally.
- Time decay attribution: This is when marketers attribute 100% of revenue to their last touch point even if they had multiple touch points beforehand, e.g., an e-mail campaign followed by a remarketing ad.
The attribution model will also depend on the business type and the leads you're looking for. Not all leads convert into revenue-generating clients. Some may convert months or years down the line.
For example, suppose you run an e-commerce store. In that case, a lead could become a customer months after visiting your website. This is after they've researched products and received recommendations from friends and family.
Leads may also convert outside your website and app in-store sales, phone calls, etc. That means you need to track an individual buyer's journey from lead to a revenue-generating client with special marketing tools such as Google Analytics to assess ROI. Leads may also come from PPC ads, SEO, social media, and e-mail marketing campaigns. But you can attribute them to one source, i.e., PPC.
Attribution in a Cookie-Less World
You can use third-party cookies to track visitor activity across multiple devices and thus understand how much time they spend on your site. The deprecation of third-party cookies makes it difficult for marketers to measure ROI from various channels.
You might think someone spent 5 minutes on your site when it was only 1 minute because their browsing history on other devices was lumped together with their activity on an iPad in one session.
Incorporating Brand Building
Brand awareness is an essential metric for any business. It's not directly tied to sales, but it impacts your sales success in the long run. While brand awareness impacts your sales success, it's tough to attribute brand awareness campaigns to actual sales results.
This is because the relationship between brand awareness and sales is indirect. For example, if you run a campaign that increases the number of people who know about your product by 20%, it might take them months or even years before they make a purchase.
When measuring the impact of your marketing campaigns, most companies focus on vanity metrics such as impressions, search volume for branded terms, and other similar numbers. These metrics can help track trends over time; they don't tell you how much revenue was generated by each campaign or what kind of ROI they generated.
Here are some examples of vanity metrics:
- Impressions (total) – The total number of times an advertisement was served on various sites or platforms such as social media platforms, search engines, etc.
- Search volume for branded terms – The number of times people searched for a particular keyword related to your business/product
Decide What a Vanity Metric Is
Measurement is the most crucial step in the marketing process. Without measurement, you can't determine whether your efforts are successful or not. That is why you need to decide what a vanity metric is.
There are two types of vanity metrics:
Internal vanity metrics - These measurements show how things are going within your organization but don't provide insight into how well your product or service is doing in the marketplace.
An example of an internal vanity metric is the cost per lead. If you're spending $100 per lead but only converting 10% of those leads into customers, then it's time to rethink your strategy.
External vanity metrics - These measures don't have much value because they're usually focused solely on one aspect of your business and don't provide much insight into how things are going, i.e., revenue growth.
One example of an external vanity metric would be monthly website visitors or page views. At the same time, those numbers may seem impressive initially, but they don't tell you anything about whether or not people care about your product or service.
The key marketing metric is calculating the return on marketing investment (ROMI) depending on the marketing channels and campaign goals. For example, if you're measuring return on ad spend (ROAS), then you'll need to calculate revenue per click (RPC) and cost per click (CPC).
Here are some metrics that are always important:
- Customer lifetime value (CLV): CLV is the net profit you expect to make from a customer over their relationship with your business, from initial purchases to repeat purchases, referrals, and recommendations.
- Customer acquisition cost (CAC): The amount of money it takes to acquire a new customer through marketing and sales activities. CAC is typically expressed as a monthly amount per customer.
- Profit margin per customer: The difference between the revenue generated by each customer and the CAC associated with acquiring them. This metric helps businesses understand how much revenue they can generate from each dollar spent on gaining new customers.
A Customer Acquisition Campaign Through Email Marketing Measure
Customer acquisition campaigns are a great way to grow your business and increase sales. A customer acquisition campaign through email marketing would additionally measure:
- E-mail open rate: This is the number of people who opened the email compared to the total number of people who received it.
- Click-through rate (ctr): This is the number of people who clicked on a link in the e-mail divided by the total number of people who opened it.
- Conversion rate: This is the percentage of people who clicked on a link in an e-mail and completed the desired action (such as making a purchase).
Lead Generation Through SEM Campaigns Measure
When creating a marketing campaign, you must know what you're trying to achieve. This will help you choose the right metrics and ensure your campaign is on track. Here are some common ways marketers measure success through SEM campaign lead generation:
- Paid traffic - How many people click on your ads? Paying traffic should be your primary focus if you're selling something like insurance or a financial product. The more people who visit your site and contact you, the better.
- Engagement rates/bounce rates - Are users sticking around on your landing page? If they're clicking through to other pages, that's good too. The goal is to get as many people as possible onto your sales funnel to become leads or customers.
- Marketing Qualified leads (MQLs) - A MQL is someone who has expressed interest in buying something from you, whether through an ad click or form fill-out. You can follow up with them via e-mail or other marketing methods until they convert into customers.
Measure your Success with ROMI
The return on marketing investment (ROMI) is a great way to measure how well your marketing campaigns are doing. It will show how much money you make from each dollar you spend on marketing.
In other words, it calculates what your marketing contributes to the bottom line.
Here are some tips for measuring ROMI:
- Measure every campaign separately. Don't lump all your marketing campaigns together. Instead, measure each one individually. That way, you can see which ones are working and which ones aren't.
- Measure results over time. You should also measure them over time to see how long it takes for various types of leads to convert into customers or sales. If someone signs up for your newsletter but doesn't buy anything immediately, there's no reason to stop sending them e-mails, yet they may still buy later.
The Bottom Line
So, when you are looking at a marketing campaign, be sure to consider what the goal is, branding or conversion, and choose a metric that matches. Give your campaign a little time to impact conversion rates and then measure those against the overall numbers. Be sure to consider all marketing elements along with channels affecting conversion rates and then try again.
With the advent of attribution models, marketers may feel it is possible to attribute every dollar to a campaign. However, after running tests on some of the most popular campaigns, there are still instances in which it is complicated to attribute revenue to marketing activity. If you want to get better at measuring attribution and marketing results, look for opportunities that can incorporate vanity metrics.
