“One of the biggest pitfalls for performance measurement is to measure the ‘part’ with ignorance of the ‘whole’”, wrote Pearl Zhu, author of the Digital Master book series. It’s a quotation that perfectly reflects the growing realisation of marketing measurement’s critical role. We see a requirement to evolve beyond attributing the value of a conversion to single customer touchpoints (the ‘part’) towards an understanding of marketing effectiveness throughout the ‘whole’ customer journey.
Multi-touch attribution delivers change through modelling all of a brand’s customer interactions to attribute fractional credit for each conversion to each unique touchpoint.
Fospha have been providing clients with data platforms for multi-channel customer intelligence for the past 18 years, but their increasingly urgent need for multi-touch attribution has been particularly profound this year.
Here are six observations on the key drivers of the change in 2017:
1. More ways to communicate with customers
It’s been a fascinating year for marketing channel innovations. For retailers, we’ve seen the emergence of Amazon as an advertising channel, with Martin Sorrell predicting it “could threaten Google as the biggest benefactor of ad spend” and Amazon CFO Brian Olsavsky declaring it a ‘meaningful’ portion of their overall business.
Developments at Facebook continue to enable more cohesive cross-channel campaigns, particularly leveraging the full suite of their platforms: Instagram, Facebook and AI-driven engagement on Messenger.
These represent great opportunities, through which marketers push to acquire customers at a sustainably low cost and increase their lifetime value. However, for most, these new opportunities are not only executed but measured exclusively within the same advertiser’s ecosystem. With most marketers using more than one ad channel, this inevitably creates data silos across an organisation, a less coherent view of the actual customer journey and the risk of each channel reporting total credit for the same conversions.
This increasing complexity, combined with spiralling costs- we’ve witnessed a 65% increase in average cost per click in Paid Search since 2015- is leading businesses to challenge these partisan tools for measuring marketing effectiveness to gain a holistic view of the customer, their touchpoints, costs and value.
2. The data opportunity
As Mark Benioff, Chairman and CEO of Salesforce, puts it:
“The world is being re-shaped by the convergence of social, mobile, cloud, big data, community and other powerful forces. The combination of these technologies unlocks an incredible opportunity to connect everything together in a new way.”
For the first time, the expectation of collapsing silos to access integrated, end-to-end customer data- the basis for multi-touch marketing measurement – is starting to be matched by the reality. In November, Google and Salesforce announced a global partnership enabling GA360 clients to integrate online and offline customer touchpoints. The significance of making this online-offline join can’t be overstated; our clients without it haven’t been able to attribute more than an average of 17% of revenue to a marketing activity, compared with more than 80% when the link is made.
3. Faith in digital
The opportunity that this interconnectivity provides has helped businesses shine a brighter light on the tangible role that digital advertising is playing anywhere in the customer journey… and some of them don’t like what they have seen.
Procter and Gamble have been causing a major stir all year, starting in January when, in a speech at the Interactive Advertising Bureau’s Annual Leadership Meeting, Chief Brand Officer Marc Pritchard called upon P&G’s agencies to clean up transparency and demand that all platforms provide third-party measurement. Pritchard threatened to pull spend if they failed to comply, and was true to his word. In Q2 the business cut $140 million in digital advertising spend without observing any drop in revenue or sales volume! P&G achieved their savings according to their CFO Jon Moeller, by identifying and eliminating ineffective ads – acknowledging they’d had been wasting huge sums of money.
At first glance, there’s a staggering contrast with L’Oréal’s confidence in digital: whilst P&G were cutting 65% of their year-on-year Q3 spend, L’Oréal ramped up theirs 76% over the same period. Upon closer inspection however, the underlying attitude is the same: having carried out a similar crackdown on wasted spend through a focus on developing digital expertise focused on better measurement, ROI focus and attribution modelling, L’Oréal’s renewed confidence in digital spend is founded upon being better-placed to measure the returns.
4. The need for independent measurement
The need for independent measurement resonates with Fospha’s clients, who were typically spending most of their budget in Paid Search, relying on Google Analytics and last-click attribution to measure the results. Applying multi-touch attribution has revealed that up to 50% of our clients’ budget was wasted on keywords that Fospha showed had never played a role at any step of a historic or forecasted conversion.
Last-click attribution also tends to over-measure towards Paid Search as a converting rather than discovery channel, it’s been fascinating to see clarity in how credit is redistributed by the multi-touch models. Commonly, we see Paid Social getting more credit for the role it plays in brand discovery and critically, credit being fairly assigned to organic and client-initiated channels like email, which have typically been underrepresented by ad-platform owned measurement solutions like Google Analytics.
Through these insights, we’re seeing consistent validation of the type of independent measurement approach for which the consumer giants were calling out.
5. Better marketing measurement as a company-wide initiative
2017 felt like the year that multi-touch attribution became as much of an imperative for the CEO and CFO as the CMO. In a report at the end of last year by the CMO Council and Deloitte, it was found that more than 70% of CEOs now expected marketing to drive revenue growth and evolve beyond a purely creative brief to fully engage with data, science and technology.
This chimes with a Marketo survey released earlier this month, which found that the most significant organisational goals marketing is expected to meet are to grow revenue, acquire new customers and improve the customer experience. By contrast, the survey found that ‘almost a third of marketers do not even measure their contribution to revenue, and only 14.8% say they contribute to more than half of company revenues. When pushed on the matter, half admitted to guessing the number.’
This resonated with a major topic of discussion at a recent Fospha breakfast, where, a group of senior marketing leaders debated whether multi-touch attribution was more interesting and relevant for a CFO than the marketing team.
The opinion we’ve formed over the course of the year is the whole business must engage with marketing measurement. The biggest barriers to successfully implementing multi-touch attribution are organisational; an unwillingness to treat data-driven marketing measurement as a business change rather than a project. In organisations with mature measurement practices, the CFO and CMO will be brought closer together as the marketing team fulfil the expectation to drive business growth through customer acquisition and retention at a manageable cost.
6. AI and machine learning
Finally, no reflections on changes in marketing measurement in 2017 would be complete without reference to the opportunity presented by AI and machine learning. Far from multi-touch attribution purely measuring the past, amongst myriad other opportunities, we can now use the data to predict where the highest value opportunity exists to invest the next pound, euro or dollar of marketing spend, calculate the true incremental value of marketing activity and incorporate external events into modelling. Central to our focus here is modelling the impact of the weather. A recent case study from IBM’s The Weather Company detailed how Starbucks have been leveraging weather data on such a granular level that they can predict tiny variations in demand street by street in New York and adjust stock and display accordingly. I remember a time not long ago in my ecommerce past when the closest we could get to understanding the true impact of the weather on sales was to pray for the rain gods to ruin a sunny weekend and avoid a downturn in performance. Advancements here have been profound and are a real cause for excitement for us in the immediate future.
These are some of the major themes driving change in 2017 and we believe will continue to dominate the marketing measurement debate in 2018. By embracing and reacting to the change, considering the developments over the past 12 months, we expect next year to be a transformational one for our clients in advancement of marketing measurement capability.
Sam Carter is CEO of Fospha, leaders in multi-touch attribution.
Leveraging over 18 years of experience in cross-channel customer data engineering, Fospha helps marketers understand where to spend the next pound of their budget to optimise customer acquisition cost and lifetime value. Our multi-touch attribution solution measures the precise contribution of every marketing effort at each step of every customer journey, powering marketing performance optimisation at scale.