It’s interesting, looking back over the past 10-20 years, how much the advertising industry has changed – and how one of its central problems has done a complete 180. For most of the history of advertising/marketing, a lack of data was one of the biggest single challenges – how do you know the money you’re spending on marketing and consumer intelligence is well-spent, and how do you track your returns?
But now, in the digital era, it’s the opposite. The typical brand manager at a high-tech agency is absolutely drowning in data. The problem has become one of sorting through all the information, finding key trends and actionable intelligence but without chasing metrics which will lead them down blind alleys. Likewise, all this data means it should be easy to optimize one’s efforts, yet finding clear paths to optimization can still be difficult.
Marketing pioneer John Wannamaker once famously lamented, “Half the money I spend on advertising is wasted. The trouble is, I don’t know which half.” The funny thing is, for many businesses, that sentiment is still true over a hundred years later – just for totally different reasons.
The typical brand manager at a high-tech agency is absolutely drowning in data.
Sorting Through the Data
Proper data handling and analysis will often depend greatly on each individual company, yet there are still clear guidelines a brand manager can follow to make their lives easier – while producing better outcomes for their company and/or client.
1. Define your Key Performance Indicators (KPIs).
If your data is an untamed wilderness, KPIs are the signposts that help you navigate it. KPIs are single metrics which are easily derived from data and give clear indications of how well an initiative is going – or not. These may be idiosyncratic depending on the business, but they usually include common ideas such as:
- Weekly/monthly sales
- Lead-to-sale conversion ratios
- Customer Total Lifetime Value
- Website leads generated
These KPIs can be tracked over time, creating a baseline for measuring performance month after month. Ideally, they should be relatively stable. You might create some KPIs which are tied to specific initiatives, but your core KPIs should remain the same to give yourself consistency in reporting.
2. Avoid focusing on “glamour” metrics.
This is the dark side of KPIs. It can become tempting to focus on numbers which look really good in a slideshow, or might wow investors, but don’t actually contribute to a business’s success or bottom line.
For example, website hits. By itself, the number of visitors a website receives is nearly meaningless. What matters is what happens to those visitors. Visitor-to-lead ratios and website sales numbers are far more important. In a worst-case scenario, a large number of website hits could even be needlessly costly. If millions of people are hitting your site, but no one is buying, you’re basically spending money on a website for nothing.
These glamour metrics can be especially problematic if it’s a situation where the metrics can be bought. Social media followers are a good example here. It’s relatively easy to spend money to gain thousands upon thousands of social media followers – but that will gain you almost nothing. Yet focusing too much on glamour metrics has caused businesses to spend money chasing them while receiving little or no value for those spends.
3. Segment your market, and then segment it again. Find manageable targets.
Targeted online advertising is the goal, but how do you define the targets? Many brand managers will find themselves staring at stacks of consumer surveys or analytical data, without being able to see any trends that link those buyers together in a way that makes for a good outreach campaign.
That’s when it’s time to start segmenting. Don’t cast a wide net. Focus your attention on your best possible leads, and make them the focus of your marketing. Or, if your product/service seems to do well with multiple groups, treat each of them as a wholly separate target. It’s increasingly common, for example, for the exact same product to be marketed to both Millennials and Boomers, but under different names and with different campaigns. This capitalizes on both, without feeling like you’re trying to be, as the saying goes, “all things to all people.”
4. Always look for ROI.
Sooner or later, any brand manager is going to be called to account for themselves and have some hard data justifying their spends. They may even be looking for budget increases, and need to proactively prove that the extra money will be justified.
So always look for opportunities where ROI can be demonstrated via the data. In many cases (although not always) it’s a good idea to specifically avoid any activities where you can’t demonstrate ROI. The main exceptions would be costly elements which are a necessary part of a larger pipeline, such as the need for customer support and warranty services as part of the sales funnel. However, you can still look at the overall budget for that pipeline and gauge its profitability as a whole.
Much of the time, following the money in this fashion, is going to be an excellent guide towards whether your data-collecting and analysis efforts are being put to good use. If you can’t find ROI for a particular initiative or idea, think long and hard about whether it’s really necessary – or whether there’s something better you could be spending time/money on instead.
Data Analysis Will Get Easier Going Forward
There is a light at the end of this tunnel. The problems of sifting through Big Data are well-known, and being worked on by many different entities. Both machine-based and human-based analysis techniques are becoming more robust with each year. Software already exists which can significantly reduce the burden of finding the right insights in the data and it’s only going to get smarter in the future.
So if it seems difficult today, fear not. Things will become much easier in the years to come.