Episode 169 - Measuring Marketing Effectiveness The Right Way

Don’t confuse anything I’m about to talk about with Marketing Mix Analytics, an old BigCo statistical machine designed to distinguish which of 15 marketing buckets had the most influence on sales growth in the past year. Just mentioning the topic makes me want to rage at the naivete with which people purchase its promises. Separate video required. 

Your Host: Dr. James F. Richardson of Premium Growth Solutions, LLC www.premiumgrowthsolutions.com

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Transcript

SPEAKER_00 0:04

Welcome to Startup Confidential. What industry insiders will never tell you that you need to know if you're building a consumer brand. With your host, best-selling author of Ramping Your Brand, Dr. James Richardson. Let's do this.

SPEAKER_01 0:21

Today I want to share a few advanced tips on marketing effectiveness. Because those of you who are new to the industry doing it all wrong, you're staring at your units per store per week, and you're expecting them to just bump up once you turn on your TikTok channel, just like your sales tend to bump when you do BOGOs. And that's not how this works. And you're measuring the wrong thing. You gotta stop worrying about velocity when you're investing in brand marketing. If you only want to spend consumer marketing dollars out of the store to generate an immediate sale, then you need to get into the e-commerce biz. And then you're gonna call it performance marketing. So the first thing you need to understand, the first tip, is you've got to measure growth and awareness, not sales velocity. Because your brand marketing investments out of the store, they're gonna require multiple impressions per new consumer to generate the first trial purchase. And then you're gonna have to wait even longer depending on the purchase cycle in your category to see whether or not you actually generated a new household. Oops. So the lag between when the marketing dollar gets spent and when the leading indicator awareness changes and the lagging indicator household penetration changes. I mean, it could be six months, nine months, could be a freaking year. Who knows? Gotta measure the right thing. I can't emphasize this enough. The other way to look at it is if you're trying to spend millions of dollars out of the store, you've got to measure. Where do you want to measure? Not in the store, you want to measure out of the store where all that happened. That includes somebody's screen in their living room or in their bed. Out-of-the-store effect, measure out of the store on a survey. And you're measuring in the same reality. Tip number two. How you're gonna measure has to change. And you learned how to do this. I hope. If you ever bothered to take one of those spins or Nielsen's webinars on trade promotion analytics, they're all sitting on there for no added fee, and you probably haven't clicked on a single one. But there's this thing, there's this concept of incremental lift, right? So I did a BOGO because the buyer forced me for the launch, first launch clod, P1, or P7. I did it, I got a sales bump, and I want to measure the incremental lift. In other words, what was the lift on top of the baseline growth that was already happening in my business? Well, that requires statistical modeling of the baseline. You subtract that from what happened during the promo and you get the net incremental lift. You can also look after the promo ends to see how much the baseline has moved. That's a better way of doing it. And if the baseline doesn't move up permanently after you did your BOGO, then you have just injected heroin into your veins. Okay, my point is you need to take the same incremental analytic mentality, you need to apply it to your s to your rolling awareness data. You need to smooth quarterly or monthly awareness data from a survey data set you've invested in, not cheap, but you can afford it if you can do a $10 million marketing budget. You can afford it even if you're doing a $5 million marketing budget. And it's gonna be more useful then. In fact, there's a service called TrackSuit, which will collect this data from your category buyers, smooth it, chart it, analyze it for you. But I don't want to get lost in the weeds of how to do the measurement, other than that you have to measure the incremental change later in your baseline trajectory of awareness based on campaign work that happened in the past, not the present. Alright. Tip number three. If you're still with me, tip number three is that you've actually got to set up tracking years in advance of when you're going to want to measure the effect of consumer marketing. So here's the thing that just drives me crazy. You've already been doing this. Nielsen and Spence have already been doing this for you because they've been collecting, as long as they have your UPCs logged, they've been collecting your data, your promotional data to calculate promo incremental lift without you even asking because it's built into their entire bureaucratic structure. So you've already had that going on. You didn't even realize it. But see, the awareness stuff isn't happening automatically. You gotta make that deliberate intentional investment, and you need to do it two years before you're gonna spend a material amount on consumer marketing out of the store that scares you shitless. And you really need to do it if you're one of these how can finance ROI jackasses last to measure return on everything. Because I've explained to you how not to measure the return in this video on awareness building long-term brand marketing. But you've got to start the measuring of the baseline early enough to produce a meaningful number. Then you can subtract the baseline growth during a specific period and see the incremental fact of your playbook on the awareness trend and should be bending it up, should be elevating the baseline, should be accelerating awareness build. Especially if you're spending, you know, five, ten, fifteen million on consumer marketing out of the store. Gulp. And some of you are spending even more of that and not doing this measurement. Start early, collect the rolling data on awareness, know your damn baseline by planning in advance. That's all I got for you this time. 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