How to measure marketing
By John Welch on September 28, 2020
How do I know if my marketing is working?
When businesses become obsessed with tying marketing activities directly to revenue, they hurt their marketing efforts. This is called “performance marketing,” and it includes things like Google Ads and social media pay-per-click.
Marketing cannot be measured the same way that sales is measured. And yet, this is what most people try to do.
Imagine you’re driving down the highway, and you see a billboard for a pair of tennis shoes. You instantly need them. You tell Siri to remind you to look up those shoes when you get home.
Later that day, you jump on Google and search the brand name of the shoe. The first thing that pops up is a Google ad taking you to their website.
10 minutes later, you’ve got an email receipt for the shoes you saw earlier, and you can’t wait for the 2-3 days to get here.
If you’re the shoe company, what just happened?
On their Google analytics, they just tracked your sale as a conversion on their Google Ads campaign. Did you buy the shoes because of a Google ad? No! You didn’t even hear about it because of a Google ad. In fact, it could be the case that every single sale that company gets from their billboard, is actually being tracked as a Google ad sale.
Can you imagine if that company stopped running their billboard because it “wasn’t performing,” only to see their sales drop and wonder “what on earth happened?”
- How do I know if my marketing is working?
It’s difficult to measure marketing by revenue
In the sales world, it’s much easier to directly tie activities to their revenue results. If you have a sales rep and you pay him $120,000/year and he brings in $750,000/year in revenue, the math is simple.
It’s only in the past 20 years that digital marketing was even relevant. Before this point, businesses had almost no insight into the effectiveness of their marketing beyond what happened to their sales over time. Ad agencies of the 50s knew how important brand perception was. Nowadays (in digital marketing) we are so focused on getting in FRONT of the customer that we don’t think about what they THINK or FEEL about us WHEN we get in front of them.
The marketing data trap
There are some methods of marketing which allow you to see metrics and performance. These methods are getting ALL of the attention.
Using paid ads on Google, you can clearly see how many clicks you received, how much you paid per click, and how many conversions have happened. The same is true for social media ads like Facebook, Instagram, and Pinterest ads.
For something like branding, it’s very difficult to directly tie marketing activities to revenue generated. In order to measure an abstract concept like “brand awareness” you have to track every possible channel you’re using. This includes all the channels where you distribute your marketing and all the channels through which your customers find you.
This means measuring things like:
- Direct traffic to your website
- Earned media (Basically PR from other sources)
- External links
- Blog shares
- Social engagement
- Community reach
- Search volume
As you launch brand awareness campaigns, these metrics will show you if it’s working or not.
How to measure marketing ROI
It’s not impossible to tie things like branding to ROI. To do it you need:
- accurate data for where your leads come from
- how long it takes them to become a customer
- what channels they are using to interact with your brand
If you can see how many people typed your website URL directly into their browser, this is a measure of brand awareness. It shows they know where to find you on the web.
You can see if the time it takes your leads to convert is decreasing. This is a measure of brand recognition and positive emotional connection with your audience.
**When you get a new customer, ask them, “How did you hear about us?”
As you connect the dots with your data, you can begin to place a value on each customer you acquire. You can track how your brand awareness campaigns have improved these specific metrics. If there is no appreciable change then what is the point of the brand awareness campaigns?
At some point, there is one measure of your marketing: are you making more sales or less?
If you’re making more, keep doing it.
If you’re making less, stop doing it and try to figure out why it didn’t work.
To illustrate the point, let’s talk about Febreze.
When P&G first launched Febreze in 1996, the product was a disaster. Their sales were abysmal.
In order to understand better why the product was doing so poorly, P&G conducted a consumer study to learn what needed to happen to increase interest in Febreze.
Turns out their marketing team was focusing on the wrong message. Febreze marketing was focused on telling consumers that they could get rid of smells. Their ads showed people getting the smell of smoke out of their jackets and thinks like that. But it wasn’t connecting with consumers.
How did P&G know this? They weren’t making any sales.
After their study P&G changed their messaging to something more positive and re-launched Febreze in 1998. Today Febreze generates more that $1 billion per year.
No one wanted Febreze to get rid of bad smells, they wanted it to make their home smell better. Rather than using it to take bad smells out of clothes and furniture, consumers who used the product were spraying it after they finished cleaning the house as a “final touch.”
Successful marketing results in more revenue (eventually)
The only reason to market is to grow your business. You need revenue to grow. If your marketing is not generating revenue, your marketing is not working.
At the same time, “generating revenue” is a vague and abstract concept. Google Ads could get attribution for leads that were generated by a billboard.
Marketing is being tied too closely to data and math. We’re losing the magic that makes marketing effective. Marketing is a conversation between a business and it’s audience. This isn’t always something you can directly track or measure.
The right marketing works
So how do you know if your marketing works?
Are you selling more of your products or services? If so, it’s working.
If your marketing isn’t working, chances are good it’s because you’re focusing too much on “performance marketing” and not enough on the art of marketing itself.
It’s not too late to start doing it right.Back to the blog