As businesses increasingly adopt a multi-channel approach to digital advertising, measuring the effectiveness of their marketing campaigns has become a challenge. With customers interacting with multiple sales channels, including Google Search, Facebook, TikTok, and more, it’s challenging to attribute the success of each channel accurately.
One of the biggest frustrations in multi-channel measurement is that each platform has its own way of tracking conversions and attributing them to different touchpoints along the customer journey. This can make it difficult to determine the true incremental impact of each channel on your business’s revenue growth. On-platform tracking is not enough to understand the full impact of each channel, as it does not account for cross-channel interactions and tracking limitations within each platform.
Thankfully, there are better ways to handle multi-channel measurement, and they don’t all have to break the bank. Here are three options:
Option 1: Marketing Efficiency Ratio (MER)
The marketing efficiency ratio (MER) is a simple and effective way to measure the effectiveness of your marketing efforts without the need for fancy software. This ratio is calculated by dividing your total revenue by your total marketing spend. For example, if you spent $100,000 on marketing and generated $500,000 in revenue, your MER would be 5:1. So, instead of setting a ROAS or CPA goal, you are setting an MER ratio goal.
The benefit of using MER is that it is a straightforward and free way to measure the overall effectiveness of your marketing efforts. When you start introducing new strategies or platforms, change one variable at a time so changes in MER can be attributed appropriately. This can sometimes be a slower path to growth as more testing time is needed, and MER does not provide insights into which channels or campaigns are driving the most revenue. Therefore, while MER is a good starting point, it may not provide the granularity needed for a more detailed analysis.
Option 2: Mixed Marketing Modeling (MMM)
Mixed marketing modeling (MMM) is a more advanced method of measuring the effectiveness of your marketing efforts. This method involves analyzing the data from all of your marketing channels to determine which channels are driving the most revenue. The analysis is done using statistical models that take into account factors such as seasonality, promotional events, and competitive activity.
The benefit of mixed marketing modeling is that it provides a detailed analysis of the effectiveness of your marketing channels. This information can be used to optimize your marketing spend by focusing on the channels that are driving the most revenue. However, this method can be expensive and time-consuming, as it requires a team of analysts to build and maintain the statistical models. The process can be made simpler by paying for specialized software, but the setup is quite involved, and the software is still costly. Due to the technology that drives MMM, it’s best for long-term budget decisions.
Option 3: Multi-Touch Attribution Tools (MTA)
Multi-touch attribution tools (MTA) are a more recent development in the field of marketing measurement. These tools use machine learning algorithms to analyze data from all of your marketing channels and assign a value to each touchpoint along the customer journey. This allows you to understand the impact of each touchpoint and optimize your marketing efforts accordingly.
The benefit of using MTA tools is that they provide a detailed analysis of the effectiveness of each touchpoint on the customer journey. This information can be used for day-to-day insights and marketing spend optimizations by focusing on the touchpoints that are driving the most revenue. However, these tools can be expensive and require significant technical expertise to implement and maintain. Again, this process can be made simpler by paying for specialized software, but the setup is quite involved, and the software is still costly.
So Which Option is Right for Me?
Measuring the effectiveness of a multi-channel strategy can be challenging, but it is essential for optimizing your marketing spend and driving revenue growth. The marketing efficiency ratio is a good starting point for measuring overall effectiveness, but it may not provide the granularity needed for a more detailed analysis. Mixed marketing modeling and multi-touch attribution tools are more advanced methods of measuring effectiveness, but they can be expensive and require significant technical expertise. Ultimately, the choice of measurement method will depend on the size and complexity of your business, as well as your budget and technical capabilities.