{"id":15664,"date":"2022-02-21T19:25:05","date_gmt":"2022-02-21T19:25:05","guid":{"rendered":"https:\/\/mailinvest.blog\/index.php\/2022\/02\/21\/static-roi-metrics-meet-dynamic-marketing-situation\/"},"modified":"2022-02-21T19:25:05","modified_gmt":"2022-02-21T19:25:05","slug":"static-roi-metrics-meet-dynamic-marketing-situation","status":"publish","type":"post","link":"https:\/\/mailinvest.blog\/index.php\/2022\/02\/21\/static-roi-metrics-meet-dynamic-marketing-situation\/","title":{"rendered":"Static ROI metrics, meet dynamic marketing situation"},"content":{"rendered":"

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This is the second part of a two-part article. The first part, \u201cReturn on investment is missing in action,\u201d can be found here<\/a>.<\/em><\/p>\n

Life would be a lot simpler if marketing were a machine. Your marketing budget would produce an expected return on investment, given a fixed input. In real life, calculating ROI on your marketing spend is impossible. Markets are non-linear in nature.<\/p>\n

\u201cMarkets are subject to the butterfly effect.\u201d wrote Kathleen Schaub, marketing strategist, in her paper \u201cMarketing Is Not a Vending Machine<\/a>.\u201d<\/p>\n

\u201c[The] non-linearity\u2026 of complex systems means continual surprises. Small changes, especially early, can have profound effects later. For example, a single tweet in 2021 could initiate a huge deal that closes in 2023. Alternatively, large actions may have little or no effect, as when sales decrease despite a large ad buy. Markets are semi-predictable and therefore can be modeled, but only within the bounds of probability and time.\u201d she wrote.<\/p>\n

Schaub, along with Mark Stouse, chairman of Proof Analytics, have been busy tearing down the assumptions surrounding the marketing spend, and rebuilding an alternative method of perceiving its value. Predictability and control are out. Perception and reaction are in.<\/p>\n

\u201cThis is a huge cultural shift for marketers,\u201d Stouse said. \u201cWe\u2019re talking about a profession that has prized orchestration very, very highly. Orchestration is just another word for control. What we are talking about here is learning, being able to see variations over time in the marketplace and shift accordingly.\u201d <\/p>\n

You are not the mission control of all that goes on in your marketing, Schaub added, executives have trouble grasping this. \u201cMarketing can influence, nudge and intervene, but cannot control this. And neither does sales.\u201d<\/p>\n

Marketing is a complex system, Schaub continued. \u201cYou have to differentiate on an individual basis, what is happening with a particular buyer, a particular account, and what is happening at the macro level, where you are talking about how to connect your revenue.\u201d she said. \u201cYou will never have the data to predict individual accounts.\u201d<\/p>\n

These individual accounts are not additive, like machine parts. \u201cThey each have their own, weird journey, some of which follow the trend line perfectly, but many go coloring way outside the lines.\u201d Schaub said.<\/p>\n

Connecting the Edge and the Core<\/h2>\n

There has to be some connection between the people \u201cat the front\u201d (the \u201cEdge\u201d), who have direct, immediate experience with the current market, and the executives higher up (the \u201cCore\u201d) who have the analytics to give them the broad view, but have no clue as to what is happening at the ground level.<\/p>\n

General Stanley McCrystal, in his book \u201cTeam of Teams\u201d, outlined a similar problem in Iraq, where he had to oversee a joint Special Forces\/Intelligence effort to track down al-Qaida terrorists in 2004. Hierarchy, bureaucracy, and information siloes hobbled the effort at first. The solution was to network all information and decentralize decision making, thus turning a large, cumbersome organization into a nimble giant that could act quickly.<\/p>\n

The business equivalent of this would be a multi-disciplinary team, consisting of marketing, (event expertise, campaign expertise, content, analytics) and sales. They would work collaboratively, using first-hand information, then tapping a transparent pipeline of data coming from the analytics side, Schaub explained. \u201cThe Edge and the Core are having a dialogue as close to real time as they can.\u201d<\/p>\n

The obstacle is not technology, but human. \u201cWe don\u2019t have people in the right places,\u201d Schaub said. \u201cWe haven\u2019t trained people to ask the right questions. We haven\u2019t trained people how to automate.\u201d The notion that marketing can be orchestrated is an idea people have to be weaned off of, she said.<\/p>\n

The Edge has to confirm with ground truth the analytics it is receiving from the Core, Stouse pointed out. In a way, this is risk mitigation. Analytics will look at the market with a \u201cprojection point of view\u201d, but there will be a time lag. The Edge may have to make a detour around circumstances, thus altering the arrival at the stated goal.<\/p>\n

Beating or missing \u201cthe number\u201d is not the right question here, Schaub said. \u201cThe annual plans for marketing are out of date the minute they are delivered.\u201d Planning is useful for setting goals, but making marketing adhere to a plan made months ago \u201cprobably does not make sense,\u201d she said. \u201cMarketing plans never survive the first contact with the customer.\u201d<\/p>\n

Read next: How to measure content marketing ROI and ROE<\/a><\/em><\/strong><\/p>\n

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Get the daily newsletter digital marketers rely on.<\/p>\n<\/p><\/div>\n<\/p><\/div>\n<\/div>\n

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You can\u2019t ever think about ROI the same way again<\/h2>\n

So what can marketers do? Changing how you analyze and apply data requires a change of thinking. This is not as crazy as reinventing the wheel as it spins, but it is challenging.<\/p>\n

It comes down to \u201casking the right question, voicing your hypothesis, that creates the model. It also dictates a punch list of the data sets that are required to arm that model, roughly two-thirds of which will be external factors that you don\u2019t control, one-third of which is what you are currently doing,\u201d Stouse said.<\/p>\n

The idea that one omnibus model explains all does not work. \u201cIt\u2019s a collection of many models, some of which are linked, some of which are not, some of which are standardized and applied to many different markets,\u201d to yield a meta-view, he said.<\/p>\n

As the marketer goes down this path, they will learn the \u201cthings I don\u2019t know I don\u2019t know\u201d, Stouse continued. \u201cMore things will become visible to you as you process these analytics and you will add new factors into the model going forward.\u201d The old and revised models can be run concurrently to understand the variances. You will need at least one data analyst to operate this, Stouse added. <\/p>\n

\u201cThe analytics will inform you about which things you should really pay attention to, and which things have less value.\u201d Schaub said. \u201cYou will know where the big waves are.\u201d An empowered, but accountable, agile team at the Edge will be able to make adjustments on the fly as it reacts to changes in the market. The goal is to spend marketing dollars wisely, not to meet some random plan you set up a year ago, Schaub said. The team is empowered on how and when to make their numbers.\u00a0<\/p>\n

The agile team does not have to start as a large project. \u201c[S]tart small and complete.\u201d Schub said. The agile team, or \u201ccustomer value squad\u201d, can sit at the Edge where they are \u201ctouching the customer\u201d, coordinating the skills of sales, marketing and product, Schaub said. It may take months, maybe even a year, to get that team to work right. Short-term desire for quarterly results will not work here, but may have to run concurrently while the agile team is being established, free from that metric.<\/p>\n

You will also have to create a network for the agile team to tap. \u201cStart opening up channels between groups,\u201d Schaub said. Put in Slack, so people could inform each other. Change here will not be linear. \u201cIt will go slow, slow, slow, slow, and then it will take off.\u201d She explained. \u201cNot because of what you are doing, but because what the groups is doing. The group makes that emerge.\u201d<\/p>\n

\u201cStart at these small scales. Let it become successful. Build the connections. And it will expand.\u201d Schaub said.<\/p>\n

In the end, the mission to change the way people think about marketing requires some illumination to see new concepts clearly. \u201cOnce the lights go on, you can\u2019t ever think in the old way again,\u201d Schaub said. \u201cIt\u2019s my mission to turn the lights on for people.\u201d<\/p>\n\n

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About The Author<\/h3>\n
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\t\t\t\t\t\tWilliam Terdoslavich is a freelance writer with a long background covering information technology. Prior to writing for Martech, he also covered digital marketing for DMN. <\/p>\n

A seasoned generalist, William covered employment in the IT industry for Insights.Dice.com, big data for Information Week, and software-as-a-service for SaaSintheEnterprise.com. He also worked as a features editor for Mobile Computing and Communication, as well as feature section editor for CRN, where he had to deal with 20 to 30 different tech topics over the course of an editorial year. <\/p>\n

Ironically, it is the human factor that draws William into writing about technology. No matter how much people try to organize and control information, it never quite works out the way they want to.\t\t\t\t\t<\/p><\/div>\n<\/p><\/div>\n<\/p><\/div>\n<\/p><\/div>\n<\/p><\/div>\n<\/div>\n

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