A Beginners Guide to Ad Effectiveness

For about 90% of marketers out there, if I was to say to you, is that effective marketing? You would probably respond based on your own idea of effectiveness or your own concept of whether or not you had achieved a specific goal with your campaign. After all, effective is just another buzzword, right?

Wrong. 

Marketing effectiveness, also known as Ad effectiveness, is an entire practice used by the top marketing research companies in the world and leveraged by about 10% of agencies. 

Why?

Because it’s hard, it’s real, and if you’re an SEO agency and run a MMM study for a client that shows your SEO had a 2% impact on sales over the last 5 years, but that the client was spending about 45% of their budget on your SEO- well, you’re going to be in trouble.

Therefore, when it comes to ad effectiveness, it’s often a hush-hush subject that often gets swept under the rug and only used by the marketing research agencies who have no stake in the game on whether the services they’re billing for matter.

I know this because I’ve been at the Executive level on both sides.

For years I started and worked on the agency side doing campaign after campaign. Then leading up to the 2020 Olympics, I was recruited to work at Nielsen, we all know who they are.

At Nielsen, I lead Marketing Effectiveness, as a result my entire process to marketing changed forever. Learning the ins and outs of marketing effectiveness was like opening the curtain behind everything to see not only how each platform measured performance, but also how we can use different types of formulas to forecast and perfect it.

But before I get ahead of myself, let’s take a quick look at what Marketing Effectiveness is, how you can start learning more, and then begin applying it to your campaigns today.

What is it?

Just like our marketing agency in Seattle specializes in getting things right, so does the art and science of Marketing Effectiveness. Marketing effectiveness is the systematic process of evaluating and measuring the impact of marketing strategies and activities. 

The goal is always to determine the return on investment (ROI) and the overall success of a marketing campaign now or in the past. Essentially, it’s like being a detective—tracking down every clue that tells you whether your marketing efforts are making a splash or just a ripple.

For example, a retail chain runs a summer sale campaign with the objective of increasing in-store and online sales. Marketing effectiveness measures the campaign's impact on sales revenue, online traffic, and customer engagement. Did the tropical-themed emails and beach ball giveaways boost sales, or did they just end up in the virtual trash bin?

Well, while each of your agencies has a different answer, a marketing effectiveness study will give you the actual solution to what worked.

Sounds awesome, right? 

Well it is, but it’s also complicated, time consuming, expensive, and requires a certain amount of data sets to get right. Therefore to run an ad effectiveness study, you have to decide what type of study or measurement model you’re going to use. For this article, let’s look at three different areas of Marketing Effectiveness and what you can do to get started.

Marketing Mix Modeling (MMM)

Marketing Mix Modeling (MMM) is a statistical analysis technique that measures the impact of various marketing channels on sales and other KPIs. 

It enables you to allocate your marketing budget effectively by identifying the channels and strategies that drive the most revenue. 

Imagine being able to pinpoint which of your marketing efforts is like the cherry on top of a sundae, making everything sweeter.

For example, say an automotive manufacturer uses MMM to analyze the impact of TV advertising, online marketing, and social media on its sales. 

By analyzing historical data, it can optimize its marketing spend to focus on the most effective channels. Maybe they’ll discover that quirky online videos featuring their latest model have a higher return on investment than those pricey TV spots.

To get your MMM right, you need to Collect Data on All Relevant Marketing Channels: Don’t leave any stone unturned. Collect data from TV, radio, print, online, and social media.

That also means Implementing the appropriate statistical models for attribution. Remember to use the right tools and models to attribute sales to the correct marketing channels.

Finally, regularly Update Your Modeling to Account for Changing Market Dynamics: The market is like a dance floor—it’s always moving. Keep your models up-to-date.

But what if you’re not looking at years of past data? What if you want to know about a campaign's impact on its own?

Matched Panel Analysis (MPA)

Matched Panel Analysis involves comparing the behavior of a group of customers before and after a marketing intervention. 

This method helps you quantify the impact of specific marketing campaigns and assess their effectiveness in changing customer behavior. It’s a bit like before-and-after photos, but for your marketing campaigns.

For example, an ecommerce platform uses Matched Panel Analysis to evaluate the impact of a recent email marketing campaign. 

By comparing the purchase behavior of recipients before and after the campaign, the company can measure its effectiveness in driving sales. 

Did that witty subject line actually get people to click and buy, or was it just good for a chuckle?

MPA is more customer centric so it’s best to collect a representative sample of customers and ensure your sample is diverse and representative of your target market. Make sure the data you collect before and after the campaign is consistent and comparable. As well, carefully shoose control and treatment groups. 

Your control group should be as similar as possible to your treatment group, except for the marketing intervention.

Okay, all this is good - but now to the most controversial subject of them all. What if you want to know what’s working now- not only via campaign, but was is impacting sell through?

Multi-Touch Attribution (MTA)

Multi-Touch Attribution is a methodology that assigns credit to multiple marketing touchpoints along the customer journey. It's also a little more relevant when it comes to paid media, which we cover here in "How Paid Advertising Works"

It acknowledges that customers often interact with various marketing channels before making a purchase, providing a more comprehensive view of how marketing influences sales. 

It’s like giving out participation trophies, but only to the touchpoints that actually matter.

For example, an online retailer employs Multi-Touch Attribution to assess the role of various touchpoints in the customer journey, such as display ads, social media, and email marketing. This method helps them optimize their marketing strategy by understanding the contribution of each touchpoint to sales.

MTA is trickly, but necessary. To get it right, choose an attribution model that aligns with your business goals. Reason is, different models give different weight to various touchpoints. Choose one that fits your marketing strategy.

Second, implement tracking and data collection across all relevant touchpoints: Make sure you’re tracking all the customer interactions that might influence their purchase decision.

Finally, regularly review and adjust your attribution model. As customer behavior changes, your attribution model should evolve to stay accurate.

Why It Matters for Marketers

Marketing effectiveness is an indispensable practice for businesses in today's dynamic marketing landscape. 

By defining clear objectives, collecting and analyzing data, employing attribution models, conducting A/B testing, and embracing regular reporting and optimization, you can unlock the power of marketing effectiveness. 

This data-driven approach not only maximizes your ROI but also allows you to adapt and thrive in the ever-changing world of marketing. Implementing methodologies like Marketing Mix Modeling, Matched Panel Analysis, and Multi-Touch Attribution empowers your marketing efforts to reach their full potential and drive your business to new heights. 

So, put on your detective hat, get out your statistical tools, and start cracking the case of marketing effectiveness!