Thursday, July 31, 2008

Who creates value here?

One of the hottest marketing topics over the next years will be a rather hidden and technical sounding issue that will have large ramifications of how brands invest their marketing dollars: Attribution Modeling. It describes the challenge of understanding what and which marketing program and channel truly drove a consumer behavior, from signing up to a newsletter, to browsing a website, visiting a store, purchasing something, or any behavioral consumer action that marketing is trying to influence.

Take for example the current run of marketing dollars into Search and purchasing of key words: Most companies contribute the click on paid key word and the following consumer action (e.g. starting a subscription, purchasing an item) to 100% to the marketing dollar spend on the particular purchased key word without any consideration of what else has influenced the consumer before and during the search activity, either consciously or unconsciously. This false attribution is rampant across most measurement of marketing programs, even for simple Test and Control set up for direct marketing programs. The Test and Control set-up assumes that no other marketing communication has driven the success of the Direct Marketing program in the Test group as long as it occurred in the Control group, too.

This is just plain wrong but most marketers have no idea of how to attribute a particular consumer behavior across all the different actual or potential marketing touch points that the consumer might have had before taking the particular consumer behavior. This attribution model challenge will become increasingly difficult due to the proliferation of marketing channels and fragmentation of media spaces within all the different channels. But it will also be one of the most critical insight disciplines for any CMO to understand consumer behavior and align marketing strategies and budgets against it.

Interestingly one of the most advanced companies in understanding this emerging practice is not a marketing agency but Microsoft. Why? Microsoft believes that brands spend too much money on Search (=Google) and need to readjust their spending behavior. It’s a smart way of hurting their biggest enemy. It will not be long before all the traditional Media Marketing Mix firms will enter this challenge, too. Truly integrated marketing firms and brands who understand this practice will have a big advantage over competitors.

7 Comments:

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Nice post. This is outright wrong however most advertisers have no clue about how to trait a specific buyer conduct over all the diverse real or potential promoting touch focuses that the customer may have had before taking the specific shopper conduct.
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