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The role of the chief marketing officer (CMO) has been increasingly scrutinized in recent years. Dozens of CMO positions have been axed from some of the world’s most recognizable brands, including McDonald’s which replaced the role with a new SVP marketing technology position. CMOs who remain will need to prepare to handle even more pressure to prove their organizational value in 2020, says a new Forrester report.
In 2018 Forrester predicted a decline in Fortune 100 CMOs. Since then, organizations have started to part ways with CMOs, reallocating their responsibilities to leaders such as the CIO. 2020 is predicted to be a critical year for CMOs to deliver seamless customer experiences with their martech investments and, crucially, generate attributable revenue from those martech-enabled experiences.
Martech spend continues to take a solid chunk out of CMOs’ budgets, and while spending slowed this year, the report warns that CMOs approach martech investments cautiously — and more strategically. “Rather than blindly dumping more money into tech spend, we’ve delivered growth with a strategy built around creative engagement with our customers through existing channels,” Chris Brandt, CMO of Chipotle told Forrester.
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1. Asked to identify the top organisational goals for the business, companies expect their marketers to grow revenues (20.75 per cent), acquire new customers (20.6 per cent), and improve the customer experience (17.9 per cent), as their top priorities.
2. Marketers are investing in programs to better demonstrate the value of their work. However, these are often unsophisticated.
3. As such, marketing is still poorly perceived by its management peers. Barely 15 per cent of respondents said their peers saw marketing as a primary business driver and revenue generator.
4. Marketing technology has made huge strides improving the lot of CMOs over the past decade, and most companies have made investments across a range of disciplines. The top five functions identified by marketers in the survey were CRM, Social Media Engagement, Email Marketing Platforms, Marketing Automation, and Data Management.
5. As to their own goals, marketers want to build a bigger personal profile (interestingly, in the deep dive this was partly motivated by wanting to demonstrate the value of thought leadership to their peers). They also aspire to taking a larger role in business strategy and see gaining additional skills and capabilities as key to this.
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More than half of all marketers admit they are merely guessing the impact their marketing has on business growth, according to a damning report by marketing technology platform Marketo and ADMA.
The report surveyed 444 marketers and found that 61% feel like they are poorly demonstrating the impact marketing has to revenue.
A third admit to not even measuring it and 13% are making no attempt to.
As a result, and not surprisingly, 15% of peers in other business functions don't view marketing as a business driver.
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Linear. The simplest Multi-Source Attribution model, linear attribution gives equal weight and revenue credit to all touchpoints.
Time decay. The lengthier the sales cycle (think B2B), the more spread out the touchpoints. The time decay model gives credit to more recent marketing touchpoints as opposed to those earlier in the process, which may not have been as impactful.
U-shaped. The U-shaped MTA model gives credit to two key touchpoints — the first touch and the lead creation — and any in between. Forty percent of the credit goes to the first touch and 40% goes to lead creation, while the remaining 20% is divided between any touches that occurred in the middle.
W-shaped. This model is the same as U-shaped MTA, except it includes an additional touchpoint — the opportunity creation. All three touchpoints receive 30% of the credit, while the remaining middle touches share 10%.
Full path. Full path attribution builds on the W-shaped model, including the final close. Basically, the bulk of the credit is given to the major milestones of the customer journey, but lower weight is also assigned to the touchpoints in between. One of the biggest benefits of this model is that it accounts for the sales team’s post-opportunity follow-up interactions, giving them the same weight as early-stage marketing activities.
Custom. Of course, there is an option to assign your own attribution weights through a custom model.
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Marketing feels they’re not getting recognition for their achievements. Finance sees marketing as an endless cost centre. This is not an easy fix. Forrester research shows 78% of respondents agree that marketing-finance alignment is vitally important, but only 15% feel that the two departments currently work together towards shared goals. At the very core of this rift is an inability to measure the impact of marketing in wider financial terms. That’s where predictive marketing analytics steps in.
Advanced predictive creates a centralised metric that brings marketing and finance onto the same page: Customer lifetime value (CLV) which represents predicted lifetime revenue in quantitative financial terms.
CLV allows marketing to see which accounts are most worth targeting so it can better focus its efforts, and in turn build a better business case for reinvestment; and finance can see exactly where revenue is coming from, through a clear, centralised dashboard.
Finance executives get complete future-based oversight of marketing performance towards tangible financial goals – so they can make better decisions about the wider business.
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They’re more likely to improve returns than other technologies
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A key part of proving digital marketing ROI is to measure the key metric over time, both before and after your effort, using a regular sample of the data or a time series. The reason you need a time series for proving digital marketing ROI is that it will allow you to illustrate that your actions had a material and lasting impact on a key metric.
Additionally, you should also be able to show that your initiative did not have a negative impact on any other key metrics. That is, to prove ROI you also need to show that while you have increased conversion rates, you did not inadvertently lower the average value of the customer. Doing so would reduce, if not negate, your impact on revenue.
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Content marketing should engage, educate, or entertain, but more importantly, should elicit action. This is what separates content marketing from content publishing.
The goal is not to be good at content, but to be good at business using content. If your content marketing works, it should affect your audience enough to prompt a business-specific behavior. These behavioral actions are the conversions that we need to track in order to see that our content has moved a reader beyond just engagement.
Many desired conversions can be as high-value as lead generation, product purchases, or requests for information. But they can also come in the form of engagement micro-conversions – sharing content, engaging with additional content, exploring your site deeper. What matters is that there are always things you want your reader to do, even if only to continue reading.
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The biggest challenge in proving digital marketing ROI is tying social and content efforts to revenue, marketers say. See what they say about KPIs, leads, data & more in this study.
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While multi-touch attribution is the most accurate approach to demonstrating content marketing ROI, there’s a simpler metric that can get you started: leads influenced.
Leads influenced: The number of people who engaged with a piece of content and converted into a lead within the next 90 days.
Let’s look at an example. Say that I publish this post and 5,000 people read it. And amongst those 5,000 people, 65 become a lead for Contently in the next 90 days—they fill out a demo request form, request to talk to a sales person, download an e-book, or some other conversion event. Then, that piece of content would have 65 leads influenced.
This metric is an easy way to show the impact that content has on the top of your funnel and can be tracked with a simple conversion pixel placed on various conversion event points, like the aforementioned demo request form or e-book download. It’s one of the metrics that we bake right into our analytics platform, and helps us optimize our distribution strategy to ensure that content pieces that generate a lot of leads get prioritized in both our paid and organic campaigns.
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The research revealed attribution — assigning credit or allocating dollars from a sale to specific pre-purchase marketing touchpoints — has grown to an increasingly important top-of-mind topic for marketers.
It also found industry professionals have intensified their interest in marketing measurement, "specifically, better evaluating their efforts and optimizing their decision process."
This year, 67 percent of marketers said they plan to shift away from first- or last-click attribution models to other alternatives, including blended attribution.
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- CLICK-THROUGH-RATES ON EMAIL MARKETING CAMPAIGNS
- CONVERSION RATES
- VALUE OF SITE INTERACTION
- SOCIAL SHARES
- ROI
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Let’s get to the math:
The majority of CEOs today – nearly 70% – believe that CMOs should be leading revenue growth.
More than half of this group goes so far as to name revenue growth as the primary mandate of marketing.
Another 23% are on the fence, feeling that, to some degree, marketing should be measured by revenue performance.
This is all according to a report that was co-written by the CMO Council and consulting agency Deloitte.
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Budget remains a very big stumbling block for many CMOs who want to accelerate their digital marketing efforts. The best way for CMOs to access increased budgets is to effectively link the increased spend to improved business outcomes. This means creating a foundation of linking marketing activities to the business goals. CMOs have never been closer to this opportunity.
Their leadership peers – CIO, CFO and CEO are totally aligned with this goal.
By engaging with the CFO to look for the key linkages of marketing activity to business outcomes they can be sure their metrics will have attention. The CIO can help automate data flows, link the disparate systems and look for cost efficiencies so that when marketing performance improves it is clear.
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There are various attribution methods; here are a few:
- Equal weighting (as demonstrated above)
- “Time decay,” or giving the most weight to the most recent channel
- Algorithmic: based on millions of data points to help determine how much the presence or absence of a particular channel in a purchase path affects the final conversion; weight is then assigned to each channel based on where in the purchase path they appear
The most important thing to note is the re-allocation of transaction value between different channels. We should make sure that the total transactional value arrived at using the chosen attribution method is the same as if the last-click attribution method was used.
This re-allocation is not a manual exercise, but something that is done via an automated system after learning the weight of each channel.
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In order to combat this fragmented consumer view and measurement challenge, some companies like Vodafone are trying out an approach called “experimental design.”
As Vodafone’s head of brand strategy David Still explains, if you want to prove whether something works or not, you test it out by taking it away. If it really works the way you think it does, you will see the effect when taken away. And this is what experimental design can help marketers find out, according to Still and Baker.
Baker describes experimental design as a series of “continuous experiments where media volumes and types of investments are continuously varied,” allowing marketers to measure and understand which investment has a “causal relationship” with sales.
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It’s an old trope of the Search Engine Optimization industry that SEO is the channel with the greatest return of any online marketing channel. But, given Google’s increased ability to identify and penalize sites employing poor-quality link-building practices, my experience in the new business trenches with QueryClick (my employer) tells me that many agencies today are failing to deliver return for their clients. And, in some cases, they report fantastic ROI figures despite presiding over declining organic traffic!
If you oversee SEO and want to get a true picture of your (or your agency’s) real return on investment improvement, what criteria do you need to use? Though this is a seemingly simple question, it’s a very important one to ask because SEO truly can — and should — be at the very core of your online marketing strategy.
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Demonstrating the impact of marketing when performance is the result of cross-functional efforts requires three elements:
- Show performance of shared impact metrics. Whether the goal is increased deal velocity, better renewal rates or improved customer loyalty, you need to demonstrate that the impact metrics marketing invests in are, in fact, improving.
- Provide proof of marketing participation. You need to prove that when marketing tactics are accepted by target audiences, impact metrics improve. If marketing isn’t involved, it will be uncomfortably difficult to assert any type of marketing influence over that performance improvement.
- Present evidence that performance metrics change as marketing participation changes. Evidence of marketing impact requires a comparison. Some deal cycles may have light levels of marketing interaction, some may have heavy levels, and some may have no marketing interaction at all. When you compare what improvements take place when marketing is present to what happens when marketing is not, you can develop reasonable proof that marketing is making a difference.
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ROI also forces a skewed perception that slants toward short-term results.
The problem with this is that most modern online marketing strategies rely on accumulated payoffs that grow over time. For example, in content marketing, one good piece of content doesn’t offer a one-time return upon publication. It can be syndicated, expanded, and even left alone to continue compounding its value. Theoretically, every piece of content you create will carry value for you indefinitely in the future, meaning your ROI measurements are biased in two ways. You’ll always be measuring the present benefits of past efforts in addition to present efforts, and you’ll never measure the full potential your campaign has.
You need to compensate for this when thinking about the “value” of your marketing campaign. Measurable ROI alone isn’t enough to accurately capture the entire significance of your campaign—at least for long-term strategies like SEO, content marketing, or social media marketing.
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"Integrated CRM Make sure your sales team is aligned with your strategy and effectively following your leads through the funnel. Your platforms, such as social media management software, should be flawlessly integrated with your marketing automation and your CRM platform, such as Salesforce.
Proven Technology
Analytics are driving so many marketing strategies as of late, it’s surprising companies got by without them. While all marketing automation platforms have some form of analytics, you can also have a separate program to strengthen your comprehension of what works and what doesn’t. Having a proper analysis platform can take a statistics-driven plan to the next level. Some statistics hold more weight than others and can have a positive impact on aiming content to your audience or understanding customer needs. Engagement is a huge part of this, so make sure to look for an analytics program that includes numbers about user interaction."I sco marketingIO: One Source for All Marketing Technology Challenges. See our solutions.
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They may sound simplistic, but even simple rules-based models can deliver immediate results. This was the case at one company we recently advised. Only after considerable efforts to get data for each touch point aligned in one repository could the company begin to figure out sensible rules of thumb to guide marketing investments. It began by simply allocating resources to each touch point as a direct function of its marginal ROI. Even this rather rough and ready approach sharply improved the company’s overall marketing ROI.
marketingIO: One Source for All Marketing Technology Challenges. See our solutions.
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How to Track Leads from Marketing to Sales by Douglas Karr on Marketing Technology
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For years we've been warning you: with great spending comes great ROI. Prove it.
Curated by CYDigital: Empowering Marketers, One Blockchain at a Time https://cyd.digital #zeropartydata #martech #marketing