Focus on ‘Measurement Strategy’ to drive profitable business growth

Successful measurement of marketing is not necessarily about picking a particular methodology, but about understanding the hierarchy of metrics and defining this for your business. This is according to an IPA-commissioned white paper on measurement strategy, created by Gain Theory and delivered at the cross-industry Eff Week conference today (9 October).

Focus on ‘Measurement Strategy’ to drive profitable business growth

A cross section of senior marketing and insight professionals from 40 brands were interviewed, representing a UK advertising spend of more than £7bn. They were clear that not all metrics are created equal, and just because you can measure something, does not mean you should. Instead, they talk about a hierarchy of metrics, of which profitable growth tops the pyramid. However, there was a clear awareness among the interviewees that these metrics do not exist in isolation and while growth in profits might be the key metric, others are important because they ladder into, and contribute to, this ultimate KPI. The result of this means that profitable growth depends on another set of metrics, all of which need to be measured.

As exemplified in the report, growth in profits is key – and one route to achieve this is to increase market share; market share might be driven in turn by improvements in brands strength, which might then be driven by better marketing, for which marketing effectiveness might be improved by enhanced creative.

For successful measurement, it is therefore important to acknowledge three key lessons:

  • No metric exists on its own. Its place in the hierarchy needs to be identified and recognised. People have to know why something is being measured; where it sits in the overall hierarchy, and how it contributes to the company’s overarching business and brand objectives.
  • A clear definition of success must be understood and shared. Without a clear definition, it is impossible to develop a measurement strategy.
  • Appropriately curated communication must exist to separate more detailed analytics from bigger picture perspectives. A planner needs to know which tactic and publisher works best on digital. The C-Suite are more likely to focus on big-picture decisions that are likely to move the dial in more significant ways – an example might be moving an element of the budget from a mature but wealthy market (e.g. North America) to one where the current returns are smaller but where growth potential is more significant.

Coupled with raising awareness of the hierarchy of metrics, the paper outlines three additional pillars that drive successful Effectiveness Strategies:

  • Fortitude: the emotional and political fuel to keep the journey on track. It means having the right motivation, intent and desire. Other aspects ranked highly were shared purpose, collaboration, breaking down silos and a ‘Zero Based Budgeting mindset’.
  • Journey:  getting to ‘best-in-class’consists of three distinct stages – Crawl, Walk and Run - with best practice in each around with regards to fortitude, data, measurement approaches and activation. Of those interviewed, 60% categorized their organization at an ‘advanced’ Run stage where change driven by advanced analytics is standard approach.
  • Team: building a best-in-class effectiveness team was also highlighted in the interviews outlining various models including in-house and out of house partners to help deliver successful results.

Jon Webb, Managing Partner at Gain Theory, says: “To ensure that marketing is as effective as possible, its impact must be measured. Having the right Marketing Effectiveness strategy will help marketers create the right culture, make the right decisions, avoid wastage and maximise impact. In creating this paper, we hope to generate momentum and provide useful direction around the marketing effectiveness strategy conversation, to help marketing and insight professionals maximise the impact of marketing from an advertising and broader marketing point of view.”

Janet Hull OBE, Director of Marketing Strategy, IPA, says: “As part of our overall Eff Week findings, we have clear evidence of the need for, and benefits of, an effectiveness culture within organisations. Thanks to this White Paper, we also have a comprehensive check-list of how to embed a strategy to enable this.”

The White Paper ‘Measurement Strategy – getting to best-in-class effectiveness’ is available to download from the EffWorks website. You can also join the conversation on Twitter #EffWeek @EffWorks