How CMOs Can Deliver Value in a Post-Third-Party Cookie Era
Those in Chief Marketing roles are often given the responsibility to lead the way to revenue growth in 2023 despite stressors like inflation, supply chain constraints, and more. In any economically stressful situation, the first aspect to be tackled in any organization is marketing budgets This also threatens the marketer’s ability to deliver value.
Evaluate versions of the Marketing budget to see what KPIs they meet and not just ROI
CMOs often assume that ROI is the best metric to prove marketing’s value to the enterprise. But relying on ROI alone may harm marketing’s ability to deliver against a broader set of enterprise goals. Enterprises also care about market share, profitability, sustainability, and so on.
To build a value case for marketing, CMOs should instead leverage the broader concept of return on objectives to show how marketing investments deliver against a diverse set of goals. Evaluate budgets across multiple metrics to stimulate dialogue about trade-offs, such as revenue versus margin growth, short-term versus long-term growth, and growth for one product line versus another.
Marketers are better able to maximize returns when they evaluate multiple scenarios, including those that look forward to using the predictive models available with marketing mix modelling and which include a simulation interface or tool.
Explore Marketing Investment Triggers
Marketing teams should identify triggers that signal when conditions change, and they need to revisit their strategic plan. Triggers improve planning in two ways.
They: 1. Ensure plans stay relevant by prompting a review when assumptions fail to hold up
2. Spark the need for investments when in-market behavior exceeds a predefined threshold Example triggers include:
• Loss of market share
• Decreases in product consideration
• Increases in competitor spending
• Declines in new customer value
• Increased acquisition costs
• Erosion of conversion rates
Conditions may still require CMOs to reduce their spending. These cuts can hurt, especially when they impact staff and contractors who’ve made real contributions to your marketing performance.
When evaluating the trade-offs needed to cut budgets, consider three strategies: Think long term
A study on the budgeting decisions made during the last global recession found that winners in six of 11 industries took proactive budget cuts which enabled them to accelerate growth investments when conditions eased.
Many marketing teams overinvest in legacy processes and skills. Use cuts as an opportunity to accelerate simplification, consolidation, automation, and outsourcing decisions. Focus training on new skills needed to advance your team, such as experimentation, enabling them to update assumptions and reveal areas for improvement.
A study on the budgeting decisions made establishing “clawback” triggers reinforces the importance of marketing by establishing conditions under which to make considered investment reductions.
Marketers Struggle to Prove & Measure Marketing ROI
Some of the main challenges in proving marketing ROI include attributing social and content to revenue, aligning KPIs to business goals, attributing leads to revenue, gathering and analysing the right set of data, lack of reliable data, determining the right KPIs to measure, lack of technology resources, lack of expertise, navigating the post cookie world, tying social activities to business outcomes, engaging buyers in a competitive media landscape, implementing the right marketing effectiveness solution and the like.
Marketing leaders need to start gauging their business’ potential to measure ROI and then identify and alleviate any roadblocks to success. They need to speak about their numbers and data in a way that is understood by the key stakeholders and can help the company make informed and critical business decisions.
It’s important to avoid vanity metrics because they can mislead you into determining your ROI like page views, email subscribers, leads in the sales funnel, total customers acquired, monthly revenue per customer etc. Instead focus on actionable metrics which are pivotal indicators of your business-like converting users, conversion rate, customer lifetime value, customer acquisition cost, email opt-in conversion rate, cohort assessment of sales funnel and the like.
Leveraging data is critical for your ROI because it helps you understand what your customers are looking for and need. Due to constantly changing customer behaviour, marketing loss touched an all-time high, but it can be reduced through a 360º view of all of your data. Collecting data and analyzing it lets you assess what’s working, what isn’t, and the next steps. In fact, there must be a good data strategy that aligns with your business goals. Use data to extrapolate the needs, demands, expectations, and interests of your customer and their behaviour. You can discover customer expectations through surveys, developing customer personas, social listening, touchpoint maps, journey maps, predictive analysis, segmentation etc.
Tools and technology should be used to maximize ROI. CRM systems have become an omnipresent and essential technology for modern marketers. Ensure that every campaign has a tracking code, that measures some results that can be quantified (leads if not revenue). And ask your team to include variable budgets in your CRM system.
Some research recommends that the average buyer touches 10-20 pieces of content before making a buying decision. ‘Multi-Touch Attribution’ can help assign value across multiple campaigns. This could require special tools and skills, but some common approaches are ‘first-touch’ (assigning all value to the first campaign that touches a buyer), ‘last touch,’ or ‘weighted’ where some level of attribution is applied across all marketing campaigns that touch the buyer.
Maximizing ROI isn’t that difficult to accomplish provided you have your business goals aligned with your efforts. With careful planning and by implementing well-curated strategies, you will be able to yield enough ROI as a marketer to drive your business success.