Market research for better ROI
FEBRUARY 10, 2012 – Marketing and advertising departments have come under increasing pressure from C-level executives to deliver campaigns that deliver a better return on their investments. One way to help ensure the print ads, commercials and social media outreach actually resonate with your audience and encourage them to buy is the use of market research.
As Randall Beard writes for Business 2 Community, companies need to find a balance between using Big Data – all that consumer information collected from transactions, web browsing and online panels – and actually measuring the ROI of their campaigns. He points to an IBM study that uncovered a disparity between the quantitative advertising analysis that CFOs wanted and the answers that CMOs were able to provide. The reason? Many CMOs were struggling to harness the power of Big Data.
“CMOs are being overwhelmed with data yet can’t adequately measure the ROI for their marketing programs,” Beard summarizes. “How can that be?”
There are three factors – digitization, social media and fragmentation – driving change in the industry, he says. With the proliferation of potential advertising channels, companies can no longer pick one version of marketing copy and use that for every aspect of their campaigns. Now it must be tailored to fit the nuances of television, radio, social, websites, blogs and other digital platforms.
Beard recommends tuning out the majority of the “data explosion” and focusing on a few “simple concepts to help you assess advertising effectiveness.”
A marketing agency will need to determine whether it is communicating with the right audience for its brand and should measure how effective it is in getting the target demographic to access the material.
He notes that after measuring its reach, a company will need to focus on resonance and grab consumers’ attention.
“Breaking through is the most important job of advertising, because if it doesn’t, nothing else matters anyway,” Beard says. “But beyond breakthrough, advertising needs to change consumer opinions about your brand.”
From there, companies have to get a reaction from their audiences, either in the form of sales, engagement on social media or a search engine inquiry.
“Measuring reaction is key to understanding if your advertising is going the final mile to cause behaviors that result in a positive ROI,” Beard adds.
It’s also important to realize that your data will be entirely useless if it’s inaccurate or put in the wrong context. Avni Patel Thompson and Joseph Thompson write for the Harvard Business Review blog that when confronted with analysis that doesn’t quite match up, it will be necessary to first ask what is being measured and then determine what assumptions were made to arrive at the conclusion.
The authors suggest asking “ruthlessly simple questions” and sticking to absolute terms rather than percentages, which can end up obscuring problems. They also recommend adding in a calculation for the counterfeit element when dealing with consumer goods. Consumers participating in market research or online panels could think they are buying the real thing and respond as such, which would end up skewing a companies’ sales numbers when compared to its actual shipments.
As for the assumptions, the bloggers advise digging through every factor and statistic to figure out how small changes can have a big effect on the final outcome. It’s also important to be skeptical. Question the data rather than just assuming it’s correct. In some countries, such as China, it may go against the culture to challenge what information is presented to you, they warn, but it’s still a necessary evil in order to uncover the truth behind the data.
“It takes coaching and patience to overcome this resistance to disagreement,” the authors say. “Help local managers who understand the market to ask detailed questions thoughtfully and systematically.”