Marketers are data-driven. They hold their teams, their agencies, and their campaigns to rigorous performance measurement. Marketers measure their success using data & analytics provided to them. Their performance measurement usually looks like this:
Above: a typical performance report from a typical digital ad platform
Meanwhile, the finance and operations teams measure the success of the overall business. These teams are also data-driven. They hold their P&L stakeholders to rigorous performance measurement. Their performance measurement usually looks like this:
When marketers show performance metrics that claim a 70% improvement in revenue generated while the overall business is seeing a 1.6% decline in total revenue, financiers lose trust in marketers. Why?
Finance and operations know the only way their marketers could be generating a 70% improvement in business results with the overall business in a -1.6% decline is if the overall business would have declined a lot more than it did without marketing. If this isn’t true, then marketing is wrong – they haven’t generated a 70% improvement in business results. To know one way or the other would be to know marketing’s incremental impact on the overall business. Ultimately, this is the only question financiers want to have answered when they ask for marketing to report on their overall business performance.
When presented with the incrementality question, marketers often turn to the same resources that provided them with their original marketing performance measurement. They will ask their media vendors – “Can you tell me how many of these conversions are incremental?”
The problem is, it isn’t possible for media vendors to answer this question. They can’t answer this because they don’t have all the required information.
- Let’s say your business runs paid search ads and email marketing campaigns. If paid search ads weren’t running, how many of the sales would have occurred anyway because of an email marketing touchpoint?
- Your product marketing team reduced the price of the top selling item by 25%. Are increased conversions attributed to paid marketing campaigns occurring because of the price reduction? Even if price reduction hasn’t increased underlying conversion rate, have these increased orders led to increased revenues, or are revenue-per-conversion losses eliminating the positive impact of conversion increase?
To answer incrementality, you must have complete information across marketing, sales, customer and business data. The mistake finance and operations teams make is withholding the critical information marketers must know in order to optimize their investments against incrementality.
The truth is neither finance nor marketing can accurately measure and improve incremental outcomes from marketing without shared data – a single source of truth. Marketers are the critical domain experts and key stakeholders for exceptionally powerful and granular datasets from media and marketing partners. These data should be incorporated into a source of truth that unifies business, sales, and marketing measurement into a framework where finance and operations teams can view performance alongside their marketing partners.
What can you do today?
- Every marketer should know how the overall business is doing. Marketing teams – demand visibility into overall business performance. You should not have to rely on media vendors or 3rd party data to describe how things are going.
- Every ops/finance analyst should be able to see overall business trends with the context of marketing and product insights. If internal business intelligence teams aren’t versed in marketing and media datasets and/or don’t have ready access to marketing campaign performance statistics, work with marketing leaders to eliminate these data silos and bringing insights together.
Your data strategy won’t improve business outcomes if you are building it on top of the wrong data. Get this right, and you’ll be miles ahead of where you were before.