Toward Scientific Marketing
I take extensive notes on the books I read to aid my own retention and share with my teams. In 2020, I decided to start publishing notes on my readings. These are less book reviews, and more book reports or summaries of critical, interesting and insightful points in the cannon of business literature.
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Marketers have a perception problem. Despite the myriad digital tools, analytics and strategic frameworks, marketing is often viewed as the least serious and rigorous department in the organization. This perception is no doubt to blame for the erosion of the CMO’s strategic responsibilities.
I have some bad news, marketers — we may have brought this on ourselves. Maybe it was by over-focusing on soft metrics like engagement (which mean nothing to most executives), or letting ourselves be branded as the “make it pretty and post it on social media” department. Often, if you peel away the layers of reasoning behind decisions at even the most ROI-focused marketing orgs, you’ll find they‘re predicated on assumptions that may or may not be factual. Even more often, they are based on how things were done last year, quarter, or budget cycle (or maybe at a leader’s last company).
As a former Creative Director, I’m a believer in the primacy of attention-grabbing creative, beautiful design and a strong and clear brand identity — none of which can be measured directly and quantitatively (consultants who tell you they can are either wrong or lying). But how and where you choose to amplify these creative assets and messages, who you target your message at, and what you expect to get back in return are all areas of marketing where we should lean away from the intuitive and toward the scientific.
McKinsey & Company’s 2016 book Marketing Performance: How Marketers Drive Profitable Growth¹ isn’t one you’re likely to find topping any must-read business book lists. It isn’t sexy or inspirational. It won’t be summarized as a viral TED Talk. It’s not your typical pop marketing book , and it’s not meant to be.
Marketing Performance offers leaders a scientific and rigorous approach to decisions we often make by intuition alone: budget sizing, messaging, comparing trade-offs between marketing channels with vastly different metrics and more.
Finding a Common Denominator Across Channels
Even simple marketing programs and campaigns are usually omnichannel, both online and offline, and represent different funnel phases. With so many channels and KPIs, how can marketers measure across all of them to determine where to place their budget for maximum performance?
McKinsey recommends creating a common denominator, a metric of metrics, that it calls RCQ for Reach-Cost-Quality. This is a single score that allows you to balance across all of your marketing efforts.
Reach: Understand the total number of people reached in your target group. Exclude people not in your target group (ie. ignore the people who drive past your billboard but are not part of your audience). And make sure to account for the number of impressions necessary to make someone aware of your ad, to account for “banner blindness.”
Cost: Think not only of the cost of the media placement but the total cost of the instrument. For example, how much did you pay an ad agency for the creative that you put into market? How much did you pay that consultant to determine your media mix? All of these should be incorporated to account for the accurate cost.
Quality: There is no fully quantitative measure of quality, but the goal is to ascertain how effective each marketing instrument is in reaching your business objective. For example, if your objective is to raise brand awareness, a 15s video may have a high quality score. But that same video would have a lower score if the goal is to convert leads to revenue further down the funnel.
The final output will be a common metric of qualified reach per cost:
Marketing Performance, pp. 84
Brand Message and Strategy
As global brand and creative marketing leader for Sisense, I constantly find myself in the liminal space between the art and science of marketing.
I’m a firm believer that the strongest brands have a healthy dose of both — they are expressed through carefully chosen words and brilliant design, but guided by a fact-based strategic foundation of customer, brand and market insights.
Marketing Performance highlights a few ways to bring science into your branding:
Segmentation: Brands that serve different customers can’t afford to be monolithic. Brands should segment their customers into different groups, then tailor different messages to each. Some do this based on demographics, or job title — I prefer to focus on segmenting based on the unique problem each group needs solved. A good segmentation strategy is a foundational piece of your marketing; it’s a force multiplier that will increase the impact of all of your other marketing efforts.
Research your customer’s decision process: The book explores several frameworks for understanding customer decision making, including BrandMatics and Customer Decision Journey — the former more of your linear funnel, while the later represents more of a dynamic cycle. Pick the one most relevant to your business model and thoroughly research how your customers interact with and respond to your brand within each phase of the process. Benchmark these responses against competitors to understand how you stack up against the competition.
Survey to understand brand attributes: Having implemented brand attribute surveys extensively, I was excited to see this tactic on their list. A well-executed brand attribute survey can not only tell you what brand attributes your customers want from you; it can tell you which of your brand attributes will drive action.
Once you understand your own brand attributes and your competitors, you can understand the relevance of the attributes to purchase decisions. This is critical as you don’t want to focus branding decisions on amplifying attributes that your audience doesn’t care about. Once you have the data from your survey, plot it to inform your branding decisions:
Marketing Performance, pp 47 (Excuse the handwritten notes; I clearly found this section important.)
Budget Sizing
In most organizations, budgets are determined by legacy and politics. Legacy, meaning what a department received last budget cycle plus or minus a few points. Politics come into play because goals and outcomes are often subjective. A better, fact-based approach to budgeting is to:
Identify pockets of growth: It may surprise you to learn that according to the authors, “the underlying momentum of a given market, category or segment accounts for about two-thirds of an average company’s growth. In contrast, capturing market share from competitors only accounted for 4 percent of growth for companies in our sample.” In short, your success rests on your ability to identify growth areas and invest heavily in those.
Align your budget with your business priorities: Don’t rely on what worked in the past. Begin by assessing the financial criteria, strategic criteria (such as pursuing new markets or launching new products) and marketing criteria (such as growing brand awareness) from all relevant stakeholders. Within each of these categories you should create a list of different investment units — this could be product lines or even core objectives.
Ask the tough questions: Are the investment units you have identified discrete and different from one another to be measured and funded separately? Do they move independently of one another? Do you know enough and have enough data to actually implement your goals in each category and understand what you get for your dollar spent? Do large investments actually make sense in different areas, even if those areas are important (see investment thresholds below).
Weight different criteria according to your strategic priorities: Don’t spread your spend equally, but determine which criteria are the most important and weight them accordingly.
Understand investment thresholds: Not all areas of marketing will scale in a linear fashion with more money. You need to understand in which areas give you better performance as a result of higher investment, and which will not due to diminishing returns. Also, understand if investment below a certain level will just be ineffective (ie. a small investment in TV advertising, where your ad will just be drowned out by dominant brands).
Once you have defined your areas of growth, your investment units and allocation criteria, and pressure-tested with hard questions and thresholds, you should have a simple budget overview like the one below, that is based on what you wish to accomplish in the year ahead:
Marketing Performance, pp 30
A Book That Belongs on Every Marketer’s Bookshelf
Marketing Performance dives much deeper into each of these dimensions of marketing and more — including channel mix optimization and different analytics models for measuring performance.
At under 200 pages, it’s a slim volume but the actionable insight per page ratio is high, which is my first metric for business books. This is a book I’ll return to as a reference as I look to optimize my existing programs or launch new ones (and definitely when budget planning rolls around).
Most importantly, it’s a reminder to apply rigor, precision and strategic thinking to the everyday challenges of marketing — to make sure I’m mixing creativity with an appropriate dose of science.
Marketing Performance
By Thomas Bauer
McKinsey, 180pp
¹Authors: Thomas Bauer, Tjark Freundt, Jonathan Gordan, Jesko Perrey, Dennis Spillecke