Bid Management Tools

By Pat Stroh

Cross-channel marketing and media mix analysis is a well-established methodology

for sophisticated marketers to understand the effects of product distribution, pricing

and promotions, media expenditures, and competition on marketing ROI. This

type of analysis permits marketing executives to plan and reallocate their resources.

It also enables marketing campaign managers to understand aspects of their campaigns,

such as the effect one channel has on another, as shown in the following

example.

IMPAQT recently analyzed the effect of paid search on organic conversions for a

nationally recognized financial services company. Key areas of focus were the socalled

“cannibalization rate,” whereas the amount of organic conversions “stolen” by

paid search were measured, and an “adjusted” paid search CPA was calculated. The

use of cross-channel effects was a necessary aspect of the project. We formulated an

extensive analysis that included focuses on long term trends and cycles in search,

and media influences. From this analysis, we found that paid search cannibalized

approximately 30% of its conversions from “highly visible organic keywords.” Consequently,

the CPAs for paid search were adjusted proportionately upward to account

for the cannibalization effect, which in turn rippled through the paid search campaign

management.

The question here is not how effective and necessary cross-channel marketing is,

because from the example above, it is quite obvious. The real question is why it

has taken so long to gain traction in the online marketing world? There are many

answers to this question, but it truly boils down to two main ideas. First, search

engine marketing is considered an after thought in many marketing departments.

This is due to the lack of knowledge and understanding of its true return and effect

on a company’s overall marketing campaign. Second, the amount of information

and data associated with analyzing returns, successes, and opportunities in search

marketing is vast. Therefore, most marketers are either too intimidated or lack the

knowledge to fully take advantage of analytical opportunities. Both of these problems

cause search engine marketing to enjoy a kind of exalted, yet misunderstood,

status in marketing organizations. The degree of inaccessibility of search from the

regular flow of traditional marketing and the ostensible ROI, make search engine

marketing a separate vertical or silo. This, in turn, permits search engine marketers

to “lay claim” to too much success, by attributing too many sales to “their channel.”

This is where things like cross-channel sales attribution become necessary.

When it comes to sales attribution, there are two main types: measurement-based

and analytics-based. Measurement-based attribution is focused on setting up, managing

and analyzing hard data generated from tracking systems. A huge downfall of this type of attribution is found in its limitations, more specifically in its inability to

look beyond the clicks made directly before a sale. In essence, search engine and online

marketers are too focused on the data as opposed to the big picture. They fail to

consider that preceding steps in the data stream may not be necessary for the final

steps, and that all of the preceding steps are only an incomplete view of all the steps

actually taken.

Given the limitations of measurement-based sales attribution, it is a wonder that

more meaningful and impactful attention has not been focused on analysis-based

sales attribution. Analysis-based sales attribution rests on the ability of statistical

procedures to identify correlations between data. The strength of those correlations

determines “what truly matters and how much it matters.” The analyst must

consider the effect each marketing channel has on all of the different channels of

conversions. For example, if TV runs heavy, what happens to the other channels?

Note that not all marketing channels are influenced by another conversion channel,

but the fundamental approach is similar: do not “line up” your marketing channel

with itself as the only conversion channel. Once you know the marketing weight for

each channel, then design what-if scenarios that accommodate potential spend and

allocate accordingly. This is the essence of marketing and/or media mix analysis. By

looking at the opportunities found in analytics-based sales attribution, and combining

it with cross channel sales attribution and media mix analysis, we can see the

importance of utilizing these two tools in the following ways:

1. I t emphasizes the complete marketing picture. No channel is managed in a

silo, and effort, information and success should be correctly attributed

2. I t optimizes the marketing or media mix because it does not over or undercredit

conversions and costs

3. I t produces better planning across the organization, in terms of required

data infrastructure and resources.

The principal barriers to cross channel sales attribution are largely organizational,

and rarely technical. In fact, the larger and more complex the marketing effort, the

greater the likelihood the appropriate skills required to conduct the analysis resides

inside the organization already, or in a closely affiliated agency. On the data side,

more often than not, the data exists. Therefore, it simply must be a departmental

priority to pull the data in the appropriate way. In any case, the key to cross-channel

sales attribution is, of course, executive sponsorship that spans the parochial

interests of the different channels. Technical teams need to be refocused on integrated,

cross-channel analytics, as opposed to silo-focused analytics. Uncomfortable

discussions must occur — where the goal is not to justify decisions of the past,

but plan a steady, orderly, and well-informed path to marketing optimization in the

future.

No doubt, there are layers upon layers of complexity that could be considered, controlled/

tested, and analyzed in order to appropriately allocate sales to the appropriate

demand generators. Given the variety of marketing environments across different

industries and companies, no one size fits all. But it is important to recognize

the importance of cross channel sales attribution and marketing mix. Furthermore,

for the purposes of search engine marketing, it is important to understand both upstream

effects of media on search engine traffic and success, as well as downstream

effects where search engine marketing spills over into other channels. Without that

cross-channel viewpoint, paid search marketing – and its structure, management

and budgeting – will be based on inaccurate and misleading reports.

n)Sh
=”serif”;mso-bidi-font-family:CenturySchoolbook’>industries and companies, no one size fits all. But it is important to recognize

the importance of cross channel sales attribution and marketing mix. Furthermore,

for the purposes of search engine marketing, it is important to understand both upstream

effects of media on search engine traffic and success, as well as downstream

effects where search engine marketing spills over into other channels. Without that

cross-channel viewpoint, paid search marketing – and its structure, management

and budgeting – will be based on inaccurate and misleading reports.

http://marketing.impaqt.com/rs/impaqt/images/WP_Cross-Channel_Viewpoint.pdf