AdExchanger Article: Attribution Modeling Across the Marketing Funnel

December 31, 2013

Attribution Modeling Needs to Model Upper and Lower Funnel Metrics

An interesting perspective from AdExchanger on how attribution modeling needs to evolve from measuring just lower funnel metrics like clicks and sales to upper funnel brand metrics.

 

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Using the Tidal Forces of Category Dynamics to Build Your Brand

May 24, 2010

Momentum can be a powerful thing, especially when it’s on your brand’s side. I’ve worked on numerous brands over the years, and seen firsthand the effect of both positive and negative momentum.  

Almost every Brand building article or book I’ve ever seen focuses on the fundamentals: defining your brands positioning, delivering a product or service that’s truly differentiated, communicating effectively with consumers, etc.  

Category Marketing Insights Build Brands

However, virtually none of them address the effects of your category’s dynamics on momentum. These dynamics are like the tide and can either make your brand’s growth easy or challenging depending on their direction. Momentum comes not just from your brand, but also your category.  

Category Dynamics

1.  Category Growth Rate – This is the most obvious metric that people focus on. Is the category growing, flat or declining ? This factor alone has a huge impact on brand growth. The E-Reader category is growing fast, so most E-Reader products benefit. On the other hand, the Travelers Cheque category is declining, making it virtually impossible for American Express or any other brand to grow volume.  

e-Reader Category Grows: iPad & Kindle

2.  Category Penetration – Category penetration is the percentage of consumers who use the category. The absolute level of penetration, along with the penetration trend over time, provide a snapshot into the potential for growth or decline. A low, but growing penetration rate indicates lots of growth upside–a likely situation facing the e-Reader category. A high, but stable penetration level — like paper towels or laundry detergent — suggests little growth opportunity.  

Laundry Detergent Category: High Consumer Penetration

3.  Category Heavy User Momentum — Not all consumers are the same within a category. Understanding the status of “trend setter” and “heavy user” groups is particularly important for insight into category health. If the percentage of heavy users in the category is increasing, this signals a healthy category and suggests consumers are finding new and more useful ways of using category products. If heavy user category penetration is declining, it suggests consumers are finding preferred alternatives to your category and reducing share of requirements.  

Soap Category Characterized By Heavy Users

4.  Category User Concerns — What are category consumers concerned about? Are there non-brand specific concerns about the category that suggest future changes in category consumption? Category specific research can identify and isolate consumer concerns that are contributing to the exodus of households or heavy users. Examples would be food categories where consumers have growing health concerns, etc.  

User Concerns Such As Healthy Eating Impacts Category Growth

5.  Category Leakage — If the category is declining, and consumers are leaving the category, where are they going ? Every category is like a glass with a hole in the bottom; consumers are being “poured” into the category (usually as consumers age into the category), but consumers are also flowing out of the bottom thru the hole. The relative rate of pouring and leakage is a large factor in whether the category water line (e.g. volume) is rising or falling.  

Understanding which categories, if any, are benefiting most from category “leakage” is an excellent diagnostic which can sometime provide insight into new product opportunities. Conversely, if your category is growing, where are consumers coming from?  

Category Dynamics — An Overlay to Brand Building

Most brands spend all their time understanding their brand position and not nearly enough understanding category dynamics. Your category is like the tide; and ideally your brand is swimming with it, not against it. Understanding category growth, penetration, heavy users, category concerns and leakage provides an excellent diagnostic framework for understanding category health and your brands challenges and opportunities.  

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Learning From the Dynamics of Viral Marketing

January 25, 2010

In what context do viral marketing strategies work? How do on-line product recommendations develop, multiply, spread and ultimately, dwindle and die? And, can Marketers influence any of this?  

These were important questions posed by Leskovec, Adamic, and Huberman in their 2008 study “The Dynamics of Viral Marketing.” This is one of the few studies I’ve seen to actually study how on-line recommendations grow virally and how this growth impacts purchase behavior throughout the viral network.  

Viral Marketing -- When and Where Does it Work?

 

Admittedly, the study had limitations, notably that it was only four categories, just measured on-line viral activity, and included a discount incentive to help motivate purchase. But, even with these limitations, it uncovered deeper insights into the systematic patterns in knowledge sharing and persuasion online—all of which are of high interest to Marketers.  

What Did the Study Entail?

Lescovec et al. examined an online recommendation network composed of 4 million people who made 16 million recommendations for 0.5 million products. Each time a consumer purchased a book, music, or movie, he or she could  send e-mails recommending the item to friends. The first person to purchase the same item through a referral link received a 10% discount.  

What was Measured

  • When and at what price a product was purchased
  • If the product was recommended to others
  • Whether the recommendation resulted in a subsequent purchase and discount

They then modeled the effectiveness of recommendations as a function of the total number of previously exchanged recommendations.  

Recommendation Networks Grow Slowly Over Time.

 

Important Viral Network Learnings & Insights

Finding #1:  Consumers recommended a large number of products to the same group of people. As a result, recommendation networks became heavily locally-based. For example, in the DVD recommendation network there are 182,000 pairs that exchanged more than 10 recommendations.  

Consumers Tend to Recommend Products to the Same People

 

Finding #2: Recommendation networks centered on a specific product category. That is, the people tended to focus on recommending a particular product category and thus created a “community of interest.” Having said this, most all networks shared recommendations for all types of products.  

Finding #3: Trust, influence, and perception of “spam” affected purchase. As people exchanged more recommendations, the likelihood they would purchase the product increased due to a growing foundation of trust. However, purchase likelihood increased, peaked, and then fell as consumers received additional recommendations for a specific product. A few recommendations built credibility; too many appeared as “spam.”  

Finding #4:  Most recommendation chains didn’t grow very large. In fact, most terminated with the initial product purchase, and even the largest connected networks were very small as a percentage of the total population.  

Recommendation Chains Don’t Typically Grow Very Large

 

Finding #5: 20% of recommendations accounted for 50% of sales. This is not far from the usual 80-20 rule, where the top 20% of products account for 80% of sales.  

What are the ‘Viral’ Implications for Marketers?

1. Identify the “Amplifiers.” Given that 20% of recommendations generate 50% of sales, it’s key to figure out whom the amplifiers are and focus your efforts on them.  

2. Determine Where the “Amplifiers” Congregate. Where do they exchange product information? On what platforms do they consume media? Web behavior can be linked to off-line purchase panels to quantify the effectiveness of recommendations (see “What Really Drives Web Advertising ROI”).  

3. Take Online Recommendation Networks to the next level Through Social Media Marketing. Marketers should explore development of models to measure recommendation systems on Twitter, Facebook, Foursquare, and the larger online arena. Through broader web 2.0 outreach, marketers can quantify consumer engagement on recommendation networks by volume, reach, tone, and source.  

Marketers can optimize paid media and earned media with viral marketing.

 

4. Be Wary of Creating “Recommendation-Fatigue.” A fine line exists between trust and influence in recommending a product and what is widely considered “spam.” Consumer engagement via any online channel must be done with careful consideration of earned media and buzz promotion.  

Viral Marketing: Limitations…

What’s not yet so clear from the research is how to minimize transmission “breakdown” – e.g. how do you minimize the likelihood that a product recommendation is the last one. As the research showed, most viral networks don’t grow very large. Marketers will only invest significant money if they can truly scale viral marketing programs.  

…And Future Opportunities

With the right tools and metrics, marketers can diversify their marketing plans to incorporate viral marketing strategies. The research clearly shows that viral marketing can build unique and niche recommendation networks, bolster consumer engagement, and lift sales.  

And as consumers continue to favor a digitally-based, social network-centric world, it’s critical that Marketers become more expert at viral marketing. Key to this will be identifying amplifiers, focusing on congregation points, leveraging social media opportunities—all without overdoing it. As importantly, Marketers must discover new approaches to spread and scale viral marketing just as effectively as the flu seems to proliferate every flu season.  

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How the Future Social Web will Transform Marketing

June 29, 2009

In a recent white paper titled “The Future of The Social Web,” Forrester’s Jeremiah Owyang predicts the social web will  morph through 5 different stages over the next 5 years, wreaking havoc on the way brands market. In his summary, Owyang states:

“Today’s social experience is disjointed because consumers have separate identities in each social network they visit. A simple set of technologies that enable a portable identity will soon empower consumers to bring their identities with them — transforming marketing, eCommerce, CRM, and advertising. IDs are just the beginning of this transformation, in which the Web will evolve step by step from separate social sites into a shared social experience. Consumers will rely on their peers as they make online decisions, whether or not brands choose to participate. Socially connected consumers will strengthen communities and shift power away from brands and CRM systems; eventually this will result in empowered communities defining the next generation of products.”

Portable Social Networks

Consumers will still use Facebook, MySpace, LinkedIn and such, as they do today. What’s different is that OpenID, Facebook Connect, and similar capabilities will enable consumers to traverse the web, and have their networks flow with them.

The Future Social Web -- Transforming Brand Marketing ?

The Future Social Web -- Transforming Brand Marketing ?

The implications of this are potentially profound, given that ~50% of consumers now belong to at least one social network. And even more important, these “portable” social networks will bring data and knowledge that is more trusted than the content delivered via traditional marketing contact points.

Changes Due To Social Network Portability

Owyang points to a number of important changes which will be driven by portability:

  • Social networks such as Facebook and LinkedIn will aggregate member activities and preferences and sell or leverage this data with brands
  • Consumers, using OpenID or Facebook Connect, will be able to expose all or portions of their personal and network information to the web sites they visit
  • Web sites will be able to use the personal information enabled by OpenID or Facebook Connect to personalize consumers web experiences
  • Consumers will visit web sites and know to what extent the site has been frequented by their community, what their community thinks of the site, product or service, etc.
  • Social communities will feed data and insights about web sites, brand experiences, product and services, etc. to members on an as wanted basis.
  • Search results will account for user preferences, habits, as well as the users social network preferences

My interpretation: Social communities will play an increasingly important, and perhaps even dominant role, in the future. Brand Marketers are going to have to rethink how they organize and market their brands.  This is because the future social web will make “portable” the opinions, insights and knowledge of friends — which all research shows is much more trusted than virtually any other information source–as consumers travel the web and interact with brands, products and services.

Implications for Marketing

  • Social Network Segmentation — Segmentation will potentially move from traditional demographic, usage, or needs based schemes to social networks. Not necessarily the group of friends an individual belongs to, but the aggregated set of individuals that tend to be like them based on habits, practices and preferences.
  • Focus on “Amplifiers” — Influencers will become more important because they will be omnipresent. Word of mouth theory posits that 10-15% of any population are “amplifiers”–consumers with unusually large social networks who also are on the leading edge of sharing new information. These amplifiers will become portable and follow their non-amplifier friends and inform them as they travel the web. The future social web will enable marketers to identify these amplifiers and develop programs to interact with and influence them.
  • Personalized User Generated Content — Consumers will be able to see what their social network — either their immediate network or people like them — think of a given store, product or service, wherever they go on the web. Thus, user generated content will become more personalized–and more impactful. Marketing organizations will need to develop new tools to influence and monitor this new content.
  • User Experience Personalization — Consumers will come to your website, along with a wealth of information about themselves and their network. Brands can use this data to personalize the experience, recommend products, etc. Brands which fail to take advantage of this opportunity will be at a disadvantage.

Owyang is quite bullish in predicting all this will happen in the next 4-5 years. Personally, this feels a bit aggressive. But, there’s no doubt that if the world above materializes, even in 10 years, marketing will be a far different place than today with far reaching implications for how brands market themselves. The time is now to begin thinking through the implications of social network “portability” and how the Marketing organization of the future should be designed in response.


10,000 Hours to Marketing Success

May 26, 2009

In his recent book “Outliers,” Malcolm Gladwell posits that success is a function of timing, culture and hard work. He defines hard work to reach genius level competence as 10,000 hours of practice. What do the Beatles, Bill Gates and other geniuses have in common ? Apparently they all practiced their craft at least 10,000 hours.

Should your Marketing team also have 10,000 hours of practice ? That’s almost 6 years of Marketing experience. It raises an interesting question: why is it that some organizations don’t consider Marketing a real craft ? Why is Marketing often seen as the function that anyone can do, and hence, doesn’t require specialist knowledge ? Or, as the Branding Strategy Insider blog put it: 

It has been my experience that “marketers” are quite varied in their ability – from “clueless” to “brilliant.” The problem is that many people can’t tell the difference between these two extreme ends of the continuum.

Well, Marketing skills do matter. Did you know that companies with higher demonstrated Marketing skill levels perform better financially than companies with lower Marketing skill levels ? This has been proven empirically, as covered in “Market Orientation, Corporate Culture and Business Performance,” by S. Singh.

Improving Marketing Skills Leads to Better Business Results

Improving Marketing Skills Leads to Better Business Results

According to the Marketing Excellence Survey, a Marketing skill benchmarking service which has surveyed over 45,000 employees, improving people’s marketing knowledge leads to changes in their beliefs about what marketing can contribute to the business. This, in turn, causes changes in behavior, improved use of marketing metrics, and finally, better business results.

The intuitive, but often overlooked finding that higher skills equals better results over time, means that Marketing skill development should be a focus of every organization. No set of Marketing strategies are complete without a strategic plank focused on this important area.

Here are 4 simple steps for developing your Marketing organizations skills:

  1. Make It A Priority— The CMO has to make this a priority. It’s too easy for skill development to be deprioritized when workloads heat up. Take a longer term view. Don’t try to accomplish everything in a year, but do strive for consistency. Engage employees from top to bottom in the development of the program.
  2. Benchmark Marketing Skills — There are a number of firms such as Marketing Excellence Survey (MES), which specialize in measuring marketing skill levels. Benchmark skills within your industry and relative to others. In addition, assess which skills are most important given the business model and marketing strategies. This, combined with benchmarking, will help you focus the organizations limited resources.
  3. Train the Organization — Implement targeted training programs to address the most important skill gap areas. You can create programs in-house or pull program content from organizations like the CMO Council or Corporate Executive Board or others. Whichever approach you choose, it’s important to match the content to the identified skill gaps and involve the most senior marketing leaders in the training.
  4. Measure Progress — Measure the quality of the trainer and content for each training module. Learn and improve with each training session. Periodically re-run the original benchmarking study to see where you’ve progressed and where you haven’t, and adjust accordingly.

If you’re still not convinced, how about this:  a focus on Marketing skill development provides a clear signal to the Marketing organization that senior management cares about them and their development. It motivates employees and reinforces their importance to the firm.

CMO’s are challenged to get results and get them fast. There’s a need to exploit every possible tool in the Marketing toolkit to get better results. It’s obvious that increased marketing competency should lead to better results. With the research to prove it, there’s really no excuse left — whether it takes 10,000 hours or not.


Marketing in the Brave New Media World

May 18, 2009
What’s the worst job in Marketing ? Media planning has long been a backwater:  unglamorous, driven by arcane algorithms, and frequently relegated to afterthought status. The Marketing team spends weeks debating and gaining agreement to the annual marketing plan goals, key initiatives, advertising, etc. And then, whoops–almost forgot–we need a media plan! But, media planning is at the edge of a virtual revolution. The media visual below, created by Brian Solis, illustrates this new, more complex landscape:
New Media Channels Are Exploding

New Media Channels Are Exploding

The media changes build on existing trends to more performance based Advertising Agency compensation models by Procter & Gamble, Coke and others. Reach, frequency and gross rating points are now giving way to a world where program and ad impact have as much currency as impressions. GRP’s as we’ve known them are becoming relics. Here are three reasons why media planning will become a central part of your marketing planning in the future:

Digital

It’s obvious but needs restating: the marketing world is moving from a TV centric model to a web centric model. The brand web site is an increasingly important platform for engaging prospects and customers. Social media and other web-based options contine to grow and evolve at an accelerating pace:  forums, webcasts, podcasts, blogs, Twitter, webinars, etc. And more digital means more measurable. Click thru, site visits and conversion rates are only the beginning as marketers become increasingly sophisticated with digital measurement. All this means that future media plans will be more creative, complex and measurable. A good guide to help cut through the hype and clutter in this area is “The Online Advertising Playbook: Proven Strategies and Tested Tactics From the ARF.”

Program and Ad Impact

Advertisers have long done pre-market ad testing.  But with the advent of very large web-based consumer panels like Nielsen IAG, companies have the ability to measure consumer engagement with individual programs. No longer do basic demographics define the media buy. Two programs with the same demographics could have vastly different consumer engagement. Are consumers more engaged with “The Office” or “Lost” ? Now we know. And this means that the same ad performs better in some programs than others, based on program fit and viewer engagement. Is your ad more effective in “The Biggest Loser” or “American Idol”? It’s now measurable.

Mike Kleha, Director of Media & Metrics at Merck and Co. says:  “IAG’s data allows us to go beyond the rating point, and gives us a deeper insight into the mind of the consumer. This allows us to do a better job of targeting our messages to where they will be more effective and provide the most consumer value.”  Simple demographic driven media plans will no longer suffice. CMO’s will demand media plans that take into account both quantity and quality.

Creative & Media Integration

Big advertisers like Unilever are increasingly going directly to media companies even before creative development with a set of objectives and asking them to create an integrated plan which helps deliver the brand objectives. This “reverse upfront” media planning process is designed to keep costs low and better integrate creative and media buying. Media companies will increasingly develop a media plan concept that matches the brands objective, and this in turn will drive both creative and usage of the full gamut of TV, digital, mobile, interactive, in-program placement, etc.

This new media landscape demands new constructs and skills, as CMO’s say they are nowhere close to realizing the opportunity in new media.  GRP’s and TRP’s will need to evolve to measures which incorporate both quantity and quality–something like  ERP’s:  Effective Ratings Points. Marketing organizations will need new capabilities to negotiate this increasingly complex world. Welcome to Marketing in the brave new media world–a place with great opportunity but also one where you ignore the heightened role of media planning at your peril.


Marketing Impact on Brand Valuation Poll — what’s your point of view ?

May 7, 2009