How Experimental Design Helps Measure Marketing ROI

Do you find it difficult to measure and quantify your marketing ROI? You’re not alone. According to a global survey conducted by the programmatic marketing and analytics firm DataXu, this is the greatest challenge marketers currently face.

Over two-thirds of marketers surveyed say developing a deeper understanding of marketing technologies is critical to their marketing ROI and success. 65% of marketers believe being data literate is a particularly important skill to have in today’s digital world.

41% of global marketers and 37% of U.S. marketers say the biggest challenge facing their organizations is developing an efficient marketing mix across channels and platforms to deliver the best marketing ROI possible.

Difficulty In Quantifying Marketing ROI

But a common roadblock they face in doing so is poor visibility into their metrics to identify what is working and isn’t, making it extremely difficult to measure the effectiveness of each channel. Some of the marketers surveyed attributed this challenge to the number of marketing technology platforms and vendors they need to manage. For many, they are working with ten or more platforms and vendors across the martech landscape, which makes it difficult for marketers to get a unified measurement.

The president and CEO of DataXu Mike Baker also thinks the measurement problem is caused by the “wall gardens” many companies have built around their channels. Digital platforms like Facebook and Google may be able to offer marketers better customer insights into how their marketing is performing within each wall garden, but the problem for marketers is that these platforms cannot measure one another.

Without a unified measurement across these different walled gardens, marketers do not have a way to effectively measure and compare their marketing investment and ROI.

How Experimental Design Can Help Marketers

In order to combat this fragmented consumer view and measurement challenge, some companies like Vodafone are trying out an approach called “experimental design.”

As Vodafone’s head of brand strategy David Still explains, if you want to prove whether something works or not, you test it out by taking it away. If it really works the way you think it does, you will see the effect when taken away. And this is what experimental design can help marketers find out, according to Still and Baker.

Baker describes experimental design as a series of “continuous experiments where media volumes and types of investments are continuously varied,” allowing marketers to measure and understand which investment has a “causal relationship” with sales.

It’s similar to the concept of A/B testing, Baker says. Media plans are more complex, however, since marketers are dealing with dozens of variables. So how one can look at experimental design is that it is a real-time, continuous multi-variant test. It provides marketers a more scientific and rigorous approach to measuring and identifying which media investment is generating sales and driving business outcomes.

Vodafone, for example, has applied experimental design to their marketing efforts by taking different parts of the country and investing various levels of marketing spend across different media channels, then comparing them to other areas where spend is kept at constant.  And through experimental design, what Vodafone found out was that, for their brand, television was still a very important channel for the business.

With key insights like this into their marketing ROI, Vodafone was able to better optimize their marketing spend to focus on efforts like television that drove most sales, while improving their efficiency by 10%.

Experimental Design Requires A Change Of Mindset

Experimental design ultimately is about testing and learning from your successes and failures. For Still, experimental design isn’t just another marketing program about better marketing planning or ROI. It’s a change of mindset, moving from one consistent way of doing and thinking about marketing to trying something different. It’s about taking risks and being open to experimentation and failures.

But through continuous experiments and smart mistakes, marketers would be able to gain a deeper understanding of how each media channel works in isolation and combination, and find out what the optimal spend is for each channel to drive the greatest marketing ROI.

Still says that adopting such an approach won’t be easy for all brands. For some, the process can be extremely labor-intensive in both getting stakeholders on board with the approach and getting it set up. But for Still, all the hard work is worth it because you’re trading short-term pain for long-term gain.

What do you think? Is experimental design something you would be interested in trying out within your marketing organization? Why or why not? Please share your thoughts below!

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Michael Brenner

Michael Brenner  is a Top CMO, Content Marketing and Digital Marketing Influencer, an international keynote speaker, author of "Mean People Suck" and "The Content Formula" and he is the CEO and Founder of Marketing Insider Group, a leading Content Marketing Agency . He has worked in leadership positions in sales and marketing for global brands like SAP and Nielsen, as well as for thriving startups. Today, Michael helps build successful content marketing programs for leading brands and startups alike. Subscribe here for regular updates.