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One of the biggest questions facing any marketing department, is “what methods do we use for comparing marketing channel performance?” In other words, how can we tell which of our investments in marketing, be it television or radio ads, direct mail, online pay per click or content ads, or any number of other marketing channels, is performing at the highest level for the lowest cost. Marketing teams in companies the world over use various methods of evaluating the KPIs or key performance indicators of their marketing channels. Here are five best practices for comparing.
1. Define Your Key Performance Indicators (KPIs)
One of the first steps in comparing the performance of several different marketing channels or avenues is to decide on which metrics or indicators you will track and are most important to you. In order to ensure that your measurements remain consistent and reliable across various channels, you should follow four simple requirements. First, metrics should measure the outcome of marketing from a consumer’s perspective, you should track data across each and every marketing activity, measurement should be repeatable and repeated over time, and should meet all statistical criteria required of your system.
2. Consistency Goes A Long Way
In order to compare different marketing activities in a meaningful way, many companies use a common scale to analyze the relative performance of different marketing channels. This allows marketing managers to easily see how one channel is performing in comparison to other channels. For instance, if you are comparing television ads to online marketing, you will want a common scale for discussing the relative performance of each. This direct comparison can help you redistribute your marketing mix so that you are spending less for traffic and conversions.
3. Consider Measurement Error
Beyond using a shared scale of performance, every marketing performance measurement system should also take into account how reliable and accurate the findings are. Many measurements or tests can be biased, or may allow the data to shift, drift, or be misinterpreted by your business analysts. Finally, watch out for bias in the way in which you are interpreting or tracking data.
4. Compare Performance Across Market Segments
It should come as no surprise that people are different. People have different tastes, attitudes, and backgrounds that cause them to behave and relate to things differently. As such, you may find that some of your ads resonate strongly with one segment of your market, for instance, people over 40, but fail to resonate with other segments, for instance people under 40. Segmenting your market will help you analyze which marketing channels are working on key segments of your market, but are proving unfruitful in other areas.
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