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“Holistic analytics that are online and offline, that understand direct and indirect effects, are really important — more today than ever — to understand what's driving business performance.”— Mike Menkes, Senior Vice President at Analytic Partners
Brands have no shortage of data, but their enduring challenge is how to make sense of it all to drive better decision-making and business performance.
Analytic Partners, a global leader in analytics solutions for measurement and optimization, helps brands address this challenge by analyzing the factors that influence return on investment (ROI). The firm has launched what it calls ROI Genome, an ongoing series of marketing intelligence reports covering industry trends, truths, myths, and more.
Mike Menkes, senior vice president at Analytic Partners, joined a recent episode of “Unpacking the Digital Shelf,” “Creating Wisdom From Numbers and Knowledge,” to share how brands can effectively use analytics for business and the coming trends that will shape the future of ecommerce.
Here’s what Menkes sees in his analytics-driven crystal ball.
The ROI Genome uses proprietary data, processes, algorithms, and collective intelligence that Analytic Partners has amassed through its client work to understand and quantify what drives better business performance.
“With the ROI Genome, our mission is to create wisdom from accumulated numbers and knowledge,” Menkes says.
Analytic Partners has already published a series of reports from the project, including “The Advertising Evolution: Media Trends, Truths, and Taking Action for Tomorrow,” and another that focuses on targeting called “ROI Genome Intelligence Report: Targeting Works, Except When It Doesn't.”
“We've done work in over 50 countries across the globe, measuring hundreds of billions of marketing spend. So, there's a lot of rich information that this information is based upon,” Menkes says.
Menkes says one industry trend Analytic Partners is seeing is that more companies are focused on lower-funnel marketing, which largely involves conversion-based executions such as search, display, and affiliate marketing.
One of the advantages of lower-funnel marketing is that it typically offers more metrics than traditional upper-funnel marketing thanks to a more mature ad tech ecosystem.
However, Menkes says it’s important for brands to focus on both lower- and upper-funnel marketing because the latter is crucial for building brand awareness, attracting new customers, and driving long-term growth.
“One of the things we've seen is a focus on heavy lower-funnel marketing, so those things that are a little closer to purchase decisions. They do tend to have higher ROIs in the short term — meaning this month — of about 20% higher,” Menkes says. “But when we look at the long term, or the impact later this year and beyond, we see that heavy upper-funnel focused marketing actually has a 65% higher return on investment.”
While brands need a holistic marketing strategy, they need a holistic measurement and analytics strategy, too.
Menkes says many brands have leaned into performance marketing, but it’s absolutely necessary for them to have comprehensive analytics to better understand what drives their business — rather than just relying on clicks and conversions to gauge their success.
“Holistic analytics that are online and offline, that understand direct and indirect effects, are really important — more today than ever — to understand what's driving business performance,” Menkes says. “And the reason is, a lot of performance metrics appear to be very effective and efficient and sometimes they are, and sometimes they aren't in reality.”
When Menkes talks about direct and indirect marketing factors, this can include things like supply chain disruptions, the ramifications of COVID-19, the weather’s impact on sales — especially in seasonal and cyclical businesses, or how a competitor’s strategic investments affect your brand’s business performance.
For example, the ROI Genome found that if the average competitor for the average brand doubled its marketing investment, the other brand would lose 15% of its business.
These figures and other data points Analytic Partners has uncovered make a compelling case for brands to continue investing in marketing in good times and in bad.
Marketing is often viewed as a cost center, so when revenue gets tight and consumers pull back their spending, marketing budgets and teams are usually the first to get slashed.
However, Menkes says this isn’t the right approach for most brands. The ROI Genome has found that brands that continue to make marketing investments in recessions perform well during these tumultuous periods and come out ahead of competitors afterward.
“There's a lot of risk of a recession. We've seen that marketing continues to work and it's really important that businesses do continue to invest during these periods of financial difficulties.” — Mike Menkes, Senior Vice President at Analytic Partners
During recessions, the key for brands is to focus on value-based marketing. However, Menkes says that doesn’t only mean touting discounts.
“It can come in the form of discounts, and there's nothing wrong with that, but that alone is not going to lead to success,” he says. “There is an element of media marketing — explaining what differentiates our business, what our value proposition is — that needs to be communicated consistently alongside, potentially, some slight increases in discounts, promotions, and various types of offers that can help incentivize and ease the financial burden.”
During recessions, the key for brands is to focus on value-based marketing. However, Menkes says that doesn’t only mean touting discounts.
“It can come in the form of discounts, and there's nothing wrong with that, but that alone is not going to lead to success,” he says. “There is an element of media marketing — explaining what differentiates our business, what our value proposition is — that needs to be communicated consistently alongside, potentially, some slight increases in discounts, promotions, and various types of offers that can help incentivize and ease the financial burden.”
It’s clear from the ROI Genome, brands significantly benefit when they make sustained marketing investments, even during economic downturns. However, the difficulty is making the case for these investments internally.
Menkes says this is why it’s crucial for marketing teams to work more collaboratively with finance teams, since finance has taken on a more prominent role in measuring ecommerce performance in recent years.
“I think some of that is because there are a lot of myths out there in the industry and the ad tech ecosystem created some misleading information that the finance team is rightly questioning,” Menkes says about finance’s more involved role.
This is another reason holistic analytics for business are so vitally important, Menkes adds. Chief financial officers (CFOs) and their teams want to assess marketing’s true incremental impact on the business more effectively, which can help them make more informed strategic decisions that lead to growth.
Therefore, chief marketing officers (CMOs) and their teams should make a concerted effort to build a stronger relationship with this part of this business and engage finance teams early on in their measurement efforts.
The organization as a whole also must effectively harness holistic analytics to create a shared language and common understanding between finance and marketing teams.
“There [are] some businesses where marketing ROIs are very strong in the short term, where you spend a dollar and you generate many, many dollars in return,” Menkes says. “It's important that the finance team understands that this [marketing] is a business driver. It's not a cost — it helps our business.”
Listen to the full episode to hear more of Menkes’ insights on ecommerce analytics.
