What you do in one channel impacts another, and who you associate with last week influences how your conversion channels perform today.
Dan Wilson, Chief Data Officer shares that “recent years have seen digital marketing platforms become increasingly siloed and operating in closed black box environments. While these platforms are highly sophisticated, their algorithms are remarkably closed to the outside world. They act as if what you’ve done elsewhere has no impact. Left to their own devices, these black boxes seek out high-propensity audiences and focus investment on getting as many ads as possible in front of users most likely to purchase. Platform-attributed results look great as these users convert, but in reality, it’s not all positive... WRONG!”
The incrementality on these black box solutions is typically poor. Many of these users would have purchased with or without additional advertising, and these bottom-of-funnel campaigns simply mop up organic conversions. While platform-reported performance lines rise, overall business performance remains flat.
These platforms ignore that customers remember what they’ve seen elsewhere. "High propensity" stops meaning “most likely to respond to our advertising” and starts meaning “most likely to buy with or without our advertising.” Meanwhile, the marketing interactions that generated this high propensity in the first place are optimised away because “the platform CPA was really high.”
NextGen customers are more impacted by synergies between marketing channels than any other audience due to the high crossover and overlap between marketing exposures.
YouTube and influencers are prime examples:
*Source: COmpass data.
Fix the measurement and judge channels by their full-funnel incremental value, and the engagement-led, attention-winning channels shine with NextGen audiences. Dan Wilson, Chief Data Officer, shares that “this likely surprises no one—marketing logic and instinct have been driving smart brands toward these channels for decades, but flawed measurement has created pressure to move away from them. When measured with the right approaches, these channels prove their worth, aligning both logic and data.”
This behaviour isn’t limited to paid marketing channels. Brands are drawn to short-term measurement of promotions because when we run 30% off, all the numbers go up. But look a couple of weeks later, and it’s clear that a large proportion of this increase is from pulled-forward demand. Customers who always intended to buy your product, likely next week at full price, instead purchase today at a 30% discount. The net impact of these promotions is usually small, often negative in the short term, and detrimental in the long term.
With pulled-forward demand on occasional promotions, brands can manage these effects and incorporate them into longer-term marketing plans. However, as frequency increases, customers become trained to wait for the next promotion.
Dan Wilson adds “We recently worked with a brand that ran 2-3 promotions every quarter. Initially, the incremental value was very positive, so they increased the frequency to two promotions every month. Incrementality significantly dropped, such that even with more promotions, the total contribution was smaller.” By repositioning to infrequent, more incremental promotions supported by increased demand generation, we can return existing customer revenue to underlying growth."
You can read the full playbook here and if you want to learn more about how to measure and attribute ROI across your full marketing strategy then drop us a line.
