Reading: Measuring Marketing Communication Effectiveness

Why Measure?

Measurement is an important aspect of marketing campaigns and other marketing activities. Measurement makes some people nervous because it brings accountability to marketing activities. In fact, this step can be one of a marketer’s best friends. If you don’t measure the impact of your marketing efforts, you’ll have no idea whether what you are doing is effective or not. On the other hand, if you do measure the impact, it will help you understand what is working, and where and how to improve your efforts. By nature, marketing is a dynamic field because markets are constantly evolving, and people’s needs and preferences change. What works beautifully this year may be a complete flop next year, and vice versa.

Measurement — and the results or “metrics” this process collects — are like a compass that helps marketers adjust their course so they can reach their goals more quickly and effectively.

Deciding What to Measure

Measuring just for the sake of having numbers misses the whole point. It’s actually essential to determine the right things to measure first if you want to get a relevant picture of what’s happening. To achieve this, marketers typically undergo a process of identifying key performance indicators (often referred to as KPIs). A KPI is a measurable indicator that shows the progress an organisation is making toward its business objectives. The KPI is not the same as the company’s actual goal or objective; instead, it is a measurable indicator that helps managers understand how well they are progressing toward the goal.

To understand the importance of KPIs, let’s say you are a track coach who wants to capture data about the sprinters on your team. You could measure all sorts of things about the athletes: their shoe size, how many cups of sweat they produce during a typical workout, how fast their hearts beat during a race, and so on. Would all those measurements be key performance indicators? Maybe not. You might decide that the key performance indicators for sprinters are their best running times and their average running times (or something else).

In a company, KPIs can be determined for many different levels of the organisation. These are described below:

• Company-level KPIs measure the overall company performance in achieving company-wide goals, including total revenue, profitability, customer satisfaction rating, market share, and percentage of growth in the customer base.
• Department-level KPIs track performance at the department level. For the marketing department, it might be brand awareness, the number of qualified new leads generated, cost per lead generated, or the conversion rate: the percentage of leads that are converted into customers.
• Team-level KPIs track the impact and effectiveness of a team’s activities. A team focused on digital marketing, for example, might track KPIs such as email-marketing click rates, the number of website visits, or SEO sales conversion rate: the percentage of individuals who come to the website via a search engine and result in a sale.
• Campaign-level KPIs track the impact of individual campaigns. By tracking similar metrics across multiple campaigns, it is easy to see which ones are most effective with target audiences and then use this information to refine tactics and replicate successful approaches. Campaign-level KPIs are somewhat dependent on the campaign design; for example, campaigns typically track the “open” rate: i.e., how many people open an email message once it is delivered. If a campaign doesn’t use email, the open rate doesn’t exist. However, there are some “common denominator” campaign metrics marketers can track across IMC activities to determine impact and progress. Cost per impression, impressions per campaign, and conversion rate are metrics that can be tracked for virtually any campaign.
• Marketing tactic-level KPIs track the effectiveness of individual marketing tactics and tools. For example, content marketing KPIs track the effectiveness of individual content pieces used on a website and in integrated marketing communications (IMC) campaigns. These metrics, such as page views per article and number of social media shares, provide insight for marketers about which types of content are most popular with target customers and which content pieces get little interest.

Different companies select different sets of KPIs, depending on what they are trying to accomplish and the strategies they are pursuing to reach their goals. At any given level, it is important to limit the total number of KPIs to those that are most essential and indicative of progress. If too many things are measured, managers have trouble prioritising and homing in on what is most important.  In addition to KPIs–which represent key, strategic indicators of progress–a company may also track a variety of other metrics to inform its operations.

Alignment with Goals and Objectives

Figuring out what to measure starts with considering the organisation’s overall goals and objectives, as well as the marketing team’s goals and objectives. The highest-level KPIs should inform managers about how well marketing is performing in meeting its goals as a team and how the team is contributing to the organisation’s overall performance. KPIs may reflect absolute figures, such as total market share. Alternatively, they may track progress toward a target, such as achieving 1,500 new customers over the course of a year. KPIs should provide managers with information to guide their decision-making about what is working and where to adjust the course.

It is helpful for an organisation to define a standard set of KPIs for measuring the effectiveness of marketing campaigns and for the contributions made by different functions within the marketing organisation: public relations, advertising, social media marketing, etc.. When marketers define S.M.A.R.T. goals at the outset of a campaign, these goals may incorporate KPIs to confirm what the campaign aims to achieve and how well it achieves these goals. KPIs for awareness-building campaigns, for example, should be focused on campaign reach, such as the number of impressions or post-campaign brand awareness.

Managers should be attentive to the number of KPIs they are tracking to ensure that measurement remains a useful activity rather than a burden that cuts into the productivity and effectiveness of the broader team. Fortunately, as marketing becomes more data-rich and technology-driven, many KPI-type metrics are calculated automatically by systems that support the marketing function, making them readily available. Tools are also available that create dashboards for marketing managers and team members to help them easily monitor key performance indicators (KPIs) on an ongoing basis.

Defining the Metric

Every marketing metric or KPI requires some type of measurement, and it should be based on legitimate data. When marketers define a KPI, they should also define what data will be used to calculate the KPI, as well as the source of that data. At times, different people or teams might have different assumptions about how to calculate the metric, so it is wise to clarify this during the definitional stage.

It isn’t uncommon for people to identify KPIs and then discover that they don’t have ready access to the information needed for measurement. This can be a good motivator for defining a process to obtain that information. Alternatively, it may be a cue that a different KPI, based on more readily available information, would be a better option.

When to Measure

When to measure depends on what is readily available for marketers and managers to track and maintain. If generating a KPI report requires a significant amount of manual effort, or managers spend hours per day or week compiling and reporting metrics, it could significantly reduce productive work time. In such cases, it may be wise to investigate alternatives. Fortunately, CRM and other systems that build KPI dashboard reports into their regular, day-to-day functions are readily available. In these cases, systems automatically calculate KPIs, which makes them easy to monitor over time and adjust course as needed. Typically, managers should monitor KPIs at least once a quarter to gauge progress and identify what’s working and how to improve.

Video: Defining KPIs

The following video provides an overview of different types of key performance indicators and the process of defining them.

You can view the transcript for “The Problem With Key Performance Indicators (KPIs)?” here (opens in new window).

Examples of Key Performance Indicators

Different types of KPIs focus on measuring progress and effectiveness in various marketing-related areas. In fact, hundreds of possible KPIs exist, so marketing managers should figure out which ones matter most for achieving their goals and focus attention accordingly. The section and table below list a variety of KPIs applicable to different aspects of marketing communications and the marketing function as a whole.

Campaign Metrics Case Study: Citizen Watch

Citizen, one of the world’s largest makers of wristwatches, embarked on a digital marketing strategy to build its brand using social media, with a specific focus on expanding its presence on Facebook. The marketing team’s goal for the first year was to gain 100,000 followers on Facebook. Their campaign strategy focused on offering engagement opportunities that encouraged people to visit Facebook and interact with the brand. It incorporated a combination of tactics that included both offline and online elements, such as a series of register-to-win contests, including a “Win Your Mum a Watch” giveaway. It also offered related online engagement opportunities, such as interactive photo galleries on the company website, allowing people to browse, view new products, and share them on social media.

To help gauge their progress and understand how well different dimensions of the campaign were working, they tracked a variety of metrics, with one key performance indicator (KPI) being the number of Facebook followers. Throughout the campaign, they achieved impressive results. In addition to blowing through their goal of getting 100,000 followers, Citizen saw the following results from consumers who participated in campaign activities:

• 76 per cent lead-submission rate
• 82 per cent app-completion rate
• 26 per cent social-share rate

By tracking these metrics across different offers and campaigns, Citizen was able to gauge which activities were most well-received and use this information to improve the effectiveness of future campaigns.  The company has leveraged these insights to expand its promotional activities to other social media platforms and various engagement activities.^[1]