Why you shouldn’t conduct an Econometrics study!
How much should I invest in marketing effectiveness?
Ok, in truth we’ve nothing against econometrics studies. Why would we? Conducted in the right way, at the right time, examining the appropriate level of data, econometrics studies can yield useful insights to feed into marketing investment decisions and media strategy and planning.
So what’s our issue?
The real issue is that for so many in our field, marketing effectiveness equates either to an almost slave-like addiction to minute-by-minute tracking of bottom funnel metrics (such as video views, click through rates or cost per acquisition) or a full blown econometrics study. Effectively missing everything in between – forgive the pun.
What is in between? If you want to improve your marketing effectiveness, what else should you be looking at?
Our research shows that organisations with high levels of marketing effectiveness demonstrate strength across 6 pillars. We used these pillars to build the Pt78 Marketing Effectiveness Matrix. These 6 pillars can equally be viewed as the fundamentals of any good marketing effectiveness practice. Get these right and you’re in a good place. But if you haven’t yet tackled some of these areas, no amount of econometric studies can fix that for you.
One of the most common issues we encounter in organisations is misalignment between company objectives, marketing objectives and the objectives set for each campaign or project. The second most common issue we see is a lack of familiarity with the data that is already available in the organisation – you might be surprised at how much you can learn about drivers of brand preference and what investment worked harder than others by just studying your latest brand tracker, sales data and investment reports.
If you’re planning to invest in an econometrics study, it’s a good idea to start with the ‘why’. What is your key objective? For most, it’s to gain a greater understanding of their return on marketing investment in order to inform future investment decisions. Makes sense so far.
So let’s return to the first 3 criteria – right way, right time, appropriate level of data.
Right way? That’s easy. There’s plenty of great econometricians out there who can conduct these studies for you.
Right time? Have you already got the fundamentals in place? Is everyone working to the same goals? Have you agreed metrics against each of these goals and set targets? Are you adopting a Stop/Start/Continue approach to campaign review?
Appropriate level of data? This generally means two things;
1. You’re investing enough in media each year to make the study worthwhile. Many brands in the Irish market will not fall into that category.
2. You can easily access all the data needed - ideally you would have 3 years’ worth of robust data - retail sales, on and offline leads, quotes, completions, investment levels, flighting by channel, pricing data etc. If you don’t believe you could easily access this today, start now! Start arranging your data warehouse so that 3 years from today, this would be an easy project to kick off.
A good econometrics study can cost in the region of €40k. For some smaller brands, that’s almost equivalent to the annual ‘working media’ budget. Econometrics studies are great, particularly when you’re investing millions of euro per annum.
But, before you initiate one, perhaps consider other ways in which you can improve your marketing effectiveness.
If you’d like to discuss this in more detail, we’d love to hear from you.
hello@pt78.ie
(01) 556 3678