In many ways, 2018 has felt like a transition year for the marketing industry. We have witnessed first-hand a shift in attitudes as the sector has realised data science is becoming no longer a luxury but a necessity. Its application is unquestionably challenging marketing to be more data-driven than ever before. Here are some reflections on 2018 and predictions for this year:
Measurement still critical
The size of the prize in data-driven attribution and measurement in 2019 is huge, for two standout reasons. Firstly, an opportunity: data can now be collected and analysed at a scale that enables a better understanding of the customer and their path to purchase than ever before. Secondly, the problem: the same driver of the opportunity in data is resulting in a rate of evolution in AdTech and MarTech with which most marketers can’t keep up. Each new technology, channel or tool adopted creates its own data silo and increases the gap to a holistic understanding of the customer.
For these reasons, we believe measurement and attribution are the necessary enabler for data-driven decision making in every facet of marketing. Forrester’s Wave supports this, showing that marketers are increasingly calling for measurement tools that can help them deliver content that effectively targets individual customers. Fortunately, the expectation for what data-science and AI can deliver here are starting to be matched by the reality.
Not only will a data-driven approach increase the ROI of emerging channels but it has also been proven to renew the effectiveness of traditional ones in 2018. The remarkable resurgence of billboard advertising has been driven to a large extent by the fact that the channel has ‘progressed to the point where advertisers can now track nearly all of the same metrics with a billboard as they can with a digital ad’. It’s a fascinating story of how data and measurement have resurrected a ‘relic of the past’ and opened up exciting opportunities for marketers.
Nailing down data ethics
The advent of the GDPR legislation within the European Economic Area (EEA), as well as the fallout from events such as Cambridge Analytica, have had profound effects.
Notably, in May, Google pulled access rights to user-level data within the EEA, preventing marketers from collecting this information for cross-channel measurement and attribution of Display advertising. Google represents 44% of global advertising spend according to Forrester’s October Privacy report and analysts are expecting this new policy to extend globally by the end of 2019. Forrester’s assessment is astonishingly frank, making it impossible to “use independent attribution models for precise, granular-level measurement”.
The data privacy changes have certainly resulted in another false start for 360 degree attribution but we have observed an overall positive mentality shift as a result. The new limitations in access to 3rd party data has forced marketers to look inwards, at their 1st party data and for most, there is a treasure trove of future IP and competitive advantage to unlock in the data their brands own. To do that, 2019 has to be the year where marketing starts to commit to breaking down the silos, with unified 1st party data now the foundation for not only better measurement and attribution but also GDPR compliance and data science more broadly.
New perspectives on measurement
The GDPR and data management challenges have also contributed to changing goals for marketers. Brand awareness has climbed to become the number one priority for marketers, overtaking customer lifetime value (CLTV). Whilst the potential impact on business of optimising CLTV is still highly regarded, it’s deprioritised because the data silo problem makes it extremely difficult to measure, let alone optimise.
We frequently hear complaints about the lack of effective tools to quantify the impact of different marketing strategies on CLTV. Whilst we knew the industry still had progress to make here, we were taken aback by the lack of progress revealed by some recent survey results. This month, ClickZ research showed us that only 33% of marketers believe that their measurement tools are accurately delivering accurate attribution across all channels. An even fewer 9% have confidence that their company as a whole has an “excellent” understanding of multi-touch attribution across the lifecycle of a customer.
We predict that in 2019, marketers will stop looking at metrics and KPIs in silos too. Whereas in the past, we’ve seen huge swings in sentiment (and spend) from brand marketing to direct response, marketers can now expect their measurement partners to help them understand and optimise the drivers of success at every level, from acquisition to CLTV and the role brand plays in driving both.
Customer care will come first
In 2018, customer acquisition costs (CAC) rose again, driving an increase of almost 50%over the past five years, according to Hubspot research. It is now costing on average five times more to acquire a new customer than it is to retain an existing customer.
In this context, we hope to see a move away from the short-term strategies that deliver fast ROI at the expense of long term customer health. We predict that retaining and nurturing existing customers will become more of a business priority for all, backed by the opportunity in the data to get a more granular and complete understanding of the customer and the consequences of marketing activities on them.
Certainly, with Amazon continuing its global domination in 2018, built on AI and its principle to ‘start with the customer and work backwards’, there is a good precedent here!
More businesses empowered to build better business cases
39% of respondents ranked proving ROI as their biggest challenge for 2019. Interestingly, this was closely followed by 27% telling us they feared not getting enough capital for their budgets. Clearly, marketers are still not able to objectively prove the effectiveness of either specific channels or their broader strategy.
We’ve written about the opportunity in marketing measurement and attribution that data science is opening up, from identifying channels underrepresented by out-of-the-box attribution models in Google Analytics to drilling into channels that are traditionally overvalued. It appears from the Hubspot survey that it’s also becoming a business imperative. CFOs and CEOs are expecting CMOs to be a revenue-driving function… and be able to communicate through the data how they are going to drive it.
Integrating data specialism into your teams
Data is fast becoming the basis for all competitive advantage in marketing and it’s critically important that we organise our teams in the same way. It is no longer sensible or even possible to segregate data specialists and traditional marketers. Companies must sponsor communication and continual learning between both groups. It is not necessary for marketers to have all these data skills but it is crucial to understand their importance and application. It is up to managers to ensure this collaboration takes off and thrives.
In 2018 we reached the tipping point, where the application of data has become a prerequisite for marketing success. The future is certainly bright for those willing to embrace the emergent technologies and foster cultures that make data central.
It is easier than ever to start and we believe that a ‘Start Small & Grow’ approach is fundamental to success, finding what works for you and building from there. We can’t wait to see where you get to in 2019 and would love to connect to share notes on your plans.