Marketing effectiveness analysis to improve the economic value of companies

"Half of the money we spend on advertising is wasted.
The problem is, I don't know which half."

John Wanamaker

The advertising problems identified by John Wanamaker seem to have not been resolved even after more than 100 years.

In today's increasingly competitive business environment, companies are striving to maximize the effectiveness of their marketing efforts in order to increase their economic value. To achieve this, it is essential to have the capability to properly analyze marketing effectiveness.

In this article, "marketing" will focus on "advertising" and "promotion," as mentioned in the opening quote by John Wanamaker. We will introduce some points to help you analyze the effectiveness of these marketing elements to improve the economic value of your company.

The role of marketing in increasing economic value

The economic value created by marketing is formed by increasing sales, building customer loyalty, expanding market share, etc. Marketing activities are an essential element for maximizing a company's economic value and are an important part of business strategy.

In order for a company to improve profitability and achieve economic growth, it is important to carry out marketing effectively and efficiently. To do this, it is necessary to properly analyze marketing effectiveness (cost-effectiveness).

Points to keep in mind in order to improve the economic value of marketing effectiveness analysis

In recent years, the diversification of marketing channels has resulted in more complex contact points with consumers, and the amount of data has become huge, making it difficult to properly analyze marketing effectiveness. In this situation, there are a few points to keep in mind in order to improve a company's economic value through marketing effectiveness analysis.

1. Ad measurement tools alone are not enough

Among the advertising effectiveness measurement tools areData collectionSome of them are easy to use and convenient, and can perform everything from marketing to analysis, but they have some shortcomings when it comes to properly analyzing marketing effectiveness.

Limited perspective

Many advertising effectiveness measurement tools are designed to measure the effectiveness of a specific promotion channel (for example, only digital measures, or tools built into advertising platforms such as Google or Facebook). However, marketing results are rarely due to a single channel, but are often brought about by factors and interactions of multiple channels. In addition, it is necessary to analyze not only promotions such as advertising, but also factors such as price and competitive factors. Advertising effectiveness measurement tools alone are insufficient for a broad perspective or comprehensive marketing evaluation.

Lack of context

Advertising effectiveness measurement tools evaluate advertising measures based on data and numbers, but it is difficult to understand the background and context in which those results were produced. In order to properly measure the effectiveness of marketing, it is necessary to take into account factors such as consumer needs and behavior, the situation of competitors, and other external factors. Advertising effectiveness measurement tools alone cannot fully capture this context.

Lack of decision support

Although advertising effectiveness measurement tools can show data-based results, these results cannot be used directly to make decisions about future marketing policies. In order to maximize the effectiveness of marketing, insight into the results and creative judgment are required in addition to data analysis. Appropriate decision-making cannot be achieved by using advertising effectiveness measurement tools alone.

2. The importance of collaboration with other departments within the company

Even within the same company, it is common for different departments and teams to use different data systems and not share each data. Below are some reasons why collaboration with other departments is necessary, apart from the marketing and advertising departments.

Data sharing and collaboration

In order to analyze marketing effectiveness, it is necessary to utilize multiple data sources and information. If internal collaboration is good, it will be possible to share and utilize data and information held by different departments and teams. For example, collaboration between the sales department and advertising department will make it possible to link the results of advertising and sales measures with sales data and analyze them.

Shared goals and transparency

 Through collaboration with other departments, you can share the goals and key indicators of marketing effectiveness analysis with other departments. By sharing progress and results, all stakeholders within the company work toward the same goal, making it easier to make decisions and improve strategies. If the entire company works together toward a common goal, it increases the likelihood of improving economic value.

Fostering a culture of experimentation within the company

Whether marketing effectiveness analysis works well or not often depends on top-down instructions from management or upper management, or on the company culture. If the company has a strong experimental culture, they set what to experiment with using a hypothesis testing approach and adopt statistically appropriate measurement methods depending on what they want to verify. In addition, companies with a strong experimental culture tend to reliably put into action what has been verified through hypothesis testing.

3. Ensure accountability for marketing results by setting the right KPIs

By clarifying accountability for results, it is easier to promote the cycle of effectiveness analysis. In addition, it is important to not only focus on "reach," "brand awareness," and "number of searches" as marketing KPIs, but also to track "ROI (return on investment)." By thoroughly understanding and evaluating results in this way, transparency can be ensured with stakeholders both inside and outside the organization. By committing to marketing results, accurate information can be shared and accountability can be fulfilled, allowing for reliable decision-making.

4. It takes time to reap the rewards

Even if proper marketing effectiveness analysis and internal collaboration are promoted as described above, it will not immediately bring economic value to the company.

Even if you can develop a method for analyzing marketing effectiveness, it takes time to apply insights to improvement actions and verify their effectiveness. By building trust both inside and outside the organization through the actual results of such improvements and spreading efforts in marketing analysis and data-driven decision-making, results will gradually accumulate and lead to increased economic value.

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My Feelings, Then and Now

To successfully conduct marketing effectiveness analysis that leads to increased economic value for a company, it is not enough to simply use an effectiveness measurement tool. It requires understanding from the entire organization, cooperation and teamwork, setting clear KPIs, and time and effort. Marketing effectiveness analysis is an organization-wide effort that requires continuous effort. This effort can improve the company's profitability and results through benefits such as the design of optimal strategies and tactics, efficient resource allocation, and data-driven decision-making.

If you are having trouble considering or implementing a marketing effectiveness analysis system, please contact us.

XICA has been providing consulting and services in the field of data science in marketing for over 10 years. We have a track record of providing consulting support to over 250 domestic enterprise companies, including providing advanced marketing effectiveness analysis solutions such as our in-house developed MMM (Marketing Mix Modeling).

XICA will assist you in the design and implementation of marketing effectiveness analysis that will improve the economic value of your company.Find out more about our marketing solutions here .

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XICA Co., Ltd. Marketing Team