If you only measure the sale, you’ll undervalue the thing that caused it. Read more from Ben Dutter👇
Tying ANY form of measurement to a lagging indicator causes you to underestimate the impact of top of funnel tactics. The most common use case for an incrementality study or a marketing mix model is to understand the relationship between marketing activity and revenue. There's an input output relationship, usually: • Incremental revenue = iROAS • Incremental customers = iCAC • Incremental leads = iCPL These things are all lagging indicators because they only measure the very end of the chain of a line of decisions. Tons of people "mentally" convert before they actually buy. (This is the basis of the mental availability model and category entry points). In other words, when your life event TRIGGERS something for you to go and make a purchase -- I have an event coming up so I need a new set of slacks, for example -- you go into purchase mode. But prior to that purchase mode, there are BRAND velocity metrics. More than 80% of consumers say that they already have a shortlist of brands in mind when they're making a purchase decision. This means (and has been proven many times) that brand metrics -- awareness, favorability, consideration, etc -- lead to purchase outcomes. You see this research most strongly in B2B in which marketing is less emphasized, but brand credibility and word of mouth is almost everything. What's the so what? • Brand metrics (Awareness) eventually lead to revenue • Measuring only toward revenue is a lagging indicator • Some tactics generate short term brand lift • Those same tactics usually have "poor" revenue This has to do with just the laws of statistics and how marketing mix models work, and over what time period they can get a statistically clear read on the cause and effect of certain activities. This means that if you're in an industry where: • You have a long consideration cycle (60+ days) • You have rare life triggering events • You spend on upper funnel tactics (like TV) • Your product is predominantly sold in stores you should be measuring brand impact, and using that to inform your MMM and allocation decisions, rather than relying strictly on an iROAS or iCAC. In the illustration below, you can see that the actual iROAS (delayed effects) is actually many times greater than what an MMM trained off of revenue can detect. #mmm #incrementality #brand