What you miss when you hyper-focus on optimization

Lately, I fear some marketing leaders may be losing sight of the forest for the trees. They are veering too far toward the sole goal of cost-optimization and moving further away from the business goal of driving demand and increasing revenue.

For all of the right reasons we got closer to our CFO's and learned how to justify our budgets through achieving ever-lower CPL's (cost per lead) and CPA's (cost per acquisition). We fell in love with A/B testing our copy, creative and landing pages in order to squeeze another point or two out of a conversion rate. We hired analysts and learned how to manipulate pivot tables with the best of them.

And as fun as data analytics can be (and I am one big geek...), it is dangerous when the value of marketing is seen to be in the act of optimization...not in driving demand. Adam Needles from Annuitas recently wrote a blog, "Is the CMO the problem?" and characterizes the problem as, "CMOs obsess about their marketing ROI; however they focus on activities and their costs, not on demand and revenue."

Don't get me wrong because optimization is my middle name (see geek reference above). Closely watching acquisition and retention metrics and managing costs is a necessary part of marketing program execution. However, it is necessary, but not sufficient.

Optimization is a tactic, not the strategy.

Given pressure to justify marketing budgets and departments, some marketing leaders have over-corrected and lost sight of their role to provide the customer insight driven strategy needed to create and sustain long term growth.

To combat this, I second the suggestion from the McKinsey & Co blog "Why can't we be friends" that the CMO and CFO collaborate to identify marketing's success metrics to ensure the set addresses both the short term and the long term health of the business. Short term metrics will be primarily financial: new sales, reduced churn, and customer acquisition costs to name just a few. While long term metrics may include: brand awareness & consideration and Net Promoter Scores.

I didn't say it would be easy.

The conversation with your CFO to get agreement on short and long term marketing success metrics may not be easy. We all know that many CEOs and CFOs can be biased to be focused on the short term financial metrics. It is marketing's job to continually bring the long term view into the conversations. Getting consensus will solidify the wider value the marketing team provides and will facilitate the necessary conversations around the investment needed to sustain revenue growth, not just short term cost optimizations. 

If one of your 2014 New Year resolutions is to build a better relationship with your CFO, getting to a common set of both short term and long term metrics is a great way to start.

Mind Pops and Marketing

The science and discipline of psychology is very much aligned with Marketing, and recently I read this great PsyBlog post about "Mind Pops". Mind Pops is the author's term for those images and/or ideas that to pop into your mind seemingly out of the blue and apropos of nothing.

Researchers learned that "mind pops" happen to everyone, on average, once per day. They have learned that these "pops" are not at all random.  

People unconsciously process much more of the stimulus around than they are aware of. The images and ideas in "mind pops" can even be from triggers experienced weeks, or even months, in the past.

Think about that...images and ideas that you were exposed to, and may not even consciously "remember" are actively simmering in your brain. These ideas stay in the background of your brain, generating more synapse connections until one day, when the context is right, it "pops". 

What does this have to do with marketing?  Everything!

In a previous post, Attribution is Not Marketing,  I talked about Google's Zero Moment of Truth and how there needs to be "something" that triggers a person to go and search and that the "something" is marketing.  

This Mind Pops research supports my point about it being good marketing strategy: you need to be where your customers are, with compelling and relevant messaging, ads and content. While an action may not come out of each touch your content and messaging and brand is making an impression that may subsequently trigger a "mind pop" in them to take that desired action.

Attribution is Not Marketing

Today I read a TechCrunch article by Josh Costine relating the news that Twitter and Facebook were attributed tiny percentages of Black Friday sales (source: IBM's Black Friday report).

McKinsey recently released a report called The Social Economy saying that up to 1/3 of consumer spending is likely impacted by social shopping.

So what gives?  All my good marketers out there reading this are nodding knowingly. We all live this every day.

Attribution isn't "real" and there are many challenges with it (learn more here). It doesn't tell the buyers' actual behavior taking them from  awareness to purchase. It just shows their last click before purchase. It is definitely an important thing to know, but it's also not the whole story and it can't be the sole driver of your marketing strategy.

I like Google's Zero-Moment-of-Truth (ZMOT) construct because it clearly articulates that "something" needs to triggers buyers to go and search. It has to be on the person's mind for them to actively go and visit a search engine. And, you know a person must be fairly far down the funnel once they type in your product's or brand's name into that search box.

What is this mythical, mystical "something" that triggers a buyers to go and search? It's not a mystery - it's your integrated marketing strategy and programs. It isn't magic, it's just marketing.

You know need to be where your customers are, with compelling messaging and ads and content relevant and engaging enough to persuade them to take the next step. And their 'steps' aren't linear. It can take many touches as the buyer researches, compares, asks his social network, views it in a store, etc. ZMOT study the average number of touches at over 10! That may not be true for every brand and every product - but it's never just one.

At this time, it is hard (perhaps impossible) to know "precisely" the sales impact of your social channels. Yes, it makes our job as marketing leaders tougher, but that's why you're there!  If marketing were simply a numbers game, an engineer would have automated it by now.

So continue to set your marketing strategy and allocate your (always too limited) resources - optimizing appropriately where you can, but always keep in mind that attribution is just a tool - it's not marketing.