Podcast Summary: Measuring Marketing Effectiveness

This interview discusses the challenges of measuring marketing effectiveness and the importance of using the language of the boardroom when communicating marketing results. The interviewee, Richard Levy, CEO of Sophera Marketing, provides insights on why marketers are often reluctant to be measured, the differences between brand awareness and brand salience, and how to translate marketing metrics into financial terms that resonate with the C-suite.

In this episode of the Cambridge Marketing Podcast, measuring marketing effectiveness,

Richard Levy, Sophera Marketing (00:06):
One of the most important impacts when people are measuring effectiveness is the quality of the creative. Therefore, what I would say is that when you look at your advert, got to look at objectively and say, what's the message I'm trying to get across? And if I was a customer, what would I think when I looked at this?

Key Points

  • Marketers are often reluctant to be measured because they are unsure of the true impact of their efforts and tend to focus on metrics that make them look good rather than being fully transparent. 
  • Brand awareness is different from brand salience - salience is more important as it measures whether a brand is top-of-mind when customers are making a purchasing decision.
  • Marketers need to speak the language of the boardroom and translate marketing metrics into financial terms like revenue growth, profit, and customer lifetime value to be taken seriously by the C-suite. 
  • Short-term marketing effectiveness can be measured through immediate sales uplifts, while longer-term effectiveness can be measured through brand tracking and metrics like reduced customer churn and increased market share. 
  • The quality and creativity of marketing communications is a key factor in their effectiveness, and marketers should always strive to see things from the customer's perspective. 

 

Podcast Transcript

Transcripts are auto-generated

Announcer (00:23):
This is the Cambridge Marketing Podcast.

Kiran Kapur (host) (00:26):
Hello and welcome. This week we are looking at marketing effectiveness and marketing measurement areas of marketing I know from teaching that people can really struggle with, and I'm delighted to welcome Richard Levy, CEO for Sophera Marketing, which is a marketing consultancy for SMEs. You are also a tutor at the college, Richard. So welcome. Why are marketers so reluctant to be measured?

Richard Levy, Sophera Marketing (00:54):
Why are they so reluctant to be measured? It's a good question. Probably because they're unsure of the impact they're having themselves if we are brutally honest about it. So therefore, we tend to look at metrics that make us look good and not really go through a really follow process where we can be open. And if you look at most marketing budgets, they're often the second or maybe even the first or the third, but then the top three of budgets given by companies and therefore it's quite a large outlay for the business. Therefore, the business has the right to say, what am I getting back for it? And unless the marketeer has extreme confidence in what they're doing, sometimes these things can be difficult to measure. So if you look at, what we tend to measure is very sort of short-term impact. So for example, we will tend to measure Google AdWords for example,

(01:53):
Because we can know that 500 people clicked on it, X amount of people came to the website, X amount of people converted. This was the cost, it was, this is the lifetime value of the customer, therefore everyone's happy that makes the marketeer happy, makes everyone happy. The reality is it's slightly not quite as how it works as you know, because 70% of people will click on an organic link, IE one that's not sponsored. So effectively only going after 30% of the market, many of those people might have been looking for us anyway. So the point I'm making is can we really measure incrementality, IE, what would've happened anyway? Should be discounted. It should be only things that happened because of what we're doing. That's quite difficult. And the second thing is that attribution is quite a difficult thing to measure. So for example, in a company I used to work with, we used to have a TV ad going at the same time we had search going.

(02:53):
And if you looked at it just from a numerical basis and people in finance love their spreadsheets, their numbers quite rightly, so then you would say search was working really, really well and this was the cost we were putting into search. This is what we were getting back. The reality is what you're seeing is the TV advert is having quite a big impact. It's making people maybe directly to our website, it's making people go to search, therefore search becomes the hero and people go, oh, the TV advert, we can't measure that, so let's not do it though.

(03:23):
There's an educational element to it as well. And then the last answer I would give to that question is because in B2B in particular where I tend to find myself a bit more these days, 95% of customers are probably not in the market today. Therefore this is about brand building and salient so that when they come in the market, they think of the brand. So there's quite that return on a south cycle in B2B can be anything from three months to 18 months, therefore it's relatively difficult to measure, therefore it's more long-term. And when we're working with a lot of companies that focus very much a quarter by quarter or half by half or even month by month, me saying to a CFO, "Don't worry about it. In 18 months time, you're going to get a nice return on this".

Kiran Kapur (host) (04:12):
Yes, I think that's a really good point. We can be very, very focused on this quarter, this quarter compared to last year, the next quarter and so on. And I think one of the things I also noticed, and I think is marketing's creative, how do you measure a creative output? So I think you are right, we do tend to measure things that look good, but I did want to pick up something that you talked about your TV ad and it was quite difficult to see the effect of that. Because the point about that is it's raising profile usually unless you are doing something specifically that you want people to buy from, on the whole it's profile raising. So how do you measure profile raising?

Richard Levy, Sophera Marketing (04:51):
Well, the way we did it is twofold. There's the short term and there's the long term. The short term is that what happens when you are, ideally you would be on TV 12 months a year, however, most people don't have budgets for that. And also seasonality makes that quite difficult. For example, at Christmas time, cost of television tends to go up because the supermarkets come in

(05:15):
As you know, or John Lewis come in and whoever, so therefore the costs go up. So therefore you can actually see the impact of what happens when you're not on TV compared to when you are now, there may be a lot of other factors involved in that as well, but that's just one way you can do it in the very short term, the better way to do it in my opinion. But again, Kiran, it evolves a little bit of honesty and willingness to put yourself out there. And a lot of people maybe for legitimate reasons, don't want to do that. What we did is we got a company like YouGov who are trusted implicitly to come in and say, "okay, this is the brand awareness" or the 'salience' as I prefer "today before the campaign". And then we're going to do a brand tracking once a year or once every nine months or 15 months, whatever it may be, but a reasonable period of time. And we will measure the brand tracking again, whether that be awareness, salience, recall, prompted recall, whatever it may be. The key there though, Kiran, and unfortunately even that on its own doesn't make a big difference because if you go to a CEO or A CFO and you say our round awareness has gone from 8% to 11% through argument's sake, the question they will invariably ask is so what?

(06:37):
Because okay, great. But it's then translating that into saying, well actually because of that customer lifetime value was extended, or we've got more clients in or we've got more valuable clients in. So relating it to pounds and pence rather than a metric that you and I would chat about. But when you're talking about it with other people about the effectiveness, very key in my opinion that you take it back to the commercial aspect.

Kiran Kapur (host) (07:04):
That's very interesting. So there were a couple of jargon points you made there, which I just want to pick up on. So you said "prompted recall and non prompted recall". So do we just quickly cover off what those are?

Richard Levy, Sophera Marketing (07:14):
Yeah, yeah, absolutely. So 'prompted recall' would be, for example, let's say a car. If you said name your top three car brands and you said BMW, Mercedes and Jaguar, they would be prompted recall, right? No one has given you any kind of hint. And then if someone says, have you heard of Renault? And you say, yes, clearly you still have the awareness of it, but they prompted you to it. What you really want to be if you can be is in that unprompted because clearly it's better.

Kiran Kapur (host) (07:47):
You really want to be as unprompted amongst your customers as well or your potential customers. Yeah, I don't necessarily need somebody who is never going to buy from me to be able to prompt me. And the other word you used was "salience", which you said "you prefer to brand awareness". So what's the difference between brand awareness and salience?

Richard Levy, Sophera Marketing (08:04):
Yes, it's a really good question. So we'll use British Airways as an example if we can here. If you ask most people in the UK who fly name an airline, 99% will probably say British Airways within those top three. If you then say, well, when it comes to booking your summer holiday, what airlines do you consider using? The number that said British Airways will dramatically decrease, let's say to 5%. I mean, I dunno what the numbers are, but let's say to 5%, that's salience. So effectively it's coming into the mind when you're actually making a buying decision, which is far more important than awareness in my mind. We obsess as marketeers about awareness. Actually, if you don't come to mind when someone's in that buying decision process, they're not really in the game whether they've heard of you or not.

Kiran Kapur (host) (08:57):
And that's particularly important to B2B, isn't it? They're being in those sort of top few that people think of when they're making a buying decision

Richard Levy, Sophera Marketing (09:05):
A hundred percent because if you're not there, you're not there. And so you can't even be sort of thought about. So one of the marketeers job is to make sure we are in that when they're making that buying decision, we're in that consideration set.

Kiran Kapur (host) (09:18):
One of the things I know you're very keen about is using the language of the Boardroom and using the rights of language. And you started to say that when we go and see the CFO, they're going to go so and so you were relating what we think of as marketing, marketing awareness into something real. So can you give me some other examples of where we should use the language of the Boardroom and what we should think about?

Richard Levy, Sophera Marketing (09:38):
I've honest, if I could turn back time and start my career again, this would be the one lesson that I wish I'd known 20 odd years ago. Because as marketeers, we tend to get very fixated on our own jargon. Brand equity, brand awareness, salience, whatever, NPS, whatever the metric is that we particularly like at the time. The reality is that your best friend needs to be the CFO. They're really, really important stakeholder because they're the one who often as the strongest relationship with the CEO and they're the person the CEO turns to. And what the CFO wants to see is how marketing is increasing one of two things, invariably either the top line which is revenue. So in basic terms, that's money coming into the business. So if you think about it as an individual, that's what you get paid each month is effectively your revenue, and that's the top line or the bottom line, which is your profit though again, take my individual what you're left with at the end of the month so you're not spending more than you're bringing in.

(10:40):
If we go back to marketing, the question is how does marketing impact that top line or the bottom line? Now the challenge that a lot of marketeers will have is that they'll say, well, I don't really control the pricing. I might have an input in it, I might not. But nevertheless, a lot of commercial leavers are not in my control and that's a very fair point. But nevertheless, when we go to those board meetings or the C-suite or however you wish to phrase it, we have to talk in financial terms. That could be we acquired new customers that could be we acquired customers that are worth more. That could be we extended the customer lifetime value. That could be that we were losing 20% of customers a year, that's what it was costing us. Now we're only losing 15% of customers a year, therefore the 5% gap means we're saving this amount of money.

(11:27):
Unless we're talk in financial terms, we are rarely going to ever be taken seriously. If we go into a boardroom, I promise you this, from bitter experience and we talk in marketing terms or we talk about emotional connection with the customers and all the stuff that you and I love talking about, people will nod away in the boardroom and then when you leave the room they'll say, okay, now let the grownups talk. And you do not want to be in that position. I would urge any marketeer out there, understand the numbers. You don't have to be a finance expert, but you have to understand revenue growth, profit, net, profit ebitda, how these things are calculated so you can have those conversations and I promise you, you'll be taken a thousand times more seriously.

Kiran Kapur (host) (12:12):
Yes, I think that's really good advice. I think all of us start our careers talking about the colours and the emotional connection and then at some point the penny drops and you go, "ah, yes, actually I do need to understand the figures". So can you give me some examples of some of the measurement tools that marketers could use and then perhaps we can look at how those might translate into financial terms.

Richard Levy, Sophera Marketing (12:34):
Yeah, I mean I would always split it up between the short term and the long term. And the difficulty for the marketeer, Kiran, is you have to be able to do both. There's a great quote by the former CFO of Pepsi, we're talking about marketing measurement. When he said, "Anyone can do the short term, anyone can do the long term. Most people can't do both". And that's a quote that I think most people should sort of remember. So short-term measurement tools is often an immediate (i.e. in the next three month) uplifting sales quite honestly, or uplifting revenue or uplifting customer numbers. That's not very difficult in my experience to measure. You start off selling a hundred units per month, you do a bit of a marketing campaign that goes to 120, 130. You can say, well actually this is what we did. The difficulties is without making it really complex, is there's often external factors that matter.

(13:25):
For example, if you're now selling umbrellas and the weather (as it is when you and I talk is unseasonably hot) most people aren't going to be that interested in umbrellas, right? T-shirts, conversely they will be. But nevertheless, I think if you could say, we did a campaign, this was what we've got out of it, everyone's going to like that. Those campaigns in my mind should be very product focused, buy now, almost direct response. You're just trying to get an immediate uplift in sales to say, this is what we got back. The longer term as we touched on it is harder to measure, especially in things like B2B, which tends to be a longer sales cycle. I would always suggest you do some degree of brand tracking to see where you were at the beginning to see where you were at the end. But you have to convert that into numbers.

(14:11):
How do you do that? If you look at the much maligned marketing funnel, which I still think is as relevant today as it's ever been, but maybe that's a topic for our next podcast, I dunno. It is about numbers coming in the top and numbers coming down the bottom. Now how they get there, the customer will be very multifaceted. We don't buy toothpaste the same way we buy cars. You can't have one funnel that does everything. But nevertheless, if we can show for the long term that we're getting more customers in that the lifetime value is increasing, that the number of times they use our product is increasing, that's a key one because a lot of times it is the light buyers that really are making a difference to us. People only buying our product once or twice a year. If we could you think of your Coca-Cola, I think the average person probably buys Coca-Cola 1.2 times a year.

(15:05):
Let's say there's going to be extremes, but average it out. If you could get that from 1.2 to 1.5, that's literally hundreds of millions pounds in extra revenue. So it could just be moving those measurements to say we reduced the churn, we increase the customer lifetime value, we increase the penetration, we increase market share. That's another one. If you're in an industry where that kind of data is available, how are we doing market share wise? That's always a good one. So there's various metrics you can use, but I also think we need to be honest with ourselves that not every campaign is going to resonate. There's an enormous amount of noise out there. People are seeing communications left, right and centre. We have to be honest with ourselves as well, are we spending enough money? Is the positioning right? Is the messaging right? Is the targeting right? Lots of factors.

Kiran Kapur (host) (15:55):
So one of the things I think people will be interested to know is how expensive it is to do this measurement. So you've talked about using YouGov for brand tracking, that sounds really expensive. YouGov is a big organisation,

Richard Levy, Sophera Marketing (16:10):
YouGov is, and you don't have to use, I mean I just used it as the example because they had salience in my mind that when I came to the buying decision, YouGov came into my mind. So therefore well done YouGov! But you could actually get a much smaller agency to do it. The key is that you speak to a representative number of customers and that each year you effectively ask the same questions. So you have a very consistent benchmark. So you don't start each year changing those questions around. So it's very difficult to measure apples via apples. The reality is, as marketeers, we should know who our customers are, we should be talking to our customers, we should have a familiarity with it. There is a bit of this that you will feel naturally if you are more out there, if people are more talking about you, there is things like social listening for example, that increasing.

(17:02):
Are you getting more hits to your websites? You can go onto a million tools to see what's going on with your website. Are people staying longer? Are they reading Hopefully the rich and deep content that you are putting on your website. So what pages are getting hits are people then talking about you? You made a very good point earlier, which I just would like to reiterate. This only matters if it's people who may end up buying your product. I don't care if people are talking about you, if they're not in the market for your product, it's a bit of a waste. So I think there's, if you haven't got the finance to go to a brand tracking, think about all those elements that you own. If you look at the website, you own the socials you own, it's not difficult to set up tools. In fact, even if you went to something like Google Trends, which is a free tool type in your company name, you'll be able to see how many people have visited, have searched for your brand name and it will show up over five years, 10 years, one month, one week.

(18:04):
Even that matters. However, I still go back to my earlier point that when you're talking to the C-suite, you have to relate that to 20% more people have come to our website, 5% more people have bought, this is the impact it has, but there's a hundred tools out there that will tell you, if you want to do it yourself, the impact you're having.

Kiran Kapur (host) (18:24):
I thought that's really interesting because actually as you were talking and I thought, yes, it'd be lovely to talk about and I can imagine in marketing department getting really excited. We've had the dwell time has increased by three minutes per page. But yes, if you took that to C-Suite, they would very much say, "Well, yes, thank you very much and let's now talk about proper things". So yes, it's a really good point to then translated into something real. I think the one thing we haven't really talked about is, I said this was a podcast about marketing effectiveness and marketing measurement. Is there anything around marketing effectiveness we haven't looked at? Because we are sort of going, we are assuming that it's all about dwell time and salience. Is there anything else we should be thinking about?

Richard Levy, Sophera Marketing (19:09):
Yeah, I think the two most important things, one of them is a bit unfair and one of them is more than our hands. So let's talk about the unfairness first.

(19:19):
Big brands would always have a very, very big advantage from an effectiveness point over small brands. If HSBC spend a hundred thousand and a smaller business spend a hundred thousand, the a hundred thousand will create more recollection than our a hundred thousand. So that's the first thing. There's nothing we can do about it, but just be aware of it. The second element is that one of the most important impacts when people are measuring effectiveness is the quality of the creative. And by Bass Institute, who you'll be familiar with, did a study a few years ago where they got people to watch television adverts and then ask them the next day, what adverts do you recall? Now these are people who sat there during the break and watched these adverts. A shocking 86% of adverts could not be recalled the very next day.

(20:14):
So that means that they are literally, you could argue ineffective, total waste of money, 14% of adverts actually making some degree of a breakthrough. Therefore, what I would say is that when you look at your advert or you look at your communications, it doesn't have to be a TV advert, it could be newspaper, it could be a flyer that you give out at an event. You've got to look at it objectively and say, what's the message I'm trying to get across? Does it come across in a powerful way? Does it just fit in with everybody else? And if I was a customer, so let's be market orientated. If I was a customer, what would I think when I looked at this? And the best way to do that is because you are not the customer, you're working for the company. So you inherently, but it could even be your work, is to actually ask customers what do they think?

(21:04):
I've got to be honest, Kiran, I'm really disappointed when I see some of the adverts that are out there, some of the communications that are out there, they're very factually based, they're not emotional. I saw one the other day from a remittance company Send Money Now, and I'm thinking, what's behind that? What's the insight that's led to you putting what you put on it though? Be part of the four T and think of it differently. Try and be creative and always, always try and see it from the customer's point of view. Would this make a difference to the customer? And if it doesn't, this isn't something we should be doing.

Kiran Kapur (host) (21:42):
Yes. And I thought your earlier point about when big businesses spend the money, it's partly because they have spent the money beforehand so they can build on that past history. And so when I see an advert from, I dunno, mark bets, I'm reminded of who they are and I've seen adverts from them before, I've walked past the store or whatever it is. But if I sit there and try and do that, clearly I can't have the high street presence, I don't have the history and so on. So I thought that was a really, really good point. So if I'm sitting here as a student thinking, okay, you've convinced me I need to know about marketing effectiveness, I need to know about marketing measurement, where do I start?

Richard Levy, Sophera Marketing (22:21):
That's a very, very good question. The first place that I would start is that there's three ways that I would do it. Firstly, there's a really good book out there, and I'm sorry it's not a page turner, but it's an important book, which is Finance for Non-Financial Managers, which actually explains in relatively simple terms, our finance work. It gives you just that base knowledge. I do say to all my students that this is your summer reading, but I think that's really, really important. We will have great resources now. I would definitely be on LinkedIn. I would follow people like Dr. Grace Kite who's a bit of an expert in marketing effectiveness, Helen Edwards, Mark Ritson, all the sort of big leading people in our time, whether that be via Marketing Week, whether that be on YouTube, it doesn't matter, just type their names in and you'll see it come up.

(23:15):
But there is stuff we can do ourselves, Kiran, which is just be really honest, if it was your money, and I have this now, I run my own marketing consultancy business, so it is my money literally. And it makes you really think, don't be overcautious because in the end you wouldn't spend anything. But if it was my money, would I spend it and how would I measure it and how would I truly scrutinise that? And if you do that, really you should be in a good place. And also don't be afraid to fail. Not everything is going to work, but if didn't, the person who hasn't failed is the person who hasn't tried to do anything differently. So don't be afraid of that, but also learn from it, move on and do it differently the next time.

Kiran Kapur (host) (23:57):
Sorry, I was just going to go back over the book. So it was finance for non-financial managers. Would this be Gene Siciliano?

Richard Levy, Sophera Marketing (24:04):
Yeah. I mean it's on Amazon, it's on the usual kind of places that you would find. I think it's even on Audible. I actually wouldn't, I'm a great fan of Audible and Stanley, but for this I think you probably need the book. It shows. It actually shows it. And also the other thing you might want to do is if you go and you meet with your finance colleagues and you say, can you just talk me through what's important in your world? How do you measure staff? How would you learn marketing to be evaluated? The credibility you will get and the respect you will get will go through the roof because very few people will do that. I talked about right at the beginning, your best friends, the C ffo, talk to them and say, what is it you'd like to see from marketing? What is it we're not giving you? What numbers would you like to see? And I think if you can work in partnership with those departments and also they'll help you say what's on your mind, what's the most important thing for you this quarter or this half or this year? And if you can then tie how marketing can help with that, I think you're going to be in a pretty good position.

Kiran Kapur (host) (25:04):
I think that's a stunning piece of advice, and I wish I'd known that at the earliest stage of a career. Richard Levy, CEO of Sophera Marketing. Thank you so much. That was really a tour force on marketing effectiveness and measurement. Thank you very much indeed.

Richard Levy, Sophera Marketing (25:17):
My pleasure. Thank you for having me on.