July 31, 2017
For years brands and marketers have been chasing the best cost–per-inquiry (CPI) because it translated to the most efficient cost-per-sale (CPS). Ten years ago when a lead was a lead, we could confidently determine with call tracking lines and unique URLS where each inquiry came from and assign an advertising vehicle responsible for generating that inquiry. Being able to determine where the inquiry was coming from created the following easy equation:
One Print Ad Placement = $1,000 (divided by)
Total Inquiries from the Print Ad = 10 (equals)
Cost-Per Inquiry = $100
Well as the saying goes “times they are a changing;” technology has advanced and evolved our capabilities. In this article we will explore why managing to CPI limits your marketing’s impact. You’ll understand common pitfalls and the difference between integrated marketing versus fragmented marketing. Lastly you’ll gain insight on how to create a strong marketing mix that will generate the best return on your investment.
Attribution Marketing Model
The way in which we process information and make decisions continues to evolve as digital intelligence increases. Think about how you receive and process information now. You may see a TV commercial, billboard or print ad or hear of an interesting product or service on the radio, but you don’t pick up the phone or head straight to the store anymore. Unless it is that non-stick frying pan seen on the infomercials, you are going to head to the internet to research what you are interested in. Our customers are even more digitally reliant than we are when making any decision from minor to life changing. Customers are not just looking at your website to find out about you, they are digging deeper and further than ever before.
Since the way we shop has evolved, the way we calculate CPI has to evolve as well. This is called “The Attribution Marketing Model.” In a recent study, Gragg Advertising explored attribution as prospects reach various offline and online marketing touchpoints such as: TV, radio, print direct mail, pay-per-click and web forms. We analyzed data over a two-year period to understand the impact various channels have on lead attribution. The data determined that 44 percent of all TV advertising inquiries are transferred to online sources. This source confusion may happen for a number of reasons. One example being that your TV advertisement may have a unique tracking phone number displayed, but the prospective customers responding to the ad contact you via the main telephone line instead.
The accompanying infographic illustrates the attribution passed from traditional sources like TV, radio, print and direct mail. Digging into the numbers further, the study found 47 percent of radio inquiries are shifted to other sources along with 43 percent of print (including magazines) and 29 percent of direct mail.
So how can you tell if the traditional marketing outlets are working for you? You now have to look at your marketing efforts as a whole to determine the correct CPI and CPS. Taken at face value, meaning only measuring a traditional media source by the dedicated phone line and unique URL, your CPI is going to measure extremely high. As a result, this skewed measurement would cause most to want to eliminate traditional marketing. However, realizing that your traditional marketing will contribute to your online sources will allow you to make smart decisions when creating the optimal marketing mix.
With the implementation of so many new digital channels the average institution’s marketing process has become fragmented and less efficient. One provider specializes in texting, another in online radio, a third provider for banner ad placement and so on. Now, without realizing it you can easily add more vendors to your marketing mix while simultaneously taking away from the success of the overall outcome.
Pitfalls of Fragmented Marketing
There are a few big downfalls to using multiple vendors in your marketing mix. One issue of managing several vendors is time management. As the marketing manager, you spend your days communicating from one vendor to the next—taking away time you could be using to strategize your marketing plan. Another issue that can occur from using multiple vendors is that each provider is looking out for their own budget allocation. They are not going to admit that another vendor providing another service is going to do a better job for fear of losing their “slice of the pie.” A third issue you might face with multiple vendors is loss of expertise. If a vendor only holds knowledge surrounding the one or two services that they provide, then they can’t begin to advise you on your marketing plan or partner with you to create the most efficient and successful program as a whole.
As the aforementioned data proves, traditional media is still working through our attribution modeling. On the other hand, fragmented marketing is hurting our overall performance by slicing up the bigger picture. Getting back to an integrated approach to marketing is a must for any marketer. This holistic, integrated approach will allow you to see how everything is working together. Using one agency or marketing department that specializes in all media channels will allow you to reallocate budget where you are seeing the most success quickly and efficiently. Within the integrated approach your brand message is clear and consistent using one voice and creative tone.
Components of a Strong Marketing Mix
If you’re ready to make the shift from fragmented to integrated, the following section may help serve as a benchmark for your strategy.
Considering the fact that over 40 percent of offline media shifts to online sources throughout the prospective consumer cycle, it’s important to practice a multi-touch point attribution model. This ensures both the first and last touch points are given credit for lead generation. Gragg’s recent attribution data reminds us how offline media continues to play a strong role in driving traffic and broadening your brand awareness in the community. Utilize seven to ten efficient marketing channels to reach new audiences.
The following channel breakdown is an example of a strong marketing mix to build for your brand. It illustrates the average budget allocated monthly along with the projected sales percentages based on averages.
- Third-Party Inquiry Generation 25% of your spend; 20% of your sales
- Digital 25% of your spend; 35% of your sales
- Traditional 30% of your spend; 30% of your sales
- Remarketing 10% of your spend; 10% of your sales
- Other Sources 10% of your spend; 5% of your sales
Consult your marketing team to take a closer look at each of these channels. Identify the strategies within each channel that work best for your business. When planning an efficient budget, remember to examine where your ad spend falls in relation to CPI and cost-per-sale. We call this the “Efficiency U.” Here’s a visual example that illustrates the ideal CPI that is in balance with the brand’s overall ad spend.
This chart breaks down a brand’s average spend within the digital channel pay-per-click. In this example the average ad spend is $15,000 and the average CPI is $150. It’s important to know the threshold for your particular campaign. The bottom of the “Efficiency U” is where you want your ad spend and CPI to meet in order to plan the most efficient budget.
Over the years marketers and brands have made significant progress in tracking CPI and campaign efficiency. If you are still building your campaign around CPI then you are limiting your marketing’s impact and jeopardizing your ability to hit sales goals. It’s time to shift the focus beyond CPI and direct inquiry generation. A strong marketing mix can translate to scalable success and sales growth.
Recent research shows just how much offline media continues to impact online sources. Traditional media such as TV, radio, print and direct mail are not dead. In fact, the attribution data proves these channels continue to play a strong role in driving traffic and broadening your brand awareness in the community.