CMO - The Chief Modeling Officer
In theory, I love it when digital budgets get cut. No, really, I’m not crazy.
Of course, the budget cuts need to be data-driven decisions -- supported by sophisticated media mix models that predict the impact and outcome of media investments.
Sure, that’s the way it normally happens… in my dreams.
How many marketers or agencies can look themselves in the mirror and say that they truthfully understand the right media mix for their business? That they understand the business impact of shifting investments from one channel to another?
The Elephant in the Room
Unfortunately, most media allocations are based on intuition and debate under the guise of collaborative channel planning, rather than a systematic approach to media mix modeling.
The first step is the hardest -- having the desire to seek the truth, even if it hurts, and even if it proves that the last five years worth of planning were inefficient. Marketers must have a willingness to venture outside of their comfort zone -- and trust me, that’s where you’ll be very quickly when you begin to take the right approach to modeling. But it’s outside of your comfort zone where the magic happens.
The Wisest Investment
Make no mistake about it; econometric media mix modeling is neither simple nor absolute.
However, CMOs today struggle with delivering results amid volatile economic conditions, rapidly changing consumer behavior, and increased demands of accountability. Therefore the best investments you make next year may be related to the analytics and insights that will help your teams make more informed decisions.
Data-Driven -- Not Just for Direct Response
All media spend, whether direct response or branding -ocused, has the same objective: to influence and sell product to consumers. The primary difference is where in the sales cycle you reach a consumer, and how long it takes to influence the sale. This is extremely overssimplified, but a fact nonetheless.
Even within the DR space, most agencies and marketers fail to use available tools like attribution reporting to properly model a digital mix and prevent duplicate tracking and over-crediting of activation channels like search and retargeting -- a huge issue that plagues every multichannel digital marketer, particularly retailers, whether they take the time to realize it or not.
The most significant challenge that digital media poses to large brand advertisers is that, unlike with traditional media, it’s hard to predict the outcome in the market. To a degree this is because of the small budget allocations to digital, but it is also due to the differences in media currency and the lack of corollary research on investment impact. Many brands believe in the power of digital media, but most have yet to quantify the marginal increase to their businesses as media dollars get shifted between traditional and digital media. We can talk ad nauseam about how digital is an essential part of the mix --and it is! – but we must do a better job at proving it.
CMOs Are Our Champions
CMOs are our marketing leadership. Part of their charter should be championing and inspiring “the right way.” Maybe the role of the CMO needs a fundamental shift. Maybe the transformation is underway already: a shift to “Chief Modeling Officer.”
Of course, media is just one cog within the marketing machine. CMOs are accountable for overarching marketing plans, and the marketing mix model, if you will. While every brand and business is unique, budgets are normally allocated to PR, advertising, CRM, events, collateral, promotions, and other buckets based, to a degree, on “the way we have been doing it” and the “if it ain’t broke, don’t fix it” model.
It’s about time we pushed accountability and modeling further than “not broke.”
Have any war stories about how marketing investment decisions are made? Leave a comment or hit me on Twitter @jasonheller