While most people try to avoid running in circles, marketers are always striving for it. They are on a never-ending quest to sustain a true closed-loop marketing strategy, which includes:
Unfortunately, closed-loop marketing isn’t as easy as “rinse and repeat” if you don’t have the right technology and practices in place to seamlessly connect one phase to the next. Establishing an ongoing cycle of measurement, optimization and activation is key to maximizing your marketing efforts. Finally, you will not only know which half of your marketing budget is wasted, but you’ll also know where to reallocate that budget to boost performance and maximize return.
Phase 1: Measurement
The foundation of a successful closed-loop marketing strategy starts with unbiased measurement of marketing effectiveness. Most marketing plans are complex and multidimensional. They may include multiple media channels and campaigns that each have their own set of tactics and messaging. They may be designed to target different audience segments, or seek to attract new audience segments. So your measurement needs not only to account for each of these unique dimensions, but also attribute the right amount of credit to each one based on its impact on key performance indicators.
Having a single measurement currency that can be applied to all channels and dimensions in order to quantify the true impact of your marketing efforts at a very granular level is critical for accurate measurement. It is this granular understanding of what’s working and what’s not that enables the next phase of a closed-loop marketing strategy.
Phase 2: Optimization
Understanding how each marketing dimension impacts your results is fantastic, but it’s meaningless if you don’t have a way to use that information to effectively optimize your marketing plan.
It’s not enough simply to shift more budget to what works and reduce budget for what doesn’t work. Each channel, campaign and tactic is subject to diminishing returns, and there are dozens of media and business constraints that every marketer has to consider. For example, marketing budgets aren’t limitless, media inventory has a cap, and some commitments can’t be canceled. Additional variables, such as new product launches, business policy changes, and seasonal and economic factors, must also be taken into account.
Closed-loop marketing requires tools that automatically factor all these constraints into the planning process, along with the attributed performance results, in order to ensure that the output is an optimized and realistic marketing plan that can be executed during the activation phase.
Phase 3: Activation
Activation is the third phase of the cycle that puts your optimized plan into market. Ultimately, activating a new plan produces new measurements that trigger the process to start all over again, creating a continuous closed loop.
There are two ways to activate an optimized plan:
1) Non-automated activation that requires marketers to manually adjust media insertion orders, creative rotations, etc., based on the optimal plan.
2) Automated activation that distributes media buying instructions to programmatic platforms via APIs or bi-directional integrations for real-time optimization.
The more you can shift to automated activation, the faster the process can be repeated to drive better business results in less time. Every time the cycle reaches the point of activation, more data is then fed back into the process, creating new measurements and increasingly accurate recommendations for optimization.
The learning process of a closed-loop marketing strategy never ends, because media consumption and consumer behavior are always changing. So your marketing must be prepared to quickly adapt to those changes every time a new plan is activated. You could say that running in circles is the only way to move forward!