Kneebone Marketing Performance BLOG

Moneyball and Marketing Performance

So what does baseball have to do with Marketing?

This seems to be  a hot topic since the release of the movie Moneyball. For those that don’t know Moneyball is a movie that is loosely based on the experience of Billy Beane and the Oakland A’s. Billy Beane essentially changed the way that players were chosen based on getting on base which leads to runs, rather than the more traditional metric of RBIs, stature, likeability and gut feel. As a result he was able to field an effective team with a fraction of the budget. Now I am not sure how successful his technique is for the Oakland A’s, but the Boston Red Sox won the World Series by deploying the same method.  

Billy Beane used Sabermetrics: “the specialized analysis of baseball through, objective, empirical evidence, specifically baseball statistics that measure in-game activity” to make his player choice selections, and more importantly he used this method in real-time. If he saw a player that had the right stats, he would trade for that player that he knew was underperforming.

If you put this into the context of marketing, it sounds similar. Since the 2008 crash every marketing department was asked to slash their budget, the good ole Q4 cough up, except that is seemed to last a year or 2. Now that the economy is somewhat back on track marketers are asked to do more with less.

Marketers have attempted to be more accountable and piled on the Digital train because it was so measurable, now it is social media, and who knows what the next marketing trick will be.  But marketers are still spending on traditional media, according to emarketer TV spending went up 9.7% in 2010. {source} What marketers need is a way to get all the “in-game activity” and measure it all. To do so requires having access to all the data required that impacts a business.In order to better understand why this is a unique approach you need to understand what marketing uses today and an understanding of  the pros and cons of Marketing Mix Modeling, Customer Targeting, ROMI calculations.

"In many ways, Moneyball is a great model for how digital marketing—and marketing communications of all kinds—is changing right now. For decades, advertising and PR campaigns have centered on the Big Idea: swinging for the fences with a clever, provocative, or powerful concept that drove brands, hearts, minds... and, ultimately, business. How did it drive business? No one knew exactly, but the numbers—whatever their provenance—showed that it worked" Source: (marketingprofs) Read More

Marketing Mix Modeling (MMM)

Marketing Mix modeling  is an exercise that is usually conducted by 3rd party vendor that has a lot a smart  people collecting data and analyzing the data using very sophisticated  statistical methods. The top players are , Marketshare they have a “proprietary database of millions of results in 45 countries and all industries, and terabytes of data from digital partners”, Thinkvine has developed a unique way to capture the behavior of “virtual consumers” called Agent Based Modeling (ABM), MMA has been doing Market Mix Modeling for years, and most of the consultancies have a practice devoted to this activity.

So why is it good?  It provides a very valuable retrospective view of what your marketing dollars have contributed, you will get a great report, and perhaps a widget that allows you to play with the different spend levers to make decisions on future spend. This sounds great.  However, the problem that I see with this approach is that is not in real-time, market conditions are constantly changing and so is performance. I am sure that they can do real-time analysis using their models, but what I have not seen is how they show real-time tracking and reporting  of that performance from all the relevant data systems and display them easily for marketers to see.  The other problem that I see is that the analysis is confined to the original set of questions. So if you wanted to see the impact of TV on social media for a specific product and it was not part of the spec, you need to go back to the data well to get that data and then run another model. This is also a high cost approach.

I am not alone in this thinking "This grim reality is largely driven by the fact that media-mix models do not fully account for all relevant sales drivers and are therefore incomplete in their ability to drive proper investment recommendations" (Source CMO.com) Read more  

The marketer, who knows their business, doesn’t have time to wait to see if the expected performance had a statistical impact Marketers want to be able to make “in-game” decisions.  I am sure that if I was in a room with a group of market mix modelers they would chew me to pieces, but I am practical, if I spend on marketing it better be doing something and I should be able to see it easily and quickly so that I can make the next decision.,

Customer Analytics

Every bank in the world is trying to predict what I am going to do next, and when I will be ready to get into more debt. Companies like Omniture and Unica are masters of this stuff. For organizations that have serious CRM capabilities this is must and most of these solutions and internal Analyst teams have mastered it.

But my question to them is, if I need to cut my budget where do I stop spending? How do I know as a marketer which marketing channel is the most cost effective?  I may be told which customers to target, but it is pretty hard to attach a budget to each of them. From my perspective there must be a way to balance the right customers with the right channels that can be controlled by marketing through marketing investment. The better you get at targeting, the better channel performance you should see.

ROMI

ROMI (return on marketing investment) calculations seem to be the most complicated to solve and some organizations are capable of doing it, but there is no formal method that can be scaled and commercialized. Jim Lenskold does a great job in coaching organizations on how to best tackle this calculation but it most cases ROMI is something that internal stakeholders have decided to use as the right way. To be honest, if anyone is doing this good for them, they are far more advanced in marketing decision making than most.  Guy Powell , of DemandROMI is the expert in this area and author of Return on Marketing Investment.

So what do these analytic solutions have in common, they don’t show real-time performance, and they don’t consider all aspects of marketing from all marketing activities to the KPIs (key performance indicators).

So what do I suggest? Well being practical and inquisitive I like to forage to find performance. If am assessing media spend, I better have all the KPIs at my finger tips, I may not be driving direct sales, but if I am driving social media mentions or web clicks I may have found a new way to drive sales. I really believe that there is a balance between art and science for marketing, but you need to have access to the memory of your marketing. Marketing memory is a history of actual marketing activities, the spend, and your related business performance over time. It is the historical cause, effect, and result of marketing.

At the end of the day marketing performance is  not a matter of thinking differently; it’s asking different questions. In order for marketing to ask different questions you need to have access to all relevant data to create new answers.  For more information on help for your data see Advantages of a Universal Marketing Performance Data Model.

Marketing Performance Measurement or Management

So how do you create this memory, here are my 10 steps to the path of Marketing Performance Management (MPM).  

1. Don’t be afraid of the data – take the time to understand what the key drivers are and the data that supports those drivers
2. There is no such thing as a magic button – accessing and understanding your marketing memory requires a marketers intuition and data that is ready for analysis.
3. Don’t let IT drive the MPM bus – IT understands the systems, you understand what you need to make better decisions – marketing should be writing the spec and IT should find the solution to provision it
4. Your data will be wrong – just make sure that is wrong the same way all the time and that you are transparent in the business rules that have been applied <more on this blog>
5. Be brave and face the facts – what you will see will not all be good, you have to accept that the decisions that you made in the past may be wrong, that’s ok as long as you change what you do in the future.
6. Be realistic on what you can achieve and build on it – the chances of getting it all  are slim, but make sure that you start with something that is meaningful, show the value and that what you can expand
7. Build agile marketing plans – Test and learns are the only true way to see the impact of marketing in real-time. When you fail faster you get one step closer to better performance
8. KISS – use systems that make it easy to get at information and highly visual, don’t let formatting complicate what you need to learn
9. Create your own breed of analytics- there is no one right way, only what works for your company, and make sure that it is in real-time
10. Be curious – use your eyes and trust your gut, to paraphrase my partner, Mathematical Physicist John Wylie, “If you can’t see something with your eyes, chances are that there is nothing there.”So if you were interested in baseball, my apologies, I really don’t know much about it, but marketers need to change the way they think, so if baseball can do something differently, why can’t marketers?

Book a demo to see how marketing performance can help you!

Additional Resources:

10 factors to successful Marketing Performance Management

Advantages of a Universal Marketing Performane Data Model

Marketing Performance Visual Insights Gallery

Moneyball Marketing Links:

CMO.COM: Moneyball Marketing - Why analytics are critical win 

WPP: Moneyball Marketing 

MarketingProfs.com: Small Movement Matters - marketing lessons from moneyball on how to measure digital relationships 

 

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