Dismissing Wanamaker: you can find out which “half” of your advertising spend is wasted
“Half the money I spend on advertising is wasted; the trouble is I don’t know which half”
John Wanamaker (allegedly), 1838-1922
It is a classic quote, one presented to every budding marketer in introductory courses; repeated so often it became the fundamental principle of advertising. And for a while there, it might have had an element of truth to it. But enter the digital age of big data, machine learning and artificial intelligence and this principle has become as outdated as the geocentric theory.
The problem is, unlike the geocentric theory, marketers still live by Wanamaker’s principle.
When that time of year arrives during which budgets are allocated, you can find marketing managers scrambling to find enough evidence to justify theirs at the C-level. What was the ROI for that big Facebook campaign last fall? Did the branding departments’ television campaign result in more website entries? Exactly how much was even spent on advertising over the past year?
With the right analytics software solution, you can track the performance of all your on- and offline campaigns. You can find out what each campaign contributed to the number of conversions, which media channels were effective, and calculate the marginal return on investment of every euro spent as well as predicting it for future investments. This is extremely valuable; an analytics solution can continuously show marketers, management and the C-level where the money was spent and what it delivered. Adding on to that, it can predict the effect of future marketing activities.
Some examples of what analytics software can help you achieve:
- Multi-touch attribution allows you to map complete online customer journeys and shows you how much each touchpoint in the journey contributed to a conversion.
- It can determine the long-term and immediate impact of offline media channels such as TV, radio and OOH on online KPIs using media mix modelling. This model can also be used to incorporate the effect of pricing or promotions in analyses.
- On- and offline spend, campaign effects and KPIs can be consolidated in a unified model, providing you with a holistic view of all marketing activities and allowing you to accurately compare results.
- The expected return on each euro of additional investment at a chosen level of budget can be calculated per channel, campaign or even per sub-campaign.
- Based on historical data, the effect of future media investments can be predicted and an optimal budget allocation can be determined at granular levels.
Being able to support internal budget decisions with data allows marketers to answer essential questions and build a stronger case internally. It also makes reallocation decisions throughout the year much easier. Working with an analytics solution means there is one company-wide ‘truth’. When all departments and external agencies are working with the same data, analysis results and success metrics, the steering of campaigns becomes much less ambiguous. Live campaigns can even be adjusted on a weekly basis according to their performance.
Although the “half” in Wanamaker’s quote should not be taken literally, as even 100 years ago that would have been quite the achievement, it is time to stop wasting your advertising spend on saturated channels and determine the exact effect of your advertising spend. With the right analytics solution, optimizing your budget allocation across channels and campaigns is not only possible, it is easily attainable.