The key to demonstrating return on marketing spend is to separate areas of investment and to not get overwhelmed by data which can’t ultimately provide attribution, according to Ariel Kelman, VP Worldwide Marketing at Amazon Web Services.
Kelman offers his advice as many marketers struggle to accurately show the return on their marketing budgets and align efforts with business goals, despite technology solutions which claim to piece together the attribution puzzle.
Kelman, who is responsible for leading the global marketing activities of Amazon’s cloud computing business Amazon Web Services, says marketing leaders are best served by segmenting their marketing efforts for greater accuracy, with the realisation that full attribution will not always be possible.
“Don’t think about it as one size fits all ROI,” Kelman told Which-50 last week following the AWS re:Invent user conference in Las Vegas.
“Be very specific to the different outcomes. And then secondly, for each outcome and program do not attempt to calculate things at a lower level of granularity than your trust is of the data.”
How to differentiate between marketing initiatives largely comes down to business outcomes, Kelman said. For example a paid search campaign should be measured against a business outcome such as new customers while a digital campaign may be more focused on generating awareness of potential product use cases like machine learning in AWS’s case.
“[In that scenario] you are not trying to get them to sign up… What we’re looking for in that case is a meaningful uplift in engagements with content.”
Kelman said some outcomes, like awareness, can be difficult to measure with hard data alone. When there is a confluence of messages and campaigns — the attribution puzzle becomes very complex, sometimes beyond what data can accurately discern, Kelman told Which-50.
“If you’re calculating the ROI you’ve got to be careful not to get seduced by the numbers when it’s not as precise as you think it is.”
Kelman said anecdotal evidence can supplement hard data to give a more complete ROI picture, one that fellow executives, including the finance department, are surprisingly open too.
“Develop a mental model for what works well and what’s useful based on anecdotes… If you get enough anecdotes then calculating the ROI isn’t as important… Don’t try and calculate ROI on things you can not actually calculate ROI on.
“If you really can’t measure it you should have an honest conversation with the CFO about why you can’t measure it but yet you still think it’s a good idea and what are the signals that you are going to take to show that it is either working or not working.”
“It’s really [about] having business conversations with the finance team and work with them as partners. That’s where it tends to work. They’ll come up with ways you may not have even thought of before.”
Technology is no silver bullet but is increasingly important
Nearly a third of marketing budget (29 per cent) is being spent on technology, according to Gartner’s latest CMO spending research, a significant rise from the last year (22 per cent) but still not surpassing the 2015-2016 period, when martech spending peaked at 33 per cent of marketing budgets.
Kelman argues spending a third of a marketing budget on technology should be a low bar as digital marketing and martech offers more efficient, targeted ways of reaching customers.
“If you’re not spending close to that much of your budget on technology you’re probably wasting money,” Kelman said.
“The the traditional mass market approaches — just doing print or online advertising that is not targeted — is incredibly expensive. A lot of these [traditional] tactics are not targeted. So the more targeted you can be you can deliver more effective messages for less money.”
“There’s a lot of companies that are very proficient in that and if you’re not good at it you’re not going to be competitive”