The National Retail Federation (NRF) CMO Council published its inaugural study this year. The topic explored how CMOs are doing marketing budget allocation to drive in-store sales. 27 CMOs from varying companies were surveyed. They talked about budget changes, choice of channels, measurements they take and challenge of revenue attribution. Research outcomes reflect the suspected tendencies of rise of digital marketing and complexity of cross-channel/ cross-device marketing. Here are the top takeaways.
Marketing budget allocation to digital media is growing
Traditional media channels are still viable and bring measurable chunk of sales to brick and mortar stores but the role of digital media is gathering momentum. According to mentioned study, about 50% of CMO’s expect their traditional marketing (print, TV, newspaper…) budget to stay same as 2014 and another quarter said it will be lower 6% – 20%. It’s quite the opposite with digital.
“Digital media budgets are increasing for most of the CMOs surveyed: 17 are increasing their budgets between 6% and 20% over 2014, while 6 of the 27 will increase
digital media spend fully 20% or more.”
Many of the surveyed CMO’s reported increase in paid search, email, social and text based marketing which proves the importance of digital marketing.
Sales is the best performance indicator
In the past several years retail has taken a very sharp turn from traditional channels to digital and retailers must be ready to tackle the digital in full power. Especially this responsibility falls on CMO’s shoulders – the decisions on their side will impact overall revenues of the company. In the age of “multi”, “cross” and “omni”, budget allocation is getting more complicated thus having insights on where to spend is crucial. It is thus important to have a key performance indicator in measuring success.
The chart below illustrates the choice of metrics retailers consider as the major indicator of well performing marketing. By far, retailers point out sales as their top metric.
Attribution is the biggest challenge for CMOs
It’s a lot more complex matter than it may look and most retailers realize that. As Kathy Dole Thomas writes
“For retail marketers, measuring the effect of traditional marketing efforts on in-store sales has become as much science as it is art… challenge is finding a “silver bullet” solution to measure across every touchpoint and identify the exact channel that prompted that purchase.
The science here is in attributing the sales to the right drivers. One of the big challenges is the multi-touch customer journey. As per the CMO Council study
The proliferation of devices is proving particularly challenging to measure the sales impact across multiple touch points”.
Indeed, the greatest challenge identified by the surveyed CMOs was attribution.
Single-touch attribution is destined to failure
The challenge with attribution is not new. Even in 2014, the barriers to attribution were identified in “The State of Retailing Online 2014: Marketing”:
- Recognizing customers across devices (51%)
- Connecting data across devices (46%)
- Obtaining consistent, accurate data across devices (29%)
The 2015 CMO Council study delved deeper into the root cause
The customer shopping journey by now stretches across online touch points (site visits, display ads, email social affiliates and more), across desktop and mobile devices, and further across physical stores and traditional media. However, many attribution models only take into account several touch points, not the full spectrum of touch points that a customer may have engaged with. 61% of retailers surveyed for “The State of Retailing Online 2014” simply use a “last touch” approach, whereby the last touch point receives all attributed credit. Similarly, 4% use a “first touch” approach.
The problem with “Last Touch” or “First touch” attribution is that it gives complete credit for the sale to a single touchpoint. The workaround calls for a silver bullet, as per Kathy Doyle Thomas, CMO of Half-Price Books. Fortunately, there is one. It’s multi-touch cross-channel cross-device attribution.
Multi-touch cross-channel cross-device attribution
The best path forward is to recognize that the customers’ shopping journey
- spans multiple devices
- has many touch points
- may not touch the retailer’s website (viz. Facebook likes, shares etc.)
- and may cross channels from digital to offline for the sale.
The right way to do the attribution is to assign weight to every channel according to
- the length of the shopping journey
- the sequence of touchpoints
- the statistical impact of the touch to the outcome.
A visualization of the attribution is shown in the conceptual graphic to the right. The channels are weighted based on their contributions in a simple three-stage journey comprising the acquisition, conversation and the conversion stages.
To learn more about how Infernotions’ revenue attribution technology helps retailers make the best choices in budget allocation, test our tool first hand.