• http://www.rimmkaufman.com George Michie

    Another great post, Andrew.

    We agree that the 6 figure solutions are probably the wrong way to go. I’m a big believer in careful experimentation with budgets here. Do the best you can with the data you can see, recognizing you’re never going to understand everything. Then, try moving in the directions the data suggests and see if the ratio of overall marketing spend (online, offline, the whole nine-yards) to total company revenue (online and offline) still looks good. If so, move the rudder a little more (pulling back TV ads in favor of something that seems more cost effective, or whatever). Be ready to move the rudder back if the spend ratio gets out of whack.

    The direct marketing folks have an easier time modeling this stuff and making accurate predictions. Modeling can provide useful guidance, but we’re never going to get the whole picture as you so eloquently point out.

  • DanEggleston

    Andrew,

    I’m glad that my recent Mediapost article is spawning an interesting debate about attribution. MMA’s core business is helping clients understand all factors (media and external) impacting their sales volume and profitability. However, we are an independent analytics company that does not receive commissions or incentives on how our clients spend their media dollars.

    Nobody is debating the fact that online media (and paid search in particular) is often the most efficient media vehicle in the media mix. Even after accounting for the contribution of offline media and brand equity, for many clients this would most likely still be the case.

    Marketers cannot make intelligent decisions about how to optimize their overall marketing mix if online attribution models are calculated using a different methodology than is used for offline media ROI. Our efforts in building holistic models that incorporate broadcast, print and digital media aim to understand the relative contribution and combined impact of each medium.

    We hear from our clients all the time, “We know that online marketing is efficient, but we do not know how much we should spend on it.” Digital agencies have done a fabulous job at helping clients understand how to optimize across creative units, sites, keywords and ad unit types. However, in our opinion, they will not be able to justify larger budgets until their clients’ ROI metrics are calculated on the same basis as the models that are frequently used for optimizing traditional media spending.

    Respectfully yours,

    Dan Eggleston