By Jared Shaner, CRO & partner of forward-thinking e-commerce agency Trellis, overseeing the agency’s client success, strategy, marketing and growth.
As marketers, we are always looking for ways to measure the effectiveness of our advertising campaigns. Traditionally, we have relied on metrics such as return on ad spend (ROAS) to gauge the success of our marketing efforts. However, with the introduction of iOS 14 updates, it has become increasingly challenging to determine the true ROAS of campaigns. This has led forward-thinking marketers to explore new key performance indicators (KPIs) that can provide a better understanding of the efficiency of their marketing decisions. It is important that marketers realize there is no “one-size-fits-all” metric for them to measure their success; they should have a toolbox of metrics they use to measure their unique business use cases.
But I put forward that no matter the situation, marketing efficiency ratio (MER)—which calculates the efficiency of your marketing spend—is safe. MER offers beauty in simplicity, as—plainly put—it’s one of the easiest metrics to calculate. It is the total revenue generated divided by the total media spend across all channels. In other words, how much revenue are you generating and how much are you spending as a whole to get eyeballs on the brand to drive that revenue?
When selecting the metrics by which you measure the efficiency and impact of your marketing, I think it is also important to not get too tied up in the numbers and to focus instead on some of the fundamentals and ideas that drove success even before the internet. Some such examples include:
Think Beyond Marketing
One of the biggest mistakes that marketers make is focusing solely on marketing efficiency without considering the bigger picture. As marketers, we should aim to drive growth across the entire business, not just through marketing. Therefore, it’s essential to think about the impact of our campaigns on other business metrics, such as the average order value (AOV) and cost of goods sold (COGS).
Remember That UGC Content Is King
Today’s consumers have a short attention span, and they are bombarded with ads everywhere they go. Therefore, it is essential to create engaging user-generated content (UGC) that can grab their attention and keep them engaged. Brands should focus on creating content that resonates with their target audience’s interests and encourages them to engage with their brand.
People want to see people that “look like them” and hear their experiences; therefore, user-generated content garnered through reviews and social posts can be absolute gold. We have seen 50% or higher engagement with UGC-formatted digital ads compared to traditional branded ads. That means, of course, that you need to be able to source this golden UGC content from somewhere; therefore, it’s integral to build incentive programs that drive the creation of UGC in reviews and social posts. You can do this through loyalty programs or similar reward offerings for customers who are strong brand advocates and share their experiences. Once a brand has built up a treasure trove of UGC content, they should thoughtfully deploy it across all mediums that their customers interact with, whether that is on the websites where they shop or through digital ads on their favorite social platforms.
Consider All Mediums
Today’s consumers interact with brands across multiple platforms, such as social media, email, search and more. Therefore, it is essential to develop a unified marketing strategy that creates a consistent message across all touchpoints. By doing this, brands can increase the likelihood of conversions and reduce ad fatigue.
Build A Relationship
Finally, one of the most critical aspects of marketing is building a relationship with your customers. The fastest-growing channel for our clients at Trellis is email and SMS marketing; brands should use these channels to interact with their customers via personalized messages that create a connection. By doing this, they can create loyal customers who will keep coming back for more.
The marketing efficiency ratio (MER) is an essential metric that I believe every marketer should be using to measure the success of their marketing campaigns. It gives a more holistic view of the efficiency of your marketing decisions, which allows you to make informed decisions that drive growth across the entire business. However, it’s important to remember that MER is just one of the many metrics that marketers should use to measure the success of their campaigns. Brands should also focus on creating engaging UGC content that resonates with their target audience, developing a unified marketing strategy and building a relationship with their customers. By doing so, they can create a loyal customer base that will keep coming back for more—which in turn is likely to continue to improve the overall MER.
