Assessing the value of marketing has always been a challenging task. The long-standing problem of there being almost no data available has been replaced by the opposite problem: there is far too much data. Every advertising platform has its own reporting system and different methods of evaluation, and the figures often contradict one another. At the same time, the cost of advertising is rising dramatically.
Marketing directors are therefore under greater pressure than ever before. They are expected to deliver better results every year, whilst budgets are growing only slowly, or not at all. Thanks to the availability of data, there is an expectation that every activity can be clearly evaluated. If something does not have a clear return on investment, it is difficult to justify the expenditure. As a result, most companies are unable to reliably answer the fundamental question of what actually works for them in marketing.
“Most companies know that the data they have contradicts itself, but they often pay no attention to it. When multiple sources provide conflicting information, they tell themselves that the truth is probably somewhere in between,” says Milan Knapp, Executive Director at Roivenue.
Same budget, lower performance
Marketing budgets are rising slightly in most companies, but returns are actually falling. Online shops are therefore paying more to maintain the same turnover as in previous years. This is due to the rising cost of digital marketing, which is also driven by growing competition from abroad with almost unlimited budgets. This is forcing companies to look for ways to save money, retain existing customers and acquire new ones at a reasonable cost.
More data, less certainty
Logically, therefore, they begin to analyse the data they have. However, individual sources only provide a partial picture of reality, mostly from their own perspective, and it is challenging to make sense of it all and subsequently make the right decision. Marketing teams often know that a particular activity works, but they lack the right data to back up such a claim. As a result, priority is often given to channels that, at first glance, appear to be a ‘safer bet’. However, these often simply bring in a customer at the right moment – a customer who would never have come if the brand hadn’t previously communicated with them via precisely those channels that often show no extra performance. “The biggest problem is that companies optimise based on metrics that don’t actually reflect reality,” explains Knapp.
Most teams therefore combine data with their own experience and gut feeling. Whilst testing different campaigns and approaches is gaining popularity and is undoubtedly the right thing to do, if teams are unable to evaluate these experiments clearly, their decisions often unwittingly undermine what was actually working. “In our experience at Roivenue, this is one of the most common reasons why marketing gradually loses effectiveness without companies even realising it,” comments Knapp.
Three mistakes that companies keep repeating
The current situation follows a common pattern. Companies most often repeat three mistakes. They lack a single source of truth that is used across the organisation. Secondly, they add new channels instead of making full use of existing ones and truly understanding how they work. This increases the complexity of the entire marketing effort and the workload, whilst reducing the time they can devote to each channel. And thirdly, they fail to assess the actual impact on profit. It is much easier to evaluate campaigns based on conversions and turnover measured on the website. In some sectors, such as fashion, however, there is a high return rate and significant differences in the profit margins of individual products. If 20–50 per cent of your products are returned, and you do not factor this into your evaluation, you are almost certainly making a loss on some campaigns on a systematic basis.
AI as another blind spot
A new variable is entering an already complex situation: artificial intelligence. Traffic from tools such as ChatGPT currently accounts for only a small proportion of total traffic, but it is growing very rapidly. Companies are therefore beginning to grapple with this new type of channel. The problem is that they usually don’t know how to evaluate it properly. They don’t know how to integrate it correctly into their marketing mix and, in most cases, don’t know whether it offers any benefit. There is therefore a risk that they will either ignore AI, even though it could be a great opportunity for them, or, conversely, fall for the hype surrounding AI and spend an unnecessary amount of time optimising for LLMs, even though their target audience uses them only minimally.
It is possible to spend the same and earn more – you just need to know how
Practical experience shows that the problem often isn’t how much companies spend, but how they spend it. “One of our clients managed to achieve 58% revenue growth without increasing their marketing budget. The key wasn’t adding new activities, but understanding which channels actually work, and then carefully reallocating their investment. That growth wasn’t down to adding new channels or doing more work. It was down to them stopping believing in distorted data and starting to make decisions based on data that was much closer to reality,” says Knapp. It wasn’t about spending more, but spending better.
Marketing stands at a crossroads
On the one hand, costs are rising, new channels are emerging and the pressure to deliver results is mounting. On the other hand, however, companies still often make decisions based on incomplete or distorted data. We could say that, ultimately, companies today face a simple choice. Either they accept that marketing is no longer about individual campaigns, but about managing the entire system – and adapt the way they work with data accordingly – or they stick with their current approach and gradually lose effectiveness.
The future is not about budgets
The future of marketing will not be about how much companies spend, nor about how many new channels they try out. It will be about whether they can correctly understand what actually delivers results for them, and manage their entire marketing effort as a single, integrated whole, rather than as a collection of separate activities.
Companies that manage to unify their data, rely on metrics that reflect reality, and make decisions systematically based on them will be able to get significantly more out of the same budgets. Conversely, those that stick to their current approach will continue to face a gradual decline in effectiveness, which cannot be resolved either by higher investment or by new trends such as AI. “If companies want to increase efficiency in the long term, they should not start with new channels, but with understanding the existing ones. Investing in high-quality data analysis and data integration is often the quickest way to improve performance today,” concludes Knapp.
Source: mediaguru.cz