Former Groupon CMO: Why measurement doesn't necessarily equal effectiveness
- 17 September, 2019 17:41
It was during his time as CMO at Groupon North American in 2015 that the dilemma of modern data-driven marketer truly confronted Australian-born marketer, Jon Wild.
Faced with a net decline in customers, the online promotions marketplace was looking to find ways to turn its fortunes around. Yet an obsessive focus on bottom of the funnel, measurable and data-driven digital marketing was stopping the brand from thinking holistically about its marketing approach.
“The world we live in presently is dominated by digital metrics, typically geared to the bottom of the funnel and a transaction, and fuelled by business’ need to understand how effective the marketing mix is,” Wild, who spent the last four business at Groupon and is now managing director of glitchAI, told attendees at the AANA Reset event in Sydney. “I’m seeing companies focused on increasing efficiency, by then reducing effectiveness and value.”
Getting the brand and narrative right is incredibly important if you’re to make those lasting customers with customers and cut through. “But in today’s digital world it gets lost,” Wild said.
In a speech entitled ‘Just because it’s measurable, doesn’t make it effective’, Wild related his personal experiences when confronting what he described as a crossroads for modern marketing.
“The environment at Groupon lent so much to the right, it was unbelievable. I had to fight to pull it back,” he said. “The art of CMO is to find balance… being the voice of reason for a more distributed, balanced approach.”
Four elements reflect this paradigm, Wild said: Short termism, the rise of digital platforms, the changing role of agencies, and a falling emphasis on creativity and brand value.
Short termism, for example, has been driven by the measurability and real-time nature of digital, Wild said. This was starkly apparent at Groupon, where 96 per cent of marketing spend focused on digital.
“In businesses I’ve been in, we’d have trading meetings three times per weeks to optimise our advertising… because it was all about driving short-term revenue outcomes,” he said.
Another outcome of short-termism is a skewed marketing skills mix. At Groupon, 75 per cent of employees were engineers, analysts or came from finance or analyst backgrounds, tipping the scales towards data, adtech and analytics.
“They’d forgotten the old marketing skillsets of brand and customer, and losing that skillset puts you at serious risk of not driving brand value in future,” Wild said.
A desire to optimise against ever-more dominant digital platforms also creates a vicious circle where marketing almost solely concentrates on both, at the expense of brand narrative and top of the funnel consideration. During Wild’s time, Groupon had 100 engineers focused on Facebook and Google ecosystems.
While such digital channels make it easier for businesses to buy media in-house, this creates an internal/external divide, Wild said.
“You have internal teams driving bottom of funnel, agencies buying and driving top of the funnel, and we saw investment spinning towards the internal team,” he said. “This saw us reduce spend, which almost invariably came out of external investments as they were not driven by transactional values. This accelerated the spiral towards the end of the funnel.”
And with such cost metrics leading the way, from open rate to clickthrough rates, conversion rates, CPA, return on ad spend and ROI, marketing ends up in a race to the bottom with procurement and becomes marginalised, Wild said. Internal teams also compete against each other, leading to search competing with display or affiliate marketing.
“Inevitably you start targeting same customer and spiralling down the funnel,” Wild said. “Your reach moves into serial decline.”
Such a trading culture saw Groupon losing sight of other less tangible, but important long-term metrics such as customer value, lifetime value, brand health and brand value. Its internal emphasis also flipped more to rating customer targeting over importance of message.
“We’d lost the ability to tell a story and a narrative,” Wild said.
Finding a way to measure marketing magic
To combat this trend, Groupon needed to figure out how to measure these brand outputs. A big step was creating standardised media mix modelling stretching from search to TV and PR. This meant all narrative media was put in same format as transactional media.
“At Groupon, there’s a belief you have to measure everything. So we started with a simple test in radio… and we ran a control test in a cluster of markets,” Wild explained. “We saw enough to see the opportunity in shifting mix up the funnel to telling a narrative.”
At the same time, Groupon was shifting from daily deals to a marketplace, and needed to articulate this story. “The model started telling us to invest further up the funnel to get the best output,” Wild said.
Armed with this, Wild and his team made a big bet in traditional media – in a measured way. This involved spending 10 weeks building a model, testing 300 variables and ending with 100 attributes. Started with the use case of lifting customer acquisition, the model allowed Groupon to compare each channel and margin efficiency.
“It wasn’t just marketing and media, we took all business data – supply index, pricing and promotion,” Wild said. “Marketers often forget all these things are incredibly important. You need to look at the entire ecosystem.”
The first benefit was really understanding all media. “We’d look at things in the model constantly, one of which was an efficiency curve, along with synergistic effects and how media works together. When you operate a digital mix, it’s often done in a vacuum.
“With this model, it forced us to look at the entire mix.”
A focus on the least performing marginal dollars by customer acquisition then saw the team scooping money out of search and retargeting and pushing it up the funnel. Off the back of this, Groupon shifted 50 per cent of marketing dollars up the marketing funnel.
“We saw customer growth numbers increase… we saw efficiency in digital channels improve,” Wild said. “And we started telling a narrative – what Groupon stands for, the magic of the brand. This flowed through the marketing mix into product.
“We reversed the issue by being focused the magic of message, narrative and brand and we started to value the brand.”
An unintended consequence was Groupon started attracting higher-value customers.
“An emphasis on bottom of the funnel finds a lot of price sensitive consumers. They’re not brand loyal. As you move up, consumers identify with your narrative and once they do that, you create a longer-term connection,” Wild said.
Getting there required Groupon to commit to the process, and be clear about disruptive tests to find small signals it could drive new approaches from.
“The first iteration of our model had an unexplained element, which we believed was brand function,” Wild commented. “We then inputted two-and-a-half years of brand metrics into the model. That allowed us to assign a lot of that unexplained factor to brand, and to start valuing it.
“This is where process is important – just talking about brand suddenly made it relevant to the c-suite.”
As a result of his Groupon experience, Wild said it’s clear: The magic of marketing matters.
“You have to measure the risk and then optimise - figure out a way to measure the narrative,” he advised. “Don’t let the digital datasets drive bottom of the funnel short termism. They’re important – and sure, keep last click methodology, but run both. You don’t ever want to rely on a single source – you want to triangulate data.
“This gives you a different frame of reference and certainly encouraged a longer-term outlook.”
It’s worth spending time on building top of the funnel programs of work, Wild said.
“Capture customer value, brand value, so spend time on getting this right. We saw business improve and flow as a result,” he added.
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