Is half of your marketing budget really wasted?

Most marketers have heard the old saw claim 50% of marketing budgets are wasted. The problem is that we don’t know what 50% is supposed to go down the drain. In the age of big data, digital fingerprints, super cookies that track users through their online journeys, and a host of other tools used to power AI-based marketing models, it would be safe to assume that we could use this data to determine the accuracy of the budget waste claim.

But, you know what they say about the assumption. And the truth is, a determined marketing department can track an individual’s journey from prospect, to paying customer, to the handful of digital ads that entice them to buy. But it takes a lot of work and may not be worth it, said Forest Principal Analyst Tina Moffett.

“About seven years ago, we got to a point where we were looking at an advertisement and saying, ‘OK, well, the cookie can tell us the placement of the call-to-action and the creative in different variations, what level of impact those components had on a person’s ability to convert. I mean, it’s really granular-level information,” she said.

Today, however, this type of monitoring at the individual level is much more difficult to achieve. Google, Meta, Amazon and many other big tech companies that hold much of the world’s data regarding online shopping behavior and preferences no longer share that data. They also do not allow third-party advertisers to operate within their walled gardens. These walled gardens are also very common today with retailers and large consumer packaged goods (CPG) companies.

Add that to the myriad of privacy regulations popping up in the United States and around the world, and it’s clear that data about an individual’s online (and offline) activities are becoming more difficult to obtain and, legally, more difficult to use.

Additionally, mega-corporations like Apple use trust as a branding issue, which has led the company to severely limit the capabilities of app developers to suck up user data and use it as they see fit.

From a strategic perspective, however, measuring paid media and owned marketing programs and understanding the effectiveness of email – direct mail is not an issue as marketers use aggregated cost data and conversion data to build campaign effectiveness models — it’s tactical-level marketing dollars that are, again, increasingly difficult to track, Moffett said.

Marketing data challenges persist even with so many tools

Intuitively, it makes sense that the more data you have about an individual customer journey, the more accurately you should be able to market to similar people in the future. But again, this is not necessarily the case.

“The reality is that it depends on how and why the marketing money was spent in the first place,” said Tim DaRosa, CMO of the managed infrastructure provider. Zadara. “For example, if a modern SaaS marketer is investing money to increase brand awareness in a specific region, then even with today’s incredible tools and technology, there is no definite way measure the direct impact on the business.”

Individual customers are also harder to track because they often research a brand, product, or service using multiple sources. Marketers may not be aware of or be able to track many of these sources, such as chat rooms, online forums, and in-person conversations.

Considering all the demand generation activity trackers – paid search, email, social media, trade shows, secure content downloads, etc. — that are available to the modern marketer, monitoring the most effective channel, not the individual, is more important anyway, says DaRosa.

“If done correctly, then each channel should have a clear metric of acquisition cost,” he said. “I would argue that if a CMO today couldn’t articulate the marketing ROI of their primary lead generation channels, there are issues with how marketing investments are being made for the business.”

Related Article: How to Find Content Marketing Success on Any Budget

Movement towards contextual marketing tracking

Moffett also moved away from individual follow-up evangelism. In the heyday of tracking cookies, Moffett was firmly on the cookie side. Now, however, she is more interested in how things like consent identity graphics can be used to target untracked individuals across the web.

“Behavior-based tracking using a third-party cookie is becoming increasingly obsolete,” she said. “But you can also track consented identity like identity graphics. It is a smaller universe than third-party cookie tracking.

A identity graphic is a data graph used to identify and target individuals across devices and brand touchpoints such as sales, service and customer care based on existing data in brand databases.

Contextual information is also an approach that can be used to target groups of potential buyers without having to track them individually, Moffett said.

“I have indicators that I’m interested in baseball,” she said. “So they’re not following me, they’re following a cohort of people who have viewed certain articles. Things like that.”

Marketers then use probability models to determine whether people in the cohort would be good targets for an ad.

Related Article: Leveraging Marketing for Business Growth

The Takeaway: Spend Your Time and Marketing Efforts Wisely

While marketers can answer almost any question they have about their customer behavior, the most important question they need to answer is whether spending time getting those answers is really worth it. sadness.

“I don’t believe 50% of marketing budgets are wasted unless there’s been no planning or strategy,” said Logan Mallory, vice president of marketing at Motivation, an employee engagement software company. “Not all marketing campaigns will be successful, but part of the process is to experiment until you find the formula that works best. Once you understand what works, there’s no way such a large budget can be ‘wasted’.