Sunday, December 27, 2020

Our Most Popular Posts for 2020


This will be my last post of 2020, and I want to thank everyone who has spent some of his or her valuable time reading this blog. My goal for this blog has always been to provide content that readers will find informative, thought-provoking, and useful, and I've been immensely gratified by the attention and engagement this blog has received.

For the past several years, I've used my last post of the year to share which posts have been most widely read. The COVID-19 pandemic has obviously been the dominant event of 2020, and I have devoted several posts to COVID-related topics during the year. So this year, I'm providing two "top five" lists - one containing COVID-related posts, and one including posts on other marketing topics.

For these lists, I'm only considering posts that were published in 2020. I've ranked the posts based on cumulative total reads, so posts published early in the year have an advantage.
So in case you missed any of them, here are our top five most popular "non-COVID" posts for 2020:
And here are the top five COVID-related posts:
Happy New Year, everyone!

Image courtesy of Republic of Korea via Flickr CC.

Sunday, December 20, 2020

The Quest for Unified Marketing Measurement


Multiple research studies have shown that measuring marketing performance remains both a top priority and a major challenge for most marketers. For example, in Demand Gen Report's 2020 Marketing Measurement and Attribution Benchmark Survey, 82% of the respondents said that measuring marketing performance is a growing priority for their company, and 54% said their ability to measure marketing performance and impact needs improvement or is poor/inadequate.

Gartner's Marketing Data and Analytics Survey 2020 found that a majority of senior marketers (CMOs and VPs of marketing) are disappointed with the results they have received from their analytics investments. Fifty-four percent of senior marketing respondents said that marketing analytics had not had as much influence in their organization as they expected.

These research findings show that marketing performance measurement is still very much a work in process. Last year, Google published a white paper that addressed three of the most important - and still unsolved - challenges relating to the measurement of marketing effectiveness. I covered two of these challenges in previous posts (here and here). This post will discuss the third "grand challenge" described in the Google paper.

"Unified methods:  a theory of everything"

At present, there are two main methods for measuring the effectiveness of marketing and advertising programs. Marketing mix modeling has been around for decades, and multi-touch attribution has now been used for several years. Each of these methods has strengths and limitations, and neither provides a comprehensive picture of marketing performance. As a result, the grand challenge for marketers is to develop a unified measurement method that will provide a holistic and accurate view of marketing effectiveness.

Marketing Mix Modeling (MMM) - MMM involves the use of statistical techniques to estimate the impact of marketing and advertising programs on incremental sales and/or other desired outcomes. These models are based on several months (or years) of historical data about sales and marketing/advertising spending across offline and digital channels. MMM also incorporates factors such as weather, competitive activity, seasonality, and overall economic conditions.

MMM is a top-down method that uses aggregate data; it doesn't evaluate the actions of individual prospects or customers. Because MMM is backward-looking and doesn't use individual-level data, it doesn't provide the timeliness or granularity that is needed to support tactical marketing decisions.

Multi-Touch Attribution (MTA) - MTA is a bottom-up method that is based on data about the actions and behaviors of individual prospects and customers. MTA solutions focus primarily on the financial impact of digital marketing programs. Therefore, they can overstate the amount of revenue attributable to digital marketing activities. MTA solutions can also be inaccurate because they usually don't account for a baseline of revenue that would exist without any marketing efforts.

Enter Unified Marketing Measurement (UMM)

Clearly, marketing leaders need (and want) a way to measure marketing effectiveness accurately and comprehensively. Since MMM and MTA use different types of data and measure different aspects of marketing effectiveness, one possible solution is to use both methods, and some companies have adopted this approach.

The Google white paper cited a 2018 survey conducted by ISBA (Incorporated Society of British Advertisers). In that survey, 29% of the respondents said they had fully integrated MMM and MTA. Another 39% of the respondents said they were using both MMM and MTA, but results are reviewed in silos.

During 2018, Google also conducted forty interviews with marketers at large brands in the UK about their marketing effectiveness practices. Here's how the Google authors described what they learned about the integration of MMM and MTA:

"While this wasn't a survey, examples of 'fully integrated' MMM and digital attribution were cited in fewer than a third of these conversations . . . When integration was mentioned, it was more the case that the advanced marketers now had effectiveness leaders whose role it was to understand marketing effectiveness as a whole, and consider results from different methods. These leaders were typically very aware of the pros and cons of MMM and digital attribution and were often blending insights from them, rather than integrating them at a technical level."

I suspect that little has changed since Google conducted these interviews, especially given the disruptive impact of COVID-19 this year.

Several companies are now offering technology solutions that purport to provide unified marketing measurement. In The Forrester Wave(TM):  Marketing Measurement and Optimization Solutions, Q1 2020, Forrester evaluated nine "significant" vendors that offer some version of a UMM solution. The vendors included in the Forrester report were Analytic Partners, Ekimetrics, Gain Theory, Ipsos MMA, IRI, Marketing Evolution, Merkle, Neustar, and Nielsen.

The Issue of Accessibility

There's no doubt that we have made significant progress in measuring marketing effectiveness over the past several years. However, advanced marketing measurement solutions aren't cheap. In a 2018 report, Gartner estimated that companies pay from $100,000 to $250,000 on average for a one-year MMM or MTA solution. At this level of investment, these solutions aren't affordable for many small and mid-size companies

But notwithstanding the cost, advanced measurement solutions can be a smart investment for many companies. In a 2018 report, Forrester noted that such solutions will often enable a 15% improvement in marketing ROI, and that spending on marketing measurement represents only 0.2% of total marketing spending.

Image courtesy of Tatinauk via Flickr CC.


Sunday, December 13, 2020

Measuring the Long-Term Impact of Marketing


The conventional wisdom in the marketing community is that measuring the performance of marketing is now both necessary and achievable. And the conventional wisdom is accurate, at least in part.

The explosion of available data about customers and prospects and the expanding capabilities of marketing and analytics technologies have made some aspects of marketing easier than ever to measure. At the same time, however, measuring the impact of marketing on major business financial outcomes remains a difficult task.

Last year, Google published a white paper that discussed three of the most difficult challenges relating to the measurement of marketing effectiveness. The authors of the paper acknowledge that perfect solutions for these challenges don't currently exist. In fact, the primary objective of the paper was to focus on the areas where existing methods of measuring marketing effectiveness are "running up against the boundaries of the possible."

In my last post, I discussed the first challenge addressed by the Google authors - demonstrating a valid cause-and-effect relationship between a particular marketing activity and a particular business outcome. This post will cover the second "grand challenge" identified in the Google paper.

"Measuring the long term, today"

Some marketing programs are designed to produce results quickly, while others will have an impact over a longer period of time. According to some industry experts, many marketers have become too focused on the short term, to the detriment of overall marketing effectiveness.

Several recent research studies have confirmed that marketers are heavily focused on running short marketing programs and measuring short-term results. For example, in a 2020 survey of B2B marketers by The Marketing Practice (in association with Marketing Week), only 18% of the respondents said they run campaigns for more than six months, and only 20% said they measure the impact of campaigns beyond six months.

This survey was fielded about two months after COVID-19 economic lockdowns began, and the pandemic almost certainly affected the survey responses. But marketing "short termism" began long before COVID-19 reared its ugly head. The Google paper cited a 2018 survey of UK marketers by ISBA in which 61% of the respondents said they measure the impact of their marketing campaigns solely while the campaign is running or in the first three months after it ends. Only 13% said they measure impact for more than a year after a campaign ends.

A number of factors are driving this focus on short-term marketing results, but one of the most important is that long-term marketing effects are difficult to measure. And it's particularly difficult to measure the long-term financial impact of marketing. With marketing leaders under constant pressure to prove the value of their programs, it's not surprising they tend to favor marketing tactics that are easier to measure.

Despite the measurement difficulty, it's important that marketers and other senior business leaders understand the true value of longer term marketing programs. Research has shown that the highest level of marketing effectiveness is achieved when companies use both long-term ("brand building"} and short-term ("sales activation" or "demand generation") marketing programs.

What Marketers Need

The current state-of-the-art method for measuring long-term marketing impact is an enhanced version of marketing mix modeling. Unfortunately, this method requires several years of data, and the cost can be prohibitive for many companies. Equally important, this method, like all forms of marketing mix modeling, is backward looking, so it isn't that useful for marketers who need to make decisions in the present.

What marketers really need is a leading indicator - or a set of leading indicators - that can reliably predict longer-term business outcomes. Recently, share of search has emerged as a promising metric for this leading indicator role. Share of search can be defined as the volume of search queries for a specific brand as a proportion of all the search queries for all the brands that define a competitive category.

For example, suppose that there are five brands (A, B, C, D and E) in a particular product or service category and that over a given time period, a total of 100 searches were performed that included any of these brands. If brand A accounted for 35 of those searches, its share of search was 35% for that time period.

What makes share of search potentially valuable is that it is readily available on a real-time basis and it may be predictive of future outcomes like sales and market share. Recent research by Les Binet has shown that share of search can predict future market share in three categories - automobiles, energy (gas and electricity) and mobile phone handsets. Binet's research found that in these three categories, if a brand's share of search increases, its market share will rise over the following months. And conversely, when share of search declines, so does future market share.

Binet's research is very important, but it was also relatively narrow. It only involved three product categories. We will need more research to determine whether and to what extent share of search predicts future revenue growth and market share in other product and service categories. But if share of search does work in a wide range of categories, many marketers will have one of the key tools they need to make the measurement of long-term marketing effects straightforward, timely and affordable.

Image courtesy of Mike Lawrence (www.creditdebitpro.com) via Flickr CC.

Sunday, December 6, 2020

Google Highlights "Three Grand Challenges" in Marketing Performance Measurement

Measuring the performance and financial impact of marketing has been (and remains) a major challenge for marketing leaders. In the 2020 Marketing Measurement and Attribution Benchmark Survey by Demand Gen Report, 54% of surveyed marketers said their ability to measure marketing performance and impact needs improvement or is poor/inadequate. The comparable percentage was 58% in the 2019 edition of the survey and 54% in the 2018 survey.

Marketing leaders widely agree about why they need a better process for measuring marketing performance. Seventy-five percent of the respondents in the Demand Gen survey identified the need to show marketing's impact on pipeline and revenue, and 58% cited the need to show ROI from all marketing investments.

Over the past two-plus decades, technological advances have significantly improved our ability to measure some aspects of marketing performance. Today, for example, most forms of digital marketing are highly "trackable." We can know who has opened our emails and who has viewed our content. We can even know how much time was spent with our content.

But, measuring the financial impact of marketing remains particularly difficult because of several inherent characteristics of marketing. A recent article at the Harvard Business Review website captures some of the difficulties:

"Marketing's environment is typically much 'noisier' that the factory floor in terms of unknown, unpredictable, and uncontrollable factors confounding precise measurement. Marketing activities can also be subject to systems effects where the portfolio of marketing tactics work together to create an outcome . . . Marketing actions may also work over multiple time frames . . . Finally, it is often difficult to attribute financial outcomes solely to marketing, because businesses frequently take actions across functions that can drive results."

An Important Perspective from Google

Last year, Google published a white paper that addresses the vital topic of measuring marketing performance. The paper is appropriately titled "Three Grand Challenges" because the authors focus on three of the most gnarly challenges relating to the measurement of marketing effectiveness.

The three "grand challenges" described in the Google paper are:

  1. "Incrementality:  proving cause and effect"
  2. "Measuring the long term, today"
  3. "Unified methods:  a theory of everything"
The authors acknowledge that no perfect solutions for these challenges currently exist. In fact, the main objective of this paper was to discuss the areas where current effectiveness measurement methods are "running up against the boundaries of the possible."
Given the importance of this topic, I'll be devoting three posts to the issues described in the Google white paper. This post will cover the first of Google's three "grand challenges."
The Cause and Effect Conundrum
The most fundamental challenge in measuring marketing effectiveness is demonstrating the existence of a valid cause-and-effect relationship between a particular marketing activity and a particular business outcome (i.e. revenue/sales). In marketing, such causal relationships are often impossible to "prove" directly. Instead, we must infer causation, and the challenge is to make sure that our inferences are based on valid evidence.
The Google authors noted that "randomized controlled experiments" are the gold standard for measuring causal effects. These experiments are similar to the clinical trials that are being used to test prospective COVID-19 vaccines. In the vaccine trials, participants are randomized into two groups, one of which receives the vaccine, and one of which receives a placebo. Then the vaccine developer tracks how many people in each group contract COVID-19 to measure the vaccine's effectiveness.
To run a randomized controlled marketing experiment, the first step is to identify a set of test subjects (i.e. potential buyers) who are as similar as possible. The test subjects are then randomly assigned to a test group or a control group. The marketing activity being tested is used with the test group, but not with the control group. The difference between the groups in the desired outcome (i.e. sales) is the estimated effect of the marketing activity.
Unfortunately, randomized controlled marketing experiments are not easy to use. For example:
  • They must be carefully designed to eliminate extraneous factors that could impact the results.
  • They can be expensive and difficult to administer.
  • They typically can test only one or two activities at a time.
As a result, such experiments aren't frequently used.
When randomized controlled experiments aren't (or can't be) used, marketers typically rely on historical (a/k/a "observational") data to measure marketing effectiveness. Marketing mix modeling and attribution modeling are two measurement methods that are based on observational data. The results produced by observational methods aren't as reliable as those from randomized experiments, but they are widely used.
To establish reasonable expectations for marketing measurement and build credibility in the C-suite, marketing leaders need to have open, frank, and evidence-based conversations with other C-level executives about which aspects of marketing can be measured precisely, and which aspects still require the use of assumptions, correlations and probabilities.

Image Source:  Google

Sunday, November 29, 2020

What B2B Buyers Rely On to Make Purchase Decisions


Earlier this month, TrustRadius published the findings of its fifth annual B2B buying disconnect research. The 2021 B2B Buying Disconnect report is based on two surveys that were conducted in September of this year.

One was a survey of 907 individuals who are involved in making business technology purchases for their organization, and the second was a survey of 227 individuals who work for technology vendors in a sales or marketing capacity. More than 75% of the respondents in these surveys were based in the United States.

In my last post, I described some of the characteristics of the technology buying process identified by the TrustRadius research. In this post, I'll discuss what the TrustRadius study discovered about how technology buyers learn about products or services and research potential purchases. I'll also review where there are still disconnects between technology buyers and sellers.

It's important to note that the TrustRadius research focused exclusively on the attributes of technology sales and purchases and on the attitudes and behaviors of technology buyers and vendors. Therefore, the results of the TrustRadius surveys may not be completely applicable to all types of B2B purchases and sales. However, these research findings are relevant for those that involve high-consideration products or services.

Information Used to Inform Buying Decisions

A primary focus of the TrustRadius surveys has been to identify what sources of information technology buyers use to inform and support purchase decisions and which sources they view as trustworthy and influential. The latest survey found that buyers used an average of 6.9 sources of information when researching potential purchases, up from 5.1 sources in last year's survey.

The sources of information most widely used by technology buyers have not changed for the past five years, although their rank order has varied slightly. In the latest TrustRadius buyer survey, the five most frequently used sources of information were:

  1. Product demos (58% of buyer respondents)
  2. Vendor/product websites (51%)
  3. User reviews (45%)
  4. Vendor representatives (43%)
  5. Free trials/accounts (41%)
The Disconnect - In the seller survey, TrustRadius asked technology vendors what marketing tactics they used to engage buyers in 2020. The following table compares the percentage of sellers using each marketing tactic (the top 5 identified by seller respondents) with the percentage of buyer respondents who reported using that source of information. As the table shows, buyers and sellers generally agree about the importance of product demos and vendor/product websites, but sellers overvalue the importance of marketing collateral, case studies, and customer references.










Information Trust and Influence
TrustRadius also asked technology buyers about the trustworthiness and influence of the information sources they use to support purchase decisions. Three of the five most widely used sources of information - free trials/accounts, product demos, and user reviews - also received high marks from buyers for trustworthiness and influence. This suggests that buyers favor sources of information that provide direct hands-on experience with a product and those that feature the opinions of actual users of a product or service.
The Disconnect - Only one of the three most trusted and influential sources of information - product demos - is among the top five marketing tactics used by vendors. In addition, three of the marketing tactics most widely used by vendors - marketing collateral, case studies, and customer references - were not rated highly by buyers for trustworthiness or influence.
How Buyers First Learn About Products
The top three ways that technology buyers first learn about new products are:
  1. Their own prior experience with the product (25% of buyer survey respondents)
  2. Recommendations from their network (15%)
  3. Online search for top products (15%)
On this issue, there isn't much of a disconnect between buyers and sellers. In the TrustRadius seller survey, the respondents identified the same three top ways that buyers first learn about products. 
One noteworthy difference between buyers and sellers relates to industry events. Nearly half of the surveyed sellers (49%) believe that buyers first learn about products at conferences and tradeshows, but only 10% of surveyed buyers said they first learn about products at such events.
The buyers' response on this point may have been influenced by the absence of in-person events this year, but it also may be that sellers tend to overestimate how often buyers first learn about products at conferences and tradeshows.

Top image courtesy of Jinx! via Flickr CC.

Sunday, November 22, 2020

New Research Unveils the Attributes of B2B Technology Buying and Selling


Image Source:  TrustRadius

This month, TrustRadius published the findings of its fifth annual B2B buying disconnect study. The 2021 B2B Buying Disconnect report provides a wealth of valuable insights regarding the sale and purchase of business technology solutions.

The report is based on two surveys that were fielded in September of this year. One was a survey of 907 individuals who were involved in making business technology purchases for their organization, and the second was a survey of 227 individuals who work for technology vendors in a sales or marketing capacity. More than 75% of the respondents in both surveys were based in the United States.

These surveys addressed a broad range of topics. The buyer survey includes findings about the technology buying process, how technology buyers learn about products and services and research potential purchases, and how they view technology vendors. The seller survey explored how technology vendors seek to engage potential buyers and how they rate the effectiveness of their marketing and sales tactics. And of course, both surveys addressed how the COVID-19 pandemic has impacted technology buying and selling in 2020.

The TrustRadius study focused exclusively on the attributes of technology sales and purchases and on the attitudes and behaviors of technology buyers and vendors. While the results of these surveys may not be completely applicable to all types of B2B purchases and sales, it's likely they would be similar to those involving complex, high-consideration products or services.

It will take a few posts to unpack the results of the TrustRadius research. In this post, I'll describe some of the basic attributes of technology buying and selling in 2020 and what we may see in 2021.

Technology Spending in 2020 and 2021

In the TrustRadius buyer survey, 49% of the respondents said their spending on technology products and services decreased in 2020, 27% reported increased spending, and 19% said their spending had not changed. It's noteworthy that only 21% of the buyer respondents expected their 2020 technology spending to decrease "substantially."

These responses reflect the uneven economic impacts of the pandemic. COVID-19 has severely affected companies in some industries (travel and hospitality, for example), while several other types of businesses have experienced dramatic revenue growth (think Amazon and Zoom).

TrustRadius found that the outlook for technology spending in 2021 is mixed. Fifty-six percent of the respondents in the buyer survey expect their technology spending to return to pre-pandemic levels or increase in 2021, while 17% expect spending to decrease next year, and 27% aren't sure what their technology spending will look like in 2021. More specifically, a majority of the buyer respondents expect to spend more on video and web conferencing software (64%) and online collaboration/project management software (53%) in 2021.

More Time Spent on Buying

TrustRadius also found that the pandemic has changed how much time buyer spend on technology purchases. In the buyer survey, about one-third of the respondents said they spent more time this year:

  • Clearly defining the expected ROI of technology investments
  • Researching products
  • Comparing products
  • Prioritizing selection criteria
Interestingly, 26% of the buyer respondents said they spent less time in 2020 talking with vendor representatives, and 20% reported spending less time consulting with their buying committee.
Despite buyers' efforts to streamline the buying process, vendors believe the COVID-19 pandemic has resulted in longer sales cycles. In the seller survey, 57% of the respondents said their deal cycles are longer than before the pandemic. One in four respondents said the length of their sales cycle hasn't changed, and 19% reported shorter sales cycles.
Buying Groups Get Slightly Smaller
During 2020, a significant number of employees at B2B companies have been working from home. Online conferencing tools such as Zoom and Microsoft Teams have enabled remote employees to perform their work fairly effectively. However, the pandemic appears to have caused some companies to reduce the number of people involved in purchase decisions.
In the latest TrustRadius buyer survey, respondents indicated that 67% of buying decisions are made by buying groups composed of 2 to 5 individuals. That was up from 61% of buying decisions in last year's survey. Meanwhile, the percentage of buying decisions made by buying groups composed of 6 or more people fell from 34% in last year's survey to 29% in this year's survey.
Coming Up
In my next post, I'll discuss what the TrustRadius research says about how technology buyers learn about and research products and services.

Sunday, November 15, 2020

More Evidence on How B2B Marketers Have Responded to COVID-19


Image Source:  Allocadia

Over the past six months, I've devoted several posts to reviewing research studies that have examined the impact of COVID-19 on B2B marketing and buying behaviors.

  • The first series of posts (available here, here, and here) discussed the findings of a special edition of The CMO Survey that was fielded in May.
  • In July, I published a post (Research Highlights How COVID-19 Has Changed B2B Buyer Behaviors) that described the results of an April survey conducted by Wunderman Thompson Commerce. The research focused primarily on the expanding role of e-commerce in B2B buying.
  • Most recently, I published a post (Mid-Summer Research Updates COVID's Impact on B2B Marketing) discussing a June survey by Edelman and LinkedIn. This survey asked B2B marketers about how buying behaviors had changed and what actions they need to take to respond to those changes.
COVID-19 has obviously been the issue of 2020, and these three surveys have provided important insights about how both marketers and buyers have responded to the pandemic. A recent report by Allocadia provides more valuable insights on this topic from a somewhat different perspective.
Allocadia provides marketing management and budgeting software, and the 2020 State of Spend report is based on aggregate data from Allocadia's customer base. The data was pulled in June. Allocadia's report is particularly useful because in describes actual spending decisions made by companies dealing with real-world circumstances.
Key Findings from Allocadia's Analysis
Marketing Spending - More than half (56%) of Allocadia's customers saw their marketing program spending reduced by more than 10% in the first half of 2020. Fifteen percent of the companies lost more than one-third of their marketing program budgets in that period.
Events - Spending on events fell by 46% in the second quarter of this year. However, Allocadia's customers were forecasting a 24% increase in spending on events in the third quarter. Allocadia believes that much of the forecasted increase is attributable to spending on virtual events, and I tend to agree with this hypothesis.
Digital Advertising - Overall spending on digital advertising increased by 2% in the second quarter, but spending varied significantly based on company size. The smaller companies in the study (those having less than $250 million in revenue) increased digital advertising spending by 9.3% in the second quarter, while the largest companies in the analysis (those having more than $5 billion in revenue) cut spending on digital advertising by 30.7% in that quarter. Companies of all sizes were forecasting higher levels of digital ad spending in the third quarter, with the over $5 billion companies projecting an increase of 183.6%.
Brand vs. Demand Spending - According to decades of research studies, companies that continue to market aggressively during a recession will recover faster and probably gain market share when the recession ends. This is particularly true when the marketing focuses on building brand awareness and brand preference. Most of Allocadia's customer did not follow this strategy.
Spending on brand marketing fell by 16% in the second quarter, and 45% of the companies in this study cut public relations budgets by more than 20% in that quarter. These companies did forecast a 17% increase in brand identity spending in the third quarter, which suggests that the cuts in brand marketing may only be temporary.
Meanwhile, spending on direct marketing increased by 23% in the second quarter, but was forecast to decrease by 1% in the third quarter. If this forecast was accurate, it means that direct marketing spending in the third quarter was 22% higher that in the first quarter of this year.
 Content Marketing - Overall spending on content marketing grew by 12% in the second quarter of this year, and nearly four in ten companies (39%) increased spending by more than 20%. Allocadia's customers were also forecasting an additional 8% increase in the third quarter. Allocadia believes that the second quarter increase in content marketing spending resulted from the increased use of direct marketing in that quarter.
My Take
The spending decisions made by Allocadia's customers are not surprising given the economic shock created by the pandemic. The more to reduce spending on brand marketing and increase investments in direct marketing is particularly understandable.
When faced with a sudden economic downturn that threatens revenues, marketing leaders have a strong tendency to favor those activities that seem most likely to produce a short-term impact on sales. The irony is, many marketers shift resources to short-term "performance" marketing programs exactly when the prevailing business and economic conditions are likely to make those short-term tactics largely ineffective.
Mark Ritson, the noted marketing expert and a regular columnist for MarketingWeek, stated his view of a better approach when he wrote:
"Confronted with a 50% cut in marketing budgets, the smarter play is to actually focus more of it on the longer-term brand-building mission. Performance marketing is going to under-perform in the current market conditions. But this virus, too, shall pass. At some point consumers will return to the streets, the cafes and the various other activities that they have been denied during the dark days ahead. Keep the brand light burning, because the cost of snuffing it out for the rest of 2020 and then trying to reignite it next year is gigantic."

Sunday, November 8, 2020

Research Maps Spending on Content Marketing

 


Image Source:  The Branded Content Project/Borrell Associates Inc.

Companies in the United States will spend $63.3 billion on content marketing this year, according to new research commissioned by The Branded Content Project. In 16 business categories, the use of content marketing is nearly ubiquitous, and it accounts for between 45% and 66% of the total marketing budget.

In mid-2020, The Branded Content Project engaged Borrell Associates Inc. to measure and analyze the economic landscape of content marketing. Sizing the Content Marketing Opportunity is based on a multi-faceted analysis of the business of content marketing. Borrell used data from its periodic surveys of small and mid-size businesses, SEC filings of public companies, and a variety of other data sources.

Content Marketing Spending

Borrell's analysis found that U.S. companies spent $64.3 billion on content marketing in 2019. Because of COVID-19, Borrell projects that content marketing spending will decline by 1.5% to $63.3 billion in 2020. This slight decline is almost entirely attributable to major spending cuts by companies that have been hit hard by the pandemic.

For example, Borrell found that companies in travel/tourism, live entertainment, sporting events, clothing and recreation have reduced spending on content marketing in 2020 by an average of 19%. Meanwhile, several other types of businesses - including financial services firms and real estate agents - have actually increased spending on content marketing this year.

The Growing Importance of Content Marketing

This analysis also found that content marketing is becoming a more important part of marketing for many companies. In Borrell's October survey of SMB's, 45% of the respondents said that content marketing had become more of a priority in 2020, and 57% said they are planning to increase content marketing in 2021.

Digital Dominates Content Marketing

It should not be surprising that most content marketing is conducted via digital channels. The following table depicts the top five media channels used for content marketing in 2020. As the table shows, digital media accounts for about two-thirds (66.3%) of all spending on content marketing this year, and collectively, these five channels account for 92.3% of all content marketing spending.










Borrell argues that digital channels dominate content marketing for two main reasons. First, digital channels can accommodate a wide variety of content formats (text, video, audio, etc.), and many types of digital content can be interactive, which makes them more engaging to potential buyers. More importantly, many digital channels enable companies to publish large volumes of content without incurring incremental advertising costs.

Business Category Rankings

The Borrell report also provides detailed estimates for 100 distinct types of businesses. Borrell placed each type of business into one of six groups based on how likely that type of business is to engage in content marketing and what percentage of their marketing budget is devoted to content marketing. Borrell used the letters "A" through "F" to identify the six groups.

The 16 types of business organizations in group "A" (shown in the following table) are those that are most likely to be making extensive use of content marketing. In these businesses, the use of content marketing is nearly ubiquitous, and they spend between 45% and 66% of their marketing budgets on content marketing. These businesses are not necessarily the biggest spenders (on content marketing) in absolute terms, but they are devoting the highest percentage of their total marketing budgets to content marketing.










Organizations in group "B" aren't far behind. Borrell estimates that 75% to 85% of businesses in group "B" are using content marketing, and they are spending 40% to 60% of their marketing budgets on content marketing. Group "B" includes general merchandise stores (think Walmart, Target, etc.) and several types of media companies.

Two Caveats

It's important to make two points about the methodology used for this analysis. First, Borrell used an expansive definition of "content marketing." The report states:

"For this report, we considered Content Marketing to be the over-arching term that encompasses all facets of marketing - with content. This could be advertorials, native advertising, testimonials, many kinds of sponsorships, many kinds of branding, and any advertising that delivers some amount [sic] content besides a direct call to action."

This definition encompasses some marketing activities that many practitioners would not classify as "content marketing." So Borrell's spending estimates may be somewhat elevated.

On the other hand, Borrell's analysis did not include the internal costs that businesses incur to create and distribute content. Other research has shown that most companies are using internal resources to produce a significant about of marketing content. Therefore, Borrell's estimates probably understate the amount of spending actually devoted to content marketing.

Despite these caveats, Borrell's analysis makes an important contribution to our body of knowledge about content marketing.

Sunday, November 1, 2020

Gartner Research Maps the Landscape of Marketing Operations


 Image Source:  Gartner, Inc.

Gartner recently published the findings of the 2020 Gartner Marketing Operations and Organization Survey. The survey results are described in two reports - the 2020 Marketing Operations Survey report, and the Marketing Organization Survey 2020 report.

This year's survey was conducted in May and June, and produced 429 respondents in the United States, Canada, France, Germany and the United Kingdom. All respondents were required to be involved in decisions regarding marketing operations and/or the alignment of marketing budgets, resources and processes. The respondents came from a variety of industries, and 91% were with organizations having $1 billion or more in annual revenue.

Given the composition of this survey panel, the findings are most reflective of circumstances in large enterprises. However, many of the findings will also be useful for marketing leaders in mid-size companies.

Here's a  brief overview of some of the more interesting survey findings. Unless otherwise indicated, these findings are described in the 2020 Marketing Operations Survey report.

Adoption of Marketing Operations

Forty-nine percent of the survey respondents said that at least one marketing team in their organization has a dedicated marketing operations leader. Frankly, I was somewhat surprised by this finding. I would have expected this percentage to be higher, given the composition of the survey panel.

Other research has indicated that marketing operations functions have been implemented by many large and mid-size companies. In fact, Gartner's 2019 Marketing Organizational Survey found that more than two-thirds of marketing organizations have a discrete marketing operations function. And in Gartner's 2020-2021 CMO Spend Survey, marketing leaders ranked marketing operations as their third most vital marketing capability, behind only brand strategy and marketing analytics.

Current Scope of Marketing Operations

The 2020 survey also revealed that the responsibilities assigned to the marketing operations function vary significantly across companies. Gartner presented the survey participants with a list of 12 marketing activities and asked which of these activities was currently led or managed by their marketing operations function. The following table shows the percentage of respondents who selected each activity.













As this table shows, companies are using their marketing operations function to manage a wide variety of activities, and no activity was selected by a majority of survey respondents. This finding should not be surprising, given that marketing operations is still a relatively young business function.

Gartner hypothesizes that marketing leaders often create a marketing operations function to address whatever operational issues are most pressing at that time. Therefore, Gartner contends that the marketing operations role resembles that of a "chief of staff" whose primary job is to support the CMO.

Marketing Operations is Expanding

Gartner's research also indicates that marketing leaders plan to expand the scope of their marketing operations function in the near future. Gartner presented the survey participants a list of 12 marketing activities - plus a "none of the above" choice - and asked which of these activities would become part of their marketing operations mandate within the next 12 to 24 months. The five most frequently selected activities were:

  • Data sourcing, consolidation and management (29% of respondents)
  • Performance management, benchmarking and analytics (29%)
  • Strategic planning, alignment and oversight (28%)
  • Marketing technology management (27%)
  • Maintaining talent audits and capacity needs (26%)
My Take
In my view, marketing operations is destined to become a more important function in the marketing departments of most large and mid-size companies for two main reasons. First, marketing is increasingly dependent on a multitude of technology applications, so the selection, implementation, integration, and management of technology tools is increasingly critical. That is a classic role for marketing operations.
Second, many companies are moving significant portions of marketing work in-house. In Gartner's 2020-2021 CMO Spend Survey, the respondents reported that they had shifted an average of about one-third of the work previously done by external suppliers to in-house teams. For "in-housing" to be successful, companies will need to design and implement effective and efficient work processes, and that too is a classic job for marketing operations.

Sunday, October 25, 2020

Understanding the "Non-Rational" Dimensions of B2B Buying

 


It's now clear that human decision making is usually a mix of rational and non-rational components. The recognition of this fact began to emerge in the 1950's when leading behavioral scientists started challenging the concept of human rationality that had dominated mainstream economics for decades. The work of these scientists laid the foundation for a new discipline that would later be called behavioral economics.

In 2008, two books - Predictably Irrational by Dan Ariely and Nudge by Richard Thaler and Cass Sunstein - raised public awareness of behavioral economics and put it on the radar screens of business and marketing leaders.

In reality, marketers have been using principles of the behavioral sciences for years, albeit largely unwittingly. As a 2010 article by McKinsey put it, "Long before behavioral economics had a name, marketers were using it."

A paper recently published by Google provides several fresh insights about how people make buying decisions. Decoding Decisions:  Making Sense of the Messy Middle is based on research conducted by Google in association with The Behavioural Architects, a research and consulting firm that specializes in the application of behavioral science to marketing.

Based on this research, Google and The Behavioural Architects developed a new model of the consumer buying process, which I described in my last post. The research also tested the influence of six heuristics and cognitive biases on buying decisions.

Heuristics are cognitive shortcuts or "rules of thumb" that humans use to simplify decision making. The use of heuristics enable us to reduce the mental effort required to make decisions. Behavioral scientists generally agree that heuristics can work reasonably well most of the time. However, the use of heuristics will also sometimes result in cognitive biases, which are decisions that deviate from what pure logic would indicate is more desirable.

Google and The Behavioural Architects evaluated the impact of six heuristics and biases on consumer buying decisions. The researchers observed 310,000 simulated purchase scenarios across 31 product categories. Each purchase scenario involved 1,000 participants who were asked to research a product they were actually in the market for.

Two of the six heuristics/biases tested in this study are particularly important for B2B marketers.

Social Proof

The most powerful heuristic identified in this study was social proof, which can be defined as our tendency to rely on the opinions and actions of other people when we're faced with a decision that involves ambiguity or uncertainty. In this study, social proof had the largest or second-largest effect in 28 of the 31 product categories tested.

While the Google research focused on consumer decision making, we also see evidence of social proof in the B2B space. For example, in a 2019 survey of technology buyers by TrustRadius, 52% of the respondents said they consult user reviews in their buying process, and they rated the trustworthiness of user reviews, on average, at 3.21 on a 4-point scale. In the 2020 Content Preferences Study by Demand Gen Report, 49% of the survey respondents reported they are using review sites to source information.

Authority Bias

Authority bias is the tendency of humans to rely on the opinions of individuals or firms that are viewed as authorities on a given subject. Google and The Behavioural Architects found that the authority bias was impactful in consumer buying decisions, although not quite as impactful as social proof. The authority bias was particularly strong in circumstances where consumers were less familiar with the product being researched.

We also see the authority bias at work in the B2B space. In the TrustRadius survey, 29% of the respondents said they used third-party publications in their buying process, and 24% reported using analyst reports. In the Demand Gen Report study, survey respondents rated content authored by a third-party publication or analyst as the type of content they give greatest credence to when evaluating a prospective purchase.

The Other Heuristics/Biases

The other four heuristics/biases evaluated in the Google research were:

  • Category heuristics - rules of thumb and enable us to make fast and satisfactory decisions within a given product or service category.
  • Power of now - our tendency to prefer products or services that are immediately available.
  • Scarcity bias - our tendency to act when we believe that the offer of a product or service is limited in terms or time, quantity, or access.
  • Power of free - the special appeal of a price that is exactly zero. Other studies have shown that we tend to prefer the offer of a free product over the offer of an alternative product that is more valuable, but not free.
These four heuristics and biases can also affect B2B buying decisions, although their impact is probably not as broad or significant as social proof and authority bias.
What B2B marketers should take from the research by Google and The Behavioural Architects is that understanding human decision making is essential for improving marketing performance.

Illustration courtesy of Abhijit Bhadurl via Flickr CC.

Sunday, October 18, 2020

Google Takes a Fresh Look at the Buying Process

 Marketers have been striving to understand how people make buying decisions for decades. In fact, the earliest formal description of the buying process - Elmo Lewis' famous AIDA model - is now more than 100 years old. The effort to decode how people make buying decisions - and to identify what can influence those decisions - has been the marketing equivalent of the quest for the Holy Grail or the search for El Dorado.

A paper recently published by Google provides several fresh insights on this vital topic. Decoding Decisions:  Making Sense of the Messy Middle is based on an extensive research project conducted by Google in association with The Behavioural Architects, a research and consulting firm that focuses on the application of behavioral science to marketing.

The objective of Google's research was to answer what is probably the most important and most perplexing question in marketing:  How to people decide what they want to buy and who they want to buy it from? Much of the recent research about the "buyer's journey" has focused on the actions people take along the path to purchase and on what sources of information and communication channels they rely on. In contrast, the Google research focuses on the mental processes that people use when faced with a purchase decision.

Based on this research, Google and The Behavioural Architects created a new model of the buying process and identified several mental shortcuts (heuristics) that people use to help them make buying decisions. While this research focuses on consumer buying decisions, the buying process model works equally well for many B2B buying decisions, and some of the heuristics also apply to B2B.

I'll describe Google's model of the buying process in this post, and I'll discuss the heuristics in a future post.

The Google Buying Process Model

The diagram below shows the buying process model that emerged from the research by Google and The Behavioural Architects. This research involved the observation of 310,000 simulated purchase scenarios across 31 product categories. Individuals participating in the study were asked to research a product they were actually in the market for. All the product research was performed online.













The study revealed that between the event or events that trigger a buying process and an actual purchase, there is what Google calls the "messy middle." The researchers concluded that there are no "typical" purchase journeys, but they also found that most people do engage in two distinct mental processes that are key to understanding what happens in the messy middle.

  • Exploration - This is an expansive group of activities during which people explore their options, learn about products or services, brands, and companies, and expand their consideration sets.
  • Evaluation - This is an inherently reductive group of activities during which people evaluate their options and narrow down their choices.
What makes the middle "messy" is that many people tend to jump back and forth between these two types of activities multiple times during the buying process, particularly when the potential purchase involves a complex or high consideration product or service. Google represents this back and forth movement as an endless loop in its buying process model.
This behavior creates a significant challenge for marketers because these two types of activities are cognitively different and therefore require different marketing tactics and different types of messaging and content. It can be difficult for marketers to discern whether a particular person is in exploration or evaluation mode, but if they send the wrong message at the wrong time, the prospective buyer may well eliminate their product or service from consideration.
Google also argues that buyers' activities in the messy middle take place against a backdrop of the buyer's awareness of (and perceptions about) products or services, brands, and companies in a given category. These perceptions are often driven by advertising, but they can also be influenced by stories in the media, information provided by family, friends, and associates, and what buyers have read or heard online.
Google calls this phenomenon "exposure," and they contend it is not a stage or step in the buying process, but rather ". . . an always-on, constantly changing backdrop that remains present throughout the duration of the decision-making process."
As I noted earlier, the research by Google and The Behavioural Architects focused on how consumers make buying decisions, but the buying process model also applies to B2B buying decisions. If anything the middle is even messier in B2B because many B2B buying decisions involve multiple people who are moving between exploration and evaluation at different times and speeds.
In my next post, I discuss what Google and The Behavioural Architects discovered about the role of heuristics in buying decisions.

Source of images:  Google

Sunday, October 4, 2020

Why Planning for 2021 Will Soon Become a Little Less Daunting

 


In case you haven't noticed, we're now in the fourth quarter of 2020, which means that many business and marketing leaders have started planning for 2021. Developing sound business and marketing plans is never easy, but the task becomes truly daunting when a global pandemic turns the business world upside down.

Planning for next year is challenging because of continuing uncertainties about the trajectory of the COVID-19 pandemic. For the next several months, the performance of the U.S. economy will largely depend on medical and scientific developments relating to the treatment and prevention of COVID-19. These developments will also significantly impact the business conditions that B2B companies will face in 2021. So in this year that is unlike any other, effective planning will require company leaders to consider topics that usually have no relevance for most businesses.

The good news is, we have made substantial progress on the medical/scientific front over the past several weeks. For example, there are now four COVID-19 vaccine candidates in Phase 3 clinical trials in the U.S. (Note:  AstraZeneca's trial has been temporarily paused in the U.S. because a U.K. trial participant developed an unexplained illness, and Novavax plans to begin its U.S. trial this month.)  

We are likely to get preliminary results from some of these trials within the next sixty days. Whatever those results are, we should have a clearer picture of when a vaccine is likely to be available, and that should enable company leaders to develop more realistic plans for 2021.

In an earlier post, I discussed the value of using scenario planning to deal with high levels of uncertainty. With scenario planning, business and marketing leaders develop alternative strategies that are based on a range of possible future conditions. But to support effective planning, the scenarios used must be realistic. Because of the enormous and growing volume of information relating to the pandemic and the future direction of the economy -  much of which is contradictory - developing realistic scenarios can be extremely challenging.

An article published recently by McKinsey & Company is a useful resource for developing realistic scenarios relating to the trajectory of the pandemic. The title of the article expresses the question that is top of mind for all of us - "When Will the COVID-19 Pandemic End?"

The article's authors identified two "end points" for the pandemic.

An epidemiological end point that will occur when a society achieves herd immunity. The authors noted that most companies will rely on a vaccine to achieve herd immunity. Reaching this end point will mean that ". . . the public-health-emergency interventions deployed in 2020 will no longer be needed."

The second end point is a transition to a form of normalcy. This end point will occur when " . . . almost all aspects of social and economic life can resume without fear of ongoing mortality . . . or long-term health consequences related to COVID-19." The authors of the article pointed out that this transition will occur gradually, and that the timing of the transition will depend on the successful rollout of an effective vaccine beginning in the fourth quarter of this year or the first quarter of 2021, and on continuing advances in therapeutics and clinical practices.

For planning purposes, the most important point in the article relates to the timing of the two end points. The article states:

"In the United States and most other developed economies, the epidemiological end point is most likely to be achieved in the third or fourth quarter of 2021, with the potential to transition to normalcy sooner, possibly in the first or second quarter of 2021." (Emphasis added)

Some business and marketing leaders may be disheartened by McKinsey's "most likely" scenario, but I view it as relatively positive. If this scenario proves to be accurate, we could see early signs of a return to a form of normalcy within the next six months.

Of course, the McKinsey "most likely" scenario is not a given. The article's authors noted that it depends on several factors, including:

  • The authorization of at least one vaccine for COVID-19 by the end of 2020 or early in 2021
  • The successful rollout of a vaccine to a sufficient portion of the population within about six months
  • A reasonably broad-based willingness by people to be vaccinated once a vaccine is available
These conditions may or may not materialize, but as I observed earlier, we should get critical information about the status of vaccine development within the next sixty days or so, and that will provide at least some of the clarity needed to support effective planning for 2021.

Image courtesy of Dan Moyle via Flickr CC.

Sunday, September 27, 2020

Mid-Summer Research Updates COVID's Impact on B2B Marketing

 


                                Image Source:  Edelman and LinkedIn

A report recently published by Edelman and LinkedIn provides a useful update on COVID-19's impact on B2B marketing and customer engagement. The report was based on a survey of 394 U.S.-based B2B executives in customer-facing business functions, including marketing, sales, business development, and communications. Survey respondents represented a wide range of industries and company sizes.

This survey was fielded in June, which means that responses were obtained after the initial shock of the COVID-19 pandemic had subsided and some early signs of economic recovery had appeared. So, the results should reflect a more balanced view of business conditions than surveys conducted in March or April, at the height of the economic lockdowns. 

Not surprisingly, the Edelman/LinkedIn survey found that COVID-19 was impacting customer buying behaviors in several ways.

  • Seventy-two percent of the survey respondents said their customers were focused on conserving cash and weren't interested in buying non-essentials.
  • Sixty-one percent said most customers were interested in purchasing familiar products with proven reliability rather than new or more innovative products.
  • Seventy-three percent said customers were interested in buying, but were slower to evaluate and commit to specific purchases.
Even in June, however, business conditions were not one dimensional. Sixty-five percent of the survey respondents said some customers were looking for unexpected opportunities to strengthen their position, and 58% said some customers were eager to advance their pre-pandemic plans while the environment is fluid.
The Edelman/LinkedIn survey also found that most of the surveyed executives agreed on what actions they needed to take to succeed during COVID-19.
  • Eighty-four percent of the respondents said they needed to strengthen their position as a trusted thought leader who could help customers solve immediate problems.
  • Seventy-two percent believe it's important to increase their communications with customers about their expertise in helping customers protect or grow sales.
  • Sixty-two percent believe it's important to improve their understanding of their customers' customers through new or intensified research or data gathering.
Unfortunately, the survey also revealed significant gaps between what the respondents identified as important and what they (or their companies) were actually doing with respect to those key actions. The following table shows the percentage of respondents who rated each action as very or extremely important, and the percentage who reported that their company was actually enabling each key action. The table also shows the percentage point difference between the belief and the follow-through.










As the table shows, the biggest gap between belief and action was in the ability of company leaders to understand the needs and circumstances of their customers' customers. Other findings from the survey indicate why this gap might exist.
The responses suggest that many of the respondents had adopted a short-term focus in their marketing and sales efforts. For example:
  • Forty-six percent of the respondents said that marketing spending was being closely evaluated for its direct impact on sales.
  • Fifty-five percent said they were shifting their marketing efforts to focus on existing product or service offerings with immediate appeal, while only 45% said they were focusing on developing new products or services.
The short-term focus can also be seen in the sources of information the surveyed executives were using to increase their understanding of their customers' customers. About half of the respondents said they were relying on feedback from sales teams and social media monitoring, but only between 1 in 4 and 1 in 5 respondents reported using primary survey research and/or customer focus groups/interviews.
While information from sales teams and social media can provide useful insights about the immediate needs and circumstances of customers (and their customers), more structured research is required to gain deeper and more persistent insights. And, as the respondents in this survey overwhelmingly agreed, deep and persistent insights are what's needed to successfully navigate the COVID and post-COVID business environment.

Sunday, September 20, 2020

What Brand Marketing and Anchovies Have in Common

 


In Italian cooking, anchovies - those salty little fish that usually come in tins or jars - are often added to a variety of sauces and dishes. Many people - including me - don't particularly like anchovies, so I'm tempted to omit them when using a recipe that includes them.

Professional chefs know this is a mistake. Anchovies add an important flavor element even though, in many cases, you don't specifically taste them in the final dish. If you leave the anchovies out, you will notice that "something" is missing, but you usually can't identify what the "something" is.

Strong brands play a similar role in the recipe for revenue growth at B2B companies. A brand that is well known and well respected will enhance the effectiveness of demand generation programs and make it easier for sales reps to win deals. And because brand perceptions tend to "stick" with potential buyers for a long time, a strong brand can make a significant contribution to long-term revenue growth.

The benefits of a strong B2B brand - and of investing in marketing programs that are specifically designed to build the brand - have been demonstrated in numerous research studies conducted over many years.

The CEB Research

For example, a 2013 study by CEB (now part of Gartner) compared the behaviors of high brand consideration customers with those of no brand consideration customers. High brand consideration customers were those who gave brands high scores for trust, image, and industry leadership. CEB found that high brand consideration customers were:

  • 5 times more likely to give consideration to a brand
  • 13 times more likely to purchase from a brand
  • 30 times more likely to be willing to pay a price premium
The TechTarget Analysis
A 2017 analysis by TechTarget (a technology-focused publisher and provider of marketing and sales services) found that brand marketing can boost the effectiveness of demand generation programs and elevate overall marketing performance. This analysis covered 1,675 branding campaigns run on the TechTarget network from 2015 to 2017.
The analysis found that consistent brand advertising increased consideration performance by 25%, while non-advertisers saw consideration decline 10% - 15%. TechTarget also found that when companies ran simultaneous brand advertising and demand generation e-mail programs targeting the same potential buyers, e-mail click-through rates were 22% higher compared to e-mail only programs. Equally important, targeted brand advertising improved funnel conversion rates (lead to MQL to SQL) by 25%.
Binet and Field on Brand Advertising
A 2019 report published by The B2B Institute (a think tank funded by LinkedIn) also provides persuasive evidence on the value of brand advertising for B2B companies. The 5 Principles of Growth in B2B Marketing describes the findings of research conducted by Les Binet and Peter Field, two highly-regarded, UK-based experts in brand advertising.
This report was based on an analysis of data contained in the IPA (Institute of Practitioners in Advertising) Databank. The IPA is a trade association representing the UK advertising industry, and the Databank includes extensive data submitted for the IPA effectiveness awards competition.
Based on their analysis, Binet and Field argued that B2B companies should balance their spending on brand building and sales activation activities. They define sales activation activities as any marketing activity that is designed to produce an immediate response from a potential buyer.
Sales activation activities can produce quick results, and their short-term ROI can be high. But the effects of sales activation programs don't last very long, so they don't foster long-term growth. Brand building programs, on the other hand, excel at driving long-term growth because their effects persist a long time.
Binet and Field found that B2B marketing effectiveness is maximized with a company allocates about 46% of its marketing budget to brand building and about 56% to short-term sales activation.
The Elusive (but Critical) Impact of Brand Marketing
Despite an abundance of research showing the importance and value of building and maintaining a strong brand, many B2B companies aren't investing enough in brand marketing. One main reason for this under-investment is that the business impacts of brand marketing programs are more challenging to measure quantitatively than most short-term marketing programs.
The primary objective of brand marketing is to influence the mindset of potential buyers, but these changes in mindset become visible primarily in improved responses to other marketing programs. So like anchovies, effective brand marketing enhances the "flavor" of many marketing "dishes" even when you can't specifically "taste" it.

Image courtesy of Nathan Forget via Flickr CC.

Sunday, September 13, 2020

The Promise and Perils of Focusing on "In-Market" Prospects

Intent data and predictive analytics have been hot topics in B2B marketing circles for the past few years. Simply put, intent data is information collected about the online activities of a person with the goal of using that data to identify or predict purchase intent. To make this prediction, intent data is processed using a software application with predictive analytics functionality.

Some providers of intent data and/or predictive analytics capabilities have been rather effusive in describing the benefits of their solutions. Consider, for example, these two blog post passages from firms operating in the intent data/predictive analytics space:

    "To avoid wasting time and money pursuing prospects that either already just bought the product from your competitor or are not serious about buying yet, your team should focus on the right people, targeting them at the right time by leveraging intent data, which will help you understand total active demand. Instead of a broad market of generic buyer personas, it enables you to find specific accounts that are active in your market."

    "The opportunity represented by intent data is obvious:  find in-market buyers before they enter the funnel by tracking their online behavior and content consumption on different websites. Get enough of a head start and you can land a deal before they even consider your competition, shorten your sales cycle, and cut your customer acquisition costs."

This is heady stuff because the ability to know which prospects are engaged in an active buying process could enable fundamental changes in the practice of B2B marketing.

The Promise

For example, suppose that your company has implemented account-based marketing. With intent data and predictive analytics, you could select ABM target accounts based on both fit (how well a prospect matches your ideal customer profile) and interest (whether a prospect is "in-market"). You could also frequently update your list of target accounts so that you have a near real-time view of which accounts are engaged in an active buying process.

This sounds like marketing nirvana, right? When you know which of your prospects are in-market, you can focus your marketing programs on this "low-hanging fruit," which should result in higher conversion rates, increased marketing efficiency, and as the blog passage says, lower customer acquisition costs.

The Perils

It's clear that some companies can reap substantial benefits from using intent data and predictive analytics in their marketing efforts. But intent data still has some important limitations that marketers need to understand. Those limitations have been widely discussed in articles and blog posts. For example:

Using intent data and predictive analytics to focus marketing efforts on in-market prospects also presents a broader hazard. If taken to the extreme, it can lead marketers to ignore prospects that don't make the in-market cut. This is dangerous because it disregards an important aspect of how business buyers make buying decisions.

The conventional view is that a B2B buying process begins when a company's leaders or managers recognize a need or a problem and decide to do something about it. These "buyers" then gather information about the need or problem, evaluate possible solutions, and may or may not decide to buy a product or service to address the need or problem. So our traditional view of B2B buying is that information gathering, learning, and evaluation all occur after an intentional buying process is underway.

But business decision makers rarely begin a buying process with a clean slate. Every day, they are forming impressions of companies, brands, and products from touch points like ads, content resources, news reports, and conversations with business colleagues and friends. When something triggers an intentional buying process, these accumulated impressions become pivotal because they shape the initial consideration set.

The initial consideration set contains those companies and/or solutions that business decision makers immediately think of when they're faced with the potential need to buy something. And being included in the initial consideration set really matters. Research by McKinsey in the B2C space has found that brands in the initial consideration set can be up to three times more likely to be purchased than brands that aren't in it.

I suspect the impact is slightly less in B2B, but being part of the initial consideration set is still important because it all but guarantees that your solution will be one of those evaluated in the formal buying process. And, you have to be invited to the party before you can be asked to dance.

The importance of being in the initial consideration set explains why it would be a mistake for most B2B companies to focus their marketing efforts exclusively on in-market prospects.

At any given moment in time, a large majority of your most attractive prospects - those with high potential value and good fit - will not be engaged in an active buying process and would not qualify as being "in-market." These attractive prospects may not be likely to buy in the near term, but that doesn't mean they are unlikely to buy in the longer term.

If you focus your marketing efforts solely on in-market prospects, you'll be abandoning the opportunity to influence the perceptions and preferences of high-value future buyers.

Image courtesy of Fertile Ground via Flickr CC.