Analytics is one such field in Computer Science that always finds a way to evolve into different forms. There are diverse forms of Analytics today, with each playing a pivotal role across various projects being undertaken by an organization. One such form of Analytics that is crucial to Marketers, in particular, is Marketing Analytics. Marketers, in general, focus on how many leads they can acquire from numerous channels, such as the organization’s website. This is a form of Web Analytics, and with rapid technological advancements occurring in every nook and corner of the world, Web Analytics alone can not determine the performance of Marketing campaigns. This paved the foundation for a new form of Analytics, Marketing Analytics.
So what is Marketing Analytics? Simply put, it is a form of Data Analytics that is designed to help Marketers manage and optimize their Marketing activities. The goal here is not only to improve the effectiveness of Marketing processes but also to allow Marketers to maximize their ROI (Return On Investment) by optimizing the processes that generate revenue for them.
This article focuses on discussing the importance of Marketing Analytics and its benefits to organizations. It will also talk about the important KPI (Key Performance Metrics) that can help track how well Marketing teams perform in their campaigns and the best practices companies can use to utilize Marketing Analytics.
Table of Contents
What is Marketing Analytics?
Marketing Analytics is a form of Analytics that consists of processes that measure, manage, optimize and analyze Marketing performance. Its goal is to improve the effectiveness of the Marketing strategies of an organization and at the same time generate more profit for the organization by optimizing the ROI. The techniques used in Marketing Analytics help Marketers not only monitor websites to measure the performance of their campaigns but also help them measure their Marketing efforts and optimize them accordingly.
It consists of a combination of tools, on-site and off-site metrics, and both online and offline efforts to track the performance of the Marketing campaigns. The concept of Marketing Analytics is based on the way a campaign is executed and not on what the campaign talks about. It is the act of looking past random website results and focusing on measuring the efforts every team member puts in to improve that activity.
It helps organizations to re-prioritize their time and resources across Marketing activities. This way businesses can make better decisions and decide whether to invest in a resource or not and get a holistic view of their operations.
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What are the Components of Marketing Analytics?
Marketing analytics is a method used to evaluate and improve marketing efforts, leading to increased ROI. It typically includes several components, including:
- Centralized Marketing Database: To effectively analyze marketing data, it’s important to have all the information in one place. This includes details on past marketing programs, their attributes, cost, and customer reach.
- Time Series Analytics: This allows you to measure and understand marketing trends over time by analyzing historical data. Without this, you may need to manually gather data from different sources.
- Advanced Attribution Capacity: Understanding what drives successful marketing efforts requires technology that provides comprehensive attribution reporting. Be aware of any limitations when evaluating different solutions.
- User-Friendly Insights: Marketing analytics should be accessible and easy to understand for non-business analyst marketers through user-friendly dashboards and visualization tools.
- Ad-Hoc Reporting and Dashboards: For marketing analytics experts, the ability to customize and analyze data through ad-hoc reports and charts is important. This allows for deeper insights into marketing performance.
3 Types of Marketing Analytics Models
There are several types of marketing analytics models, including:
- Descriptive Analytics: This type of model uses data aggregations and visualizations to describe what has happened and to identify patterns, trends, and relationships in the data. Descriptive analytics provides a comprehensive overview of past campaigns and helps in understanding the past performance of the marketing initiatives. It essentially is the foundation for more advanced analytics models, such as predictive and prescriptive analytics.
- Predictive Analytics: This type of model applies mathematical models and machine learning techniques to analyze past campaigns and identify patterns that can be used to forecast future outcomes. Predictive analytics can help marketers make informed decisions by providing insights into future trends, customer behavior, market conditions, and other factors that may impact their business.
- Prescriptive Analytics: Going beyond just predicting future outcomes, prescriptive analytics provides specific recommendations for action based on the analysis of past campaigns and business constraints using advanced algorithms and optimization techniques. For instance, helping businesses optimally allocate their marketing budgets, identifying the most effective marketing strategies, and improving the overall performance of their marketing initiatives.
Importance of Marketing Analytics to Boost Your Business
Now that you have understood what Marketing Analytics is and the way it works, this section will help you understand the importance it plays for any organization. The role it plays is given in the following points:
- In today’s world, understanding customer and market trends is crucial. Marketing Analytics provides insights into customer preferences, buying patterns, and other factors influencing customer behavior, helping businesses better understand their customers and improve their marketing efforts.
- It also helps depict which campaigns succeeded and which failed. It provides the reasons for the success or failure of the campaign as well.
- By monitoring the Marketing trends regularly, Marketing Analytics enhances the market study of the organization and provides clear reports to give a crystal view of the operations of all the campaigns. This also helps businesses optimize their marketing spending and better estimate their ROI.
- Marketing analytics can help businesses identify the most valuable segments of their customer base and target their marketing efforts more effectively.
These are the general reasons why Marketing Analytics plays an important role in any organization. According to LyfeMarketing, 93% of Finnish Business Directors, feel that Data-Driven Marketing strategies are crucial to the success of their companies.
5 Common Problems that Marketing Analytics can Solve
Businesses might have all the data to check the performance of their marketing data, but there are multiple challenges they have to face before arriving at actionable insights:
- Unclear Impact of Metrics: Typically, marketers simply track metrics such as lead source and cost-per-lead without fully understanding their influence on core business goals. A properly implemented marketing analytics solution is aligned with the priorities of stakeholders so that data is collected and analyzed with a clear purpose in mind.
- How to Unify Data: Marketers often struggle with extracting and combining data from multiple applications and spreadsheets. Marketing Analytics takes care of automatically collecting, cleaning, and loading all your data into a single place. This allows you to spend more time analyzing data rather than manually extracting it.
- Unable to Translate Data into Marketing ROI: For many marketers, calculating marketing ROI is simply the number of monthly reports on the results of their initiatives. However, you can implement effective marketing analytics solutions that focus less on the act of reporting itself and more on providing actionable insights from these reports to make decisions that drive sales growth.
- Incomplete View of Marketing Efforts: Reporting on the metrics of just a single marketing campaign might not lead you to the actions that drive outcomes. Marketing analytics allows you to combine the individual impact of each marketing program and how they impact sales at different stages of the customer journey. This helps you establish the credibility of your analysis and demonstrate the long-term success of your marketing efforts.
- The Forecasting Struggle: It is often difficult for marketers to consider all the historical data from multiple data sources for accurately predicting future sales revenue. With marketing analytics, it is possible to predict the number of new leads, sales opportunities, and customers that marketing efforts will generate in the future. This is because marketing analytics tracks the current stage of prospects in the sales cycle and their likelihood of moving through each stage over time.
How Organizations use Marketing Analytics
Now that you have understood the importance of Marketing Analytics, this section provides 4 key steps that businesses can use to incorporate it into their processes:
- Product Intelligence
- Product Development Trends
- Predict Future Results
- Customer Trends and Preferences
- Messaging and Media
- Customer Support
1) Product Intelligence
These activities focus on the current trends of the Marketing activities of the organization. It is important to focus on different sources of inputs, to measure performance, and, hence the Marketing team should have a wide-angle view of the processes and campaigns.
Companies should try to use more accurate metrics/KPIs such as Conversion, Comments, and Shares, and reports must be designed in such a manner that they can communicate to the whole team and not just one or two individuals. Most of the metrics are people-centred so that both current and future customers are well taken care of.
Competitive Analysis plays a major role in any Marketing team. Organizations must not compromise on this and must treat it as a constant metric in their analysis when leveraging Analytical techniques. In addition to the performance, the investments and efforts of competitors need to be studied. The Competitive Analysis adds an extra dimension in Performance Research and helps the team decide where and when to invest their time & resources and to strategize those decisions accordingly.
3) Product Development Trends
A Long-Term Analysis of Marketing goals helps a team get ready and prepares them for any possible situation. Organizations must measure their gains and losses in a Long-Term fashion to combat any type of risks that can arise. This will enable them to make holistic decisions on where they need to invest their energy.
4) Predict Future Results
Marketing Analytics helps predict where to spend time and resources because it values efforts and investments over a temporary period of success of a particular Marketing Channel. By treating all channels equally, the Marketing team will be able to decide when and where to use each channel. This helps to prioritize the next quarter’s investments more accurately.
5) Customer Trends and Preferences
Analytics can help provide detailed insight into your customers. This includes useful insights like which products are they buying, which products are being widely researched, which ads are leading to conversions, and which ones are being ignored to name a few.
6) Messaging and Media
Data Analysis can play a pivotal role in helping marketers decide which messages to display for specific customers. This has gained precedence with the increase in the number of channels. Apart from the traditional marketing channels such as television, broadcast, and print, marketers should also know which social media networks and digital channels are being consumed by customers. Analytics helps you decide which media is garnering the most sales, what message is resonating with your audience to name a few.
7) Customer Support
Analytics can also play a role in discovering areas in the buyer’s journey that could be improved or simplified. Important aspects like where are your clients struggling, and intuitive ways to simplify the product or check-out process can help you improve your funnel to increase efficiency and increase your Lead Conversion Rate.
Marketing Analytics Techniques
Now that you have learned about the problems marketing analytics can solve, let’s check various techniques used in marketing analytics:
- Marketing Mix Modeling: This technique uses historical data and mathematical algorithms to estimate the impact of various marketing activities(such as advertising, promotions, email marketing, search, pricing, and product) on sales, allowing marketers to simulate and predict the outcome of different marketing scenarios. This helps companies allocate resources more effectively and maximize the return on their marketing investments.
- Attribution Modeling: This technique assigns credit to various touchpoints in a customer’s journey to purchase, allowing marketers to understand the most effective channels and tactics and allocate budget accordingly. There are several types of attribution models, including last-click attribution, first-click attribution, linear attribution, time decay attribution, and others.
- Forecasting: It is a method used to predict future market trends and customer behavior based on historical data and statistical models. It helps companies to make informed decisions about resource allocation, product development, and marketing strategies by providing a predicted estimate of future market conditions.
- Clustering: Customer Segmentation or clustering is used to segment a large and heterogeneous market into smaller and more homogeneous groups based on similarities in customer behavior and preferences. The goal of clustering is to identify natural groupings in the data, which can be used to target different customer segments with personalized marketing strategies. This helps companies to better understand their customers, increase marketing efficiency, and improve customer satisfaction.
- Competitor Analytics: This is the practice of gathering and analyzing data on a company’s competitors to understand their marketing strategies, target audience, brand image, strengths, weaknesses, and overall market position. This information can be used to inform a company’s marketing efforts, its product development decisions and help identify opportunities for differentiation in the market. Competitor analytics can include monitoring competitor marketing activities, tracking competitor prices, analyzing competitor advertising and promotions, and evaluating customer perceptions of competitors.
- Anomaly Detection: Anomaly detection techniques are used to identify unusual patterns in customer behavior, sales data, or marketing campaign metrics, which can help companies identify opportunities to optimize their marketing strategies.
Important KPIs/Metrics to Measure Marketing Performance
This section focuses on providing important KPI metrics that measure Marketing Performance so that companies can constantly keep track of their performance. The important KPI metrics are given below:
1) Sales Revenue
Sales Revenue is defined as the income that a company generates through its product/services. It is one of the most important KPIs because companies must monitor it regularly to ensure that their sales are exceeding the expenses they incur through their Marketing campaigns.
2) CPC (Cost Per Click)
Whenever a potential customer decides to show interest in a product/service offered by a company, that customer becomes a “lead”. CPC is the relationship between the amount of cost incurred by the organization to convert a customer into a lead. Mathematically, CPC is calculated by dividing the total amount of money spent by the organization to run a Marketing campaign by the total number of times a click occurred.
3) Online Marketing ROI
Online Marketing ROI depends on the relationship between Reporting and Analytics. It is the measure of the profit or loss that a company generates depending on its Marketing campaigns, concerning the money the business invested in those campaigns. It helps Marketers understand whether their investments are worth from the Marketing campaigns. The ability to analyze website traffic and convert it to valuable reports is an important KPI for determining the success of the company.
4) Form Conversion Rates
Form Conversion Rates are the rates at which the content produced by the Marketing team in a company drives traffic to the website of that company. This is also known as Content Marketing. Content Marketing is something that always requires to be optimized regularly. Once companies get a hang of the trends in the conversion rates, they can make effective decisions.
5) Social Media Reach
Social Media Reach is the KPI that measures the number of leads a company can get through its social media pages. If the Marketing team knows how each social media network functions, they can analyze which platform works for their business. This way they can improve Social Media Marketing techniques.
6) Cost of Customer Acquisition (COCA)
The Cost of Customer Acquisition is the cost involved in convincing a customer to buy the product or service of the organization. Mathematically, COCA is calculated by dividing the total Marketing investment by the number of customers acquired.
COCA is an important KPI as once the COCA is determined, the Marketing team can set their goals according to the number of customers they want to acquire and allocate the budget accordingly.
7) Website Traffic
Website Traffic represents the number of people that visit the organization’s website. These customers can turn out to be potential leads. Getting to know these customers is what makes up Website Traffic. It can help you understand what customers are searching for and what products/services they are interested in.
Whenever a potential customer is interested in the product or service an organization provides, he becomes a lead. Having more Leads increases your chances of acquiring more sales, thereby generating more revenue. In general, there are 2 types of leads:
- Marketing Qualified Lead (MQL): An MQL is a lead that is more likely to become a customer as compared to the other leads. They have decided that they are deeply engaged with the organization’s product/service but have not yet become fully-fledged customers.
- Sales Qualified Lead (SQL): An SQL is a lead that the Sales team has accepted to have a direct sales follow-up. SQL’s have been determined to have a high probability of becoming customers.
9) Customer Lifetime Value (LTV)
Customer Lifetime Value (LTV) represents the cost that each customer has to the organization. It helps to understand how much your customers are worth to you. It is an important KPI because it helps to determine the company’s ROI, and plan the companies future goals. LTV is determined by multiplying revenue that the company makes, the gross margin, and the average of any repeated purchases the customer makes.
10) Click-Through Rate (CTR)
Click-Through Rate is a KPI that measures the number of clicks advertisers receive on their advertisements. A high CTR is important because it directly affects the Quality Score and also reduces the cost incurred by you when someone clicks your advertisement.
11) Marketing Revenue Attribution
Marketing Revenue Attribution is the process of matching the revenue generated by customers onto a specific Marketing output. It helps improve the ROI, optimize the work and add all the relevant data to the correct destinations.
12) Cost Per Lead (CPL)
Cost Per Lead (CPL) is a Marketing pricing model where advertisers pay a fixed price for every lead they get. CPL is commonly used in the E-Commerce industry by companies that sell high-value products. CPL can be calculated by dividing the total money spent on advertisements by the number of times a lead was generated.
Overall, by following these KPIs, organizations can convert the customers into leads and that will ultimately boost sales and performance of their product.
What is the Impact of a Successful Marketing Analytics Program on a Company’s ROI?
The impact of a successful marketing analytics program on a company’s return on investment (ROI) is significant. By utilizing data to inform decision-making, a company can make more effective use of its marketing resources and achieve better results.
Advantages of marketing analytics include:
- Establishing credibility through a professional and data-driven approach to marketing
- Streamlining processes and saving time and money through integrated reporting and analytics
- Driving faster revenue growth through improved accuracy in forecasting and more effective marketing campaigns.
Investing in marketing analytics has been shown to lead to a 5% increase in returns on marketing investments and over 7% higher growth performance while also freeing up 15-20% of marketing spending.
Types Of Softwares Enabling Marketing Analytics
With the help of Marketing Analytics Software, you can quickly organize, collect, and correlate valuable data quickly. This allows marketers to make real-time campaign optimizations.
Modern Marketing Analytics platforms are known for the speed at which they can process and store massive amounts of data. A primary drawback of having access to such a huge volume of data is that marketers cannot possibly parse through it all fast enough to make real-time optimizations.
This is where modern analytics platforms come into play, allowing marketers to adjust ad or creative placement as needed before the campaign ends. This helps enhance potential ROI (Return on Investment). These solutions also allow you to enjoy the following features:
- Brand Measurement Capabilities
- Contextualized Market and Customer Insights
- Real-time Insights and Analytics
- Granular, Person-level Data
- Annual Media Plan Recommendations
- The Ability to Correlate Offline and Online Attribution Metrics
There are multiple marketing analytics tools available, namely:
- Google Analytics
- The AdWords Performance Grader
- Heap Analytics
How to Start the Marketing Analytics Process
Here are the steps you can follow to get started on the Marketing Analysis process:
- Understand What You Wish to Measure: There are various aspects of a Marketing Campaign that can be measured: leads captured, conversion rates, and brand recognition are a few examples. You need to understand the problem you are trying to solve or insight you are trying to extract when you are beginning to analyze your data.
- Set a Benchmark: Understanding what a successful campaign looks like, will help determine the metrics and type of data that will be collected by marketers. For instance, if your goal is to increase brand awareness, the success benchmark might be an increased percentage of brand loyalty depicted in a customer panel, instead of an online impression or click.
- Access Your Current Capabilities: You need to get an idea about where your company stands right now. Understanding the weak points of your company can help you strengthen your program and boost efficiency.
- Use a Marketing Analytics Tool: Marketing Analytics tools will increase in significance as consumers continue to grow more selective and datasets continue to grow. An advanced platform typically helps identify the messages that resonate with your target audience and the types of media that will convert. This provides a comprehensive view of which campaigns are successful and which ones are underperforming in real-time.
Best Practices for Marketing Analytics
Organizations can use Marketing Analytics and its techniques to monitor their campaigns and optimize their processes to make those campaigns effective. In this section, we will explain 6 best practices that organizations can use to utilize Analytics and boost their performance:
- Create Separate Dashboards: Suppose an organization is running multiple ad campaigns simultaneously, it will make Marketers confused if they have all their entries on a single dashboard. Marketing Analytics helps avoid such confusion by allowing the Marketing team to create separate dashboards for each campaign and pull the main points from each campaign into an overarching Marketing dashboard to allow them to better organize their data.
- Compare YOY (Year Over Year), not only MOM (Month Over Month): When dealing with Analytics, only following a MOM scheme is not preferred because many businesses go through different changes every month, so the analysis can have errors. It is always advisable to also have a YOY Marketing Analysis along with MOM Marketing Analysis. It will give a much clearer picture of the performance.
- Plan A Segmented Approach: Organizations need to have an individual and personalized approach whenever designing any Marketing campaign. Analytics helps segment different strategies and deliver content to the right people at the right time. By segmenting ideas and decisions, Marketers will have a better idea of which campaigns are performing better and also decide when to invest in what campaign.
- Constant Monitoring: Analytics need to be monitored regularly to spot trends, errors, and optimization points along the way. Only if you monitor the Analytics constantly, you can utilize the opportunities when they come and improve performance, and adjust budgets.
- Patience is Key: When designing any Marketing Campaign, the Marketing team needs to give it time to improve. Many businesses stop analyzing a campaign when it does not perform and shut it down. Give the campaigns time, and once they stabilize over a period, Marketing Analytics can optimize them efficiently and accurately.
- Plan all Activities according to the KPIs: All the campaigns must be designed and planned to keep all the KPIs in mind. Each campaign likely has a different KPI that it is focused on, but many businesses lose sight of the KPIs as the campaign progresses. Not every campaign results in success and the KPIs decide which campaigns are successful and which aren’t. Hence, it helps to monitor the KPIs regularly to identify areas of opportunities and ensures that the campaign proceeds in a smooth manner.
Marketing Analytics FAQs
Here are the most common marketing analytics FAQs:
What skills are required for marketing analytics?
Skills required for marketing analytics include knowledge of data analysis, statistics, and marketing, as well as proficiency in data visualization and analysis software.
How is marketing analytics different from market research?
Market research is focused on understanding customer needs and preferences, while marketing analytics is focused on measuring and optimizing marketing performance.
What are the challenges of marketing analytics?
Challenges of marketing analytics include data quality and consistency, ensuring data privacy and security, and choosing the right analytics tools and techniques.
What is the future of marketing analytics?
The future of marketing analytics is expected to be increasingly data-driven, with more advanced technologies and techniques for collecting, analyzing, and using data to inform marketing decisions.
This article provided a comprehensive analysis of Marketing Analytics and its importance to various businesses. It gave 4 key steps that companies can use to incorporate Analytics into their Marketing processes and gave the popular KPIs which companies can use to improve their Marketing Performance. It also talked about the best practices companies can use to utilize Analytics to boost their performance and also highlighted a few limitations of it. Overall, Marketing Analytics gives a 360-degree view of a business that governs all the business operations. It optimizes and prioritizes time and resources so that an organization can make effective decisions to boost its performance.
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