The Time is Now for Brand Building – And Upper Funnel ROI

The recent recession has been difficult on everyone -- consumers, manufacturers, service providers and marketers alike.  And we have witnessed reactions that are as varied as the groups that have been impacted. 

The reaction from marketers has been both predictable and pragmatic.  They have focused their limited, highly-scrutinized communication resources on lower funnel, direct response activities.   With inventories growing, revenues shrinking and consumer sentiment falling off a cliff, it is easy to understand the need for this approach.  Digital marketing efforts have been a beneficiary of this trend.  The combined accountability and real time optimization opportunities which are inherent to digital have been the main reasons for this.  There is nothing like a serious recession to focus everyone on ROI – especially lower funnel ROI.  

But as we start to see the fragile tenants of recovery take hold, it is important to take a step back and remember that only focusing on lower funnel activities is a very short term strategy -- in fact, it is more a tactic than a strategy. In light of this, let me mention two words that have been absent from everyone’s vocabulary for the last 18 month – brand building.  Yes, it is time for all good marketers to start planning brand building activities again.

If there is one thing that good analytics teaches us, it is that every brand needs to build the top of its purchase funnel.  Simply investing in, or harvesting from, the bottom of the purchase funnel will have dire consequences for even the healthiest of brands.  Time and time again, we have seen that solely focusing on lower funnel ROI leads to increased acquisition costs, decreased loyalty and diminished brand attributes.   It is worth noting, however, that analytics often played an unwitting role in this process.  Namely, that it is much, much easier to create a lower funnel ROI model than it is to create an upper funnel ROI model.

Within the world of the good “analysts,” the ability to create an upper funnel ROI is akin to what separates athletes in “Major” versus “Minor” leagues.  To be clear, creating a good, attribute based lower funnel ROI isn’t easy.  But it is much more difficult to create an accurate upper funnel ROI.  Imagination, creativity and a deep understanding of the business vertical are costs of entry for this process.  It often involves more complex modeling or less direct measures than a lower funnel ROI.  Additionally, proving causality -- versus merely measuring correlations -- is more difficult for upper funnel ROI measures.   I have outlined a detailed approach to calculating an upper funnel ROI in previous posts (“Pouring the Predictive Analytics Foundation” posted on February 3 and “It Takes a Village to Drive Predictive Analytics” posted on March 24).

Difficulties aside, every marketer needs an upper funnel ROI.  If you have an analytics or market intelligence department and they are only calculating lower funnel ROIs, then you are only getting half the picture.  Ask them for an upper funnel ROI – and soon! Without this, you may be at a disadvantage as  other marketers start to shift part of their spending back to brand building and are able quantify the impact of what they expect to get in return. 

Here are three ways to get started with a smart upper funnel ROI strategy:

1. Quantify the impact that upper funnel activities have on lower funnel activities.  Spending on brand focused, upper funnel campaigns, eventually leads to an impact in lower funnel activities. Understanding media lag or decay functions by channel will be critical to this process.  

2. Quantify the impact that changes in key brand attributes have on ROI measures such as sales, loyalty or customer life time value.  ROI measures that are more long term, such as loyalty, more accurately reflect the true value of upper funnel activities.  The addition of survey data and holding out control groups to better understand lift are often necessary to quantify these causal relationships.  

3. Attribution between multiple touch points should be accounted for, otherwise several high value upper funnel activities may appear to have a negative ROI, when in reality they are adding considerable value.

Steve Kerho is the SVP, Analytics, Media and Marketing Optimization at Organic (www.organic.com).