Iterative Marketing Podcast Ep. 6: Marketing Optimization

Iterative Marketing Podcast Ep. 6: Marketing Optimization


Hello, Iterative Marketers!
Welcome to the Iterative Marketing Podcast where each week, we give marketers and entrepreneurs
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of your fellow Iterative Marketers. Now, let’s dive into the show! Hello and welcome to the
Iterative Marketing podcast. I’m Steve Robinson, and with me, as always,
is the witty and charming, Elizabeth Earin. How are you doing today, Elizabeth? I am good. You always say such
nice things about me. I have made a list in advance! What are we talking about today? We are talking about optimizations and I think this is a really
important episode for our podcasting. They are all important, but this
one, I think, is especially important because, you know, we kind
of joke around amongst ourselves but really, optimization is what makes — puts
the “iterative” in Iterative Marketing. And that’s actually the
title of today’s podcast: “Marketing Optimizations:
Putting the Iterative into Iterative Marketing.” When we talk about optimization, I think that that word kind of gets
banded around quite a bit in marketing circles, so what are we talking about when
we are talking about optimization? I think that’s a great question. And we are talking about making these
incremental improvements over time and really working to identify ways
that we can make something better and taking action to
make that happen. Another key point of optimization
is it’s incremental improvements but it’s changes that are informed by
some sort of data or experimentation. Or some input gives you more
information that allows you to determine whether something is working
well or working more poorly and do more of what’s working
well and do less of what’s not. Exactly, and that’s what we,
as marketers, want to do. Why do we optimize?
Why is this so important? Well, I think if you don’t optimize, you
are leaving opportunities on the table. And obviously, if you have a chance to
improve something, you want to do that. And when you look at that exact moment
in time, and optimization helps you do that, but it takes it a step further because your
optimizations are actually compounding over time. And so, when you fail to optimize or you take a program
and you set it and forget it you are not just missing out
on that one optimization, you are missing out on
all of the future growth that you could have been getting
and receiving, had you made that change. Yeah. I think that compounding thing is key.
Because if you are doing it right your optimizations can have
an impact far into the future. And then any optimizations
you make in the future are actually optimizing on top of the
optimizations that you have made in the past. And so, just like you were
probably taught in grade school about interest compounding
in a bank account your incremental improvements for
optimizations of your marketing programs can actually compound over time
and add onto each other to the point where you can make amazing
gains from where you started in a given program. Definitely. I think the other thing that
optimizations give you is marketing is really hard
to justify sometimes. Sometimes it’s really hard
to connect the dots all the way from, “We engaged in this activity,”
and then the results for these dollars on the other side. Sometimes we can make that
leap in a very logical manner. Other times, it’s a bit fuzzy, and sometimes it’s
impossible to do it all, especially when you have got
complex distribution channels in the mix. By doing optimization on an ongoing
basis, it gives you something to talk about something to report up the chain to
explain where your efforts are going and how you are continuously improving
in the results that you are producing even if you can’t necessarily connect
the dots all the way to the other side. So if you are doing optimization it has the opportunity to, essentially,
kind of make you look good as a marketer. And that’s what we are looking for. I cannot think of a single study
talking about marketing and what marketers are focused on
and concerned about where showing ROI and showing value is not
in at least the top three. And that’s me not wanting
to make up a fact here. I think, usually, it’s in
the top one or two. And so, this is something that marketers
across the country, across the world really are looking for ways to do. And so, to your point, when
it’s hard to connect the dots being able to show and report on
improvements is another metric that we can show our executive teams
and our C-suites and our shareholders that we are adding value
to the organization. And I think it’s important when
we talk about optimization that we explain, this is more than just
A/B testing or conversion rate optimization. I mean, there are certainly other
practices out there in marketing that encompass bits and pieces or parts of what
we are talking about when we talk about optimization but this is a little bit
more of a holistic, overall, continuous improvement
of your entire marketing program. Yeah. I think that’s a really great point. When we are talking about conversion
rate optimization, that, specifically that’s the mechanics of what
it is that we are trying to do. And a lot of the
same principles apply. The difference when you start
looking at optimizations is that we put a little bit more
thought into the metrics and really, finding that way to
connect our revenue back to the metric and the metric to the revenue. Or maybe — I’m not sure how many
ways that gets connected but connecting revenue and metrics
is really the main point there. And so, that’s one of the
ways that that really differs. Yeah, when you’re talking about conversion rates I mean, conversion rates is
when you get people onto a website and then they convert into a lead or a sale,
and that’s a quantitative thing. We will talk more
about this later, but we take that
one step further and we make sure that we are
looking at the quality of those conversions. The other way I think that we differ
from conversion rate optimization is that, within Iterative Marketing,
when we are focused on optimization, we are focused on creating
optimizations that are portable meaning we can take this optimization
from where we glean that insight, say on our website, and apply
it over to another media whether that’s a billboard or a
TV commercial or a print piece, some place that, in and of itself,
it’s a hard place to do optimizations. We want to create optimizations that can be
learned in one medium and then applied elsewhere. So, let’s take a second here and talk
about some of the must-haves that we need to make
our optimization successful. What is it that we need to
do before we try to optimize to ensure that we are setting
ourselves up for success? I think that there’s a couple of
different things that we can do, and a lot of these tie into the
six components of Iterative Marketing — I am sorry, the six fundamental
truths of Iterative Marketing. The first being that we really want
to be trying to optimize a program that’s sustainable and repeatable. It can’t be a one-off campaign and the reason is that
we need data to analyze and we need time
to analyze that data as well as time to
make the optimizations to see if they are
having an impact. And you can’t do that with a
one-off campaign that’s time boxed. And so, keeping true to the fundamental
truth of sustainable and repeatable programs. Yeah. If you try to do this
in a very campaign way then by the time you
have generated the insights, the optimizations that
really make an impact, you are on to the next campaign
where they may or may not apply. You may be onto a completely
different market segment. You may be onto a completely
different audience and then any optimizations that
you made are inapplicable. And so the key is to set something up
that you can run as continuously as possible so that those optimizations
move from point to point. And I think it’s also important we talk about
setting something up as small as possible because the fewer moving
pieces that you have, the fewer moving parts that you
have in your marketing program the easier it is to
make those optimizations. And that’s not to say that it’s not
going to get more complicated later. It’s not going to
get more complex. This tactic over here is going to
support this other tactic over there. That layering can
be done later. But if you delay some of that layering,
you have two advantages. (1) The optimizations that you make
early will now inform the decisions as to which tactics
you apply later. You figure out which channels
or which content resonates. Those are the channels and content
that you expand upon and build upon. And then, (2) it makes those
experiments early in the program where you are still
filling out your KPIs and you are still trying to figure
out really what metrics matter and how we’re measuring this and
making sure that all that stuff is working. It makes that stuff much easier because you don’t have all that many moving
parts getting in the way of your optimizations. And I think that leads into kind of the
third way to really set yourself up for success and it comes back to
that measurement part. And measurement really needs to be —
and feedback really needs to be something that you plan for in advance.
It should not be an afterthought, so you really want to bake that into the planning
in terms of what tools are you going to be using? What KPI’s are you going to measure
and how are you going to measure them and then also being flexible to kind
of adjust that as you move forward. Flexibility is key. And not only do you have
to bake in the KPIs and the measurement but now you also have to bake in the
resources to take that data in and analyze it. And so you need to identify
who on staff is going to do that or which one of our partners
is going to do that. You need to identify how much resources do you
need to set aside for making these optimizations because if you are optimizing creative,
somebody has to produce that creative and there’s going to be a cost, whether
internal or external, to do that production. If you don’t set aside the money,
then you might realize “Well, if we do this, that, or the other, we can improve
the effectiveness of that campaign two fold but we don’t have resources for
the production, so we can’t do that,” and that’s a horrible position to be in. So, setting aside resources for optimization,
both in terms of creative needs and analysis, that’s one of the other things that
you definitely want to have in place. And what I think is interesting about each
of these that we have now talked about, these four points, is that they all
kind of build on each other. They have led into each other very
well because they are all connected. And that kind of leads us to
the fifth key to success here and that’s setting realistic expectations
with your stakeholders. Yeah, and this is both
an important prerequisite and one of the huge benefits that
comes out of Iterative Marketing. If you are doing this sort of iteration
and optimization and improvement over time you need to make sure that your
stakeholders understand that that’s your goal, that your goal is not to
come out of the box, and pardon the sports analogy,
but hit it out of the park. Your goal is to come out and
learn and incrementally improve and, at the end of the day, have a
marketing program that would far exceed the possible outcome of something
that you had engineered in a vacuum, in a box and just throwing
out to the world, but you have to set the expectations with
the stakeholders that that’s what you are doing. The nice thing is if they understand
that that’s what you are doing then that’s what they are going to be
looking at your performance against, and so they are going to be
looking at you, looking for the insights, looking for the incremental improvement, which is a lot easier to prove
than it is that, “You know what, we guessed on 15 different things and boom! It managed to produce
some great results,” instead of, “We guessed on one
or two and here’s what we learned and here’s how we are improving.” A lot easier bar to reach
with your stakeholders. Very valid point. So, I think we are at a
good point here for a break, so why don’t we talk about how
we are going to help some people. Before we continue, I would like to take a quick moment
to ask you Iterative Marketers a small but meaningful favor. We don’t have sponsors for this podcast. Instead of asking you to get a free digital scale
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and click the Share a Cause button. We want to support what’s important to you. And we are back. So before the break, we talked
about why optimization was important and what you really need in
place before you could optimize. Now, we are going to get
into the real nitty-gritty of this and talk about how you go
about making these optimizations. When we talk about optimizations, there are
really two key areas you can make optimizations. One of them is in your creative,
or the content that you are producing. You can produce better
creative that performs better. And two is in the channels
of delivery of that content. You can make optimizations in how you
are getting that content to your audience. I think, Elizabeth, it makes sense for
us to talk about the content portion first. What do you think? I think that’s a great place to start. And when we talk about
content, we talk about creative and making these optimizations. We want to ensure
that our content is resonating within our audience. We want to make sure that we are
getting the right message out to the right people. The question is
how do you do that? And I feel kind of like this
is the million dollar question because this is what marketers
are thinking about every single day when they are working
with their creative teams. And there’s a way that we can
do this by identifying some KPIs. And so I’d like to spend the next couple of
minutes kind of going over some of the different ways that we can measure and optimize our creative
in our content and what we can expect from that. I think it really depends. When you talk about KPIs, it really depends
on what type of content you are creating. If we are doing our jobs for
creating content that really has, if not singularly, at least
a primary focus, right? We create content that tries to
accomplish in general one of three things: We are either trying to evoke action;
or we are trying to persuade or inform an audience
about some specific thing; or we are trying to generate an awareness
for our brand and taking that one step further, generate some feelings to
be associated with our brand so that we can create an emotional
connection with our audience. And our KPI is different for each one. Now, I will say that when
we look at optimization we are usually most focused
on the evoking action piece because that’s really
the easiest to optimize. If we are asking our audience to
do something, we can then measure if they did it, pretty straightforward. When we are asking our audience
to learn something or know something now it gets a little bit trickier to test. When we are getting our audience to feel
something, that we haven’t figured out yet, but one of these days, we’ll be able
to tap into people’s brains directly and extract what they are feeling about stuff
but we have got a ways to go on that. So in terms of evoking action, you
mentioned that this is the easiest to optimize because we are asking
them to take a specific action. We are asking them to click on a button.
We are asking them to fill out a form. What are some of the KPIs that we can
use to measure that, specifically? Usually when you are defining a KPI, you
want to try and get as close to the money as possible. So if you think about it,
what are the steps that that person takes if they click on form, then if they fill
a form, then that generates a lead. And then that lead
ideally converts into a sale, but not all leads
are created equal, so you want to make sure that you are
measuring both the quantity of leads that that lead form is creating
and the quality of those leads and those two metrics combined are really
what gives you a full picture of the revenue that you are adding to creating. The same thing
is true with sales. So if you are an e-commerce site, you
really want to look at, “Am I creating sales that add to a lifetime value of
those customers, not just short-term sales?” Basically it just comes down
to quantity and quality. And then in terms of informing them
or changing their perception what are some of those KPIs that we can really
focus on and see if we have moved the needle? These are usually more
assist type actions, right? So if I am informing or persuading, I am
changing some perception in our buyer’s mind, what that’s going to do is it’s going
to reduce friction in the sales process. And so in those instances, we are really
looking at things like time to close or close rate, we are looking at sales,
the size of the sale or how quickly, a cart abandonment
rate if you are e-commerce. Those are the type of situations where you
can really see whether or not your “inform or persuade” type of
content is being effective. And then our third point that we mentioned,
evoking a feeling that drives awareness, you mentioned this but this is
one that’s almost impossible to optimize on as it’s hard to isolate your brand. It’s never – No one’s living in a bubble and so there’s other factors that are
going on out there, either advertising-wise or their own personal interactions
or through social media. And so this is one that’s
very hard to optimize for. And this kind of leads
into the next point, but when you are doing your optimizations,
the key is to set up a controlled experiment. We got a whole podcast coming up
here next week on experimentation, so I am not going to
get too deep into it but you are going to want to
set up a Group A and Group B that gets two different stimulus, which in this case, if you are talking
about content, is two different pieces of content, and then measure the response
from Group A versus Group B and you want to control
all of the other factors. Well, when we start talking
about brand and brand content and the feelings that
we are trying to evoke, it’s really hard to make sure that
Group A only gets Group A stuff and Group B only gets group B stuff because your brand extends
far beyond the 30-second spot or the banner ads that
you are putting out there. It extends to word of mouth, and as soon as somebody interacts
with the company in any way, shape, or form, that’s an extension of
your brand as well and so the controls
go out the window. I have heard of brands try to isolate this by putting
two different messages on in two different markets, but then again, you are just throwing out
– you have got a horrible lack of control in that, because you now have two different markets,
that are going to react very differently. And even if you try and swap it now, one has seen one brand message first
and then they see the other one second. It just doesn’t work. So, brand is very hard to
optimize on effectively. So, you touched on experiments and I know you mentioned we are
going to get into that a little bit more next week. There’s one more point I want to make
before we kind of move into optimizing our channels. And that is one of the great opportunities
that we have with creative and content is that we can test this digitally
but then apply it globally. And it comes back to the point you made here
earlier about these optimizations being portable. We have got a lot of opportunities within
digital media to test through direct response and through some of these
other KPIs that we have identified that we don’t necessarily
have in traditional media. And so by testing
this through digital, we can then take those insights and apply
them to some of our traditional campaigns, like billboards, and like TV and like print. And we are getting more
into that next week, but I think the key there is making
sure you are setting up the right experiment and we will rail on button color experiments next week. How does that sound?
– Wonderful. I think that pretty much covers
it for the creative and content, that really – so that’s really half the battle
when it comes to optimization. If you can get the right content, the content
that truly resonates, you are halfway there. And now we need to make sure that we are
getting it most effectively in front of the right people, and that’s where optimizing
your channels comes in. And a lot of this is done through
direct response advertising, which to our point earlier,
that brand is little — a little harder we can then carry that over
to brand advertising as well, but as I mentioned earlier, direct response
gives us those immediate actions that we are able to measure it
and determine if it worked or not. Exactly. The stimulus in your response,
we ask somebody to do something, we measure if they did it. The key we are looking at in channel is, okay,
at what rate did they follow through into it? Because if we have done our job
and crafting good content and content that really resonates
with a defined persona or audience, now we know whether we are hitting that
audience based on the rate at which they respond. If we are hitting the wrong audience, we will see right away they are
clicking on the ad, they are converting or maybe if they are converting. we are
getting junk leads or low dollar value sales. So in that case, we have got a miss
for not hitting the right people. If they are converting at a high rate,
they are clicking on our ads at the high rate, they are converting
when they get there and it’s good quality conversions,
good leads, good sales, good lifetime value, whatever metric we need
to do on the quality side, then we know that we getting
the right people at the right time. And that can then be applied over to that brand
advertising that otherwise is very hard to optimize on. If we are able to identify a channel that our
direct response ads are evoking responses to, then we can make the assumption,
a very educated assumption, that we are in
the right channel, and so that’s a great place to
put our brand advertising as well. The important thing to note, though,
when we are doing this analysis is the key metric, the metric that trumps all other metrics is
what was our cost for each one of those actions. So, it’s really easy to get hung up
on what is our click-through rate, what is our conversion rate, etc., etc., but that totally takes out of account
how much did we pay for that to happen. Because you can find that you have
channels that perform really well, they are just not cheap and you can find that you have
channels that perform fairly poorly but they are so inexpensive
that it doesn’t matter because we end up compensating for that just
in sheer volume of traffic that we are able to generate or eyeballs that we are
able to get in front of. And so you want to take your cost
you invest in a given channel and then divide that by the number of
actions that you get that are desired actions and maybe some quality
threshold on those actions, so only sales that are above
a certain dollar amount, only leads that the sales department
comes back and says are grade A or better or something like that and then calculate your cost
per action and that’s your key metric, that’s the metric to be on metrics. So, we have talked about kind
of why we want to optimize our channels and we have talked about what
it looks like when we are successful, but how do we actually go
about optimizing our channels? There’s a couple of different
ways you can do this. So I think that when you are
looking at direct placements where we call up publication X, Y, Z
and we say that we want advertise, whether it’s print or online or however, there you are
really pitting publication against publication, and that kind of gets
back to last week where we talked about the difference between
buying ad space versus buying the audience. If you are buying ad space, what you are trying to
evaluate is this ad space better than this other ad space, and so there it’s
an either/or scenario. But then if you
are buying digitally and you have the ability to target where
you are targeting your individual audience, whether it’s demographically or behavioral based on
third party data sources of what their interests are, now you have the ability to pick one particular
targeting method against another targeting method. And are there any other ways that
we are able to optimize our channels? Absolutely. The other key things
to look at are ad format. So the question is, should this
be video or should this be text. There is an additional production cost
associated with creating an animated banner ad. Is it worth it to create
the animated banner ad? Well, let’s try it to see
what the results are. The key is to have that controlled
experiment we will talk about next week, and the other key is to make sure that
you are using roughly the same creative when you are doing these split tests, because if your message varies wildly from
version A to version B it’s not really a fair test. Or if your message varies between
publication A and publication B, it’s not a fair test either. So, you have to be controlling
the creative and content and making sure that’s the same if you want to be able to analyze which channel
is going to produce more value than the other one. I think those are all great points and I think we have probably
given our listeners a couple of ideas and some new ways that they can
work to optimize their channels. Before they go off and start
trying this on their own, I think there is one point we
would really like to share and really hope to make clear to everyone
is that we sometimes fall into this mental trap and we want to caution you
against doing this and that once you have identified that
superior content or that superior channel for some reason we
have a hard time letting it go and I have seen this happen
over and over again with clients. I know you have
seen it happen, Steve, and we had a client a few months back that
actually had said this doesn’t make sense to be here, and they are like, “Well, let’s just leave it on and see what happens.” I am like, “No, you are literally throwing
money away. There’s nothing here.” And they wanted to keep it going
because we have a hard time letting go, especially when there may still
be people on that channel. When I think – you often bring up a good question
that we like to ask the clients is that, yes, there are still people on that channel
but is your budget unlimited? Because there’s an opportunity cost
associated with staying on that channel and the question is if I had the same
amount of money to spend elsewhere, is there another channel where I can
get more bang for my buck? I don’t know. I really don’t understand exactly
what psychological trigger is here, but I think we are all apt to fall victim
to not wanting to lose what we already have. And so if we have a channel
that addresses a certain audience, then the idea of taking
that channel away, regardless of whether we are going to replace it
with something that performs 20% better or 30% better, you are still taking something away. And we have to get past
that trap and get over that and realize that it’s dead weight,
it really is. Even if it’s performing, you have an opportunity
cost associated with continuing to invest in it and you need to move your
money elsewhere. I think that does it pretty
much for this week. Next week, we really, really get into
the nitty-gritty of experimentation, which is sort of a prerequisite
to doing this optimization, but it made sense to outline
the broader optimization first. So, I look forward to joining us —
for you joining us next week. And until then, have a great week! Bye! If you haven’t already, be sure to subscribe
to the podcast on YouTube on your favorite podcast directory. If you want notes and links
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and our community LinkedIn group, where you can share ideas and ask
questions of your fellow Iterative Marketers. You can also follow us on Twitter. Our user name is @iter8ive or email us
at [email protected] The Iterative Marketing Podcast is
a production of Brilliant Metrics, a consultancy helping brands and agencies
rid the world of marketing waste. Our producer is Heather Ohlman
with transcription assistance from Emily Bechtel. Our music is by SeaStock Audio,
Music Production and Sound Design. You can check them out
at seastockaudio.com. We will see you next week. Until then onward and upward!

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