Digital Marketing Optimisation: Part 1

In my last column I looked at the concept of “data driven marketing” and outlined what I believe to be the for key components for successful data driven marketing, namely:

  • Philosophy
  • Processes
  • Data
  • Technology

At its heart data driven marketing underpins the drive towards optimisation but optimisation is one of those words that’s used a lot but often means different things to different people. A bit like segmentation, engagement and so on. So in this series of columns I thought I would offer my take on optimisation, what is means and how it can be achieved.

I first came across “optimisation” as part of my college degree course. It was presented as a mathematical problem; how do I maximise a desired outcome given a set of certain constraints? This is the way I have tended to think about optimisation ever since, particularly when it comes to marketing optimisation. My desired outcome will be things like orders, revenue or profit and my constraints will be things like money, time and resources. The challenge is to maximise the return on investment in marketing.

The problem with this purely mathematical approach to optimisation is that often the problem is too large or complex to solve easily. You need to understand and define the relationship between all the variables (such as sales and advertising) and then use the mathematics to determine the optimal allocation across the various inputs. The challenge is that there are often too many variables and the relationships are too complex to be solved easily. The approach then is to chunk the problem down and iterate towards a solution. This is where the components of data driven marketing come into play.

In the digital world the ultimate goal of many marketers is to maximise customer lifetime value and to allocate the resources available in such a way to achieve that. The issue is that things like customer lifetime value can be difficult to define and to measure and marketers may not have the ability to efficiently manage all the resources appropriately. The intent may be there but the ability to execute may not. As a result we break the overall process into smaller processes and we need to begin to think about how we can optimise individual separate processes rather than the complete value chain in one go.

We already think about digital marketing as three separate processes, namely:

  • Acquisition
  • Conversion
  • Retention

Sometimes these processes can be too separated with little joined up thinking between the three. Having said that, for the purposes of optimisation and given the constraints of data and technology, it probably makes sense still to use them separately as the basis for our optimisation strategy. However, it is useful to bear in mind that what we are trying to so ultimately is to maximise the allocation of resources and investment across the whole customer lifecycle.

So what problems are we trying to solve? In acquisition we are trying to optimise our campaigns to increase the propensity of people to visit a website and engage. This is an area where there has been a lot of focus over the years and where technology has made a significant impact in either allowing marketers to iterate through the cycles more quickly or where the technology effectively automated the optimisation process. However, I think that the goalposts are moving and the problem set is changing and increasingly marketers need to be looking to optimise in a different way.

When it comes to conversion what we are trying to do is to increase the likelihood of some desired outcomes, whether that is an order, a registration and download or telephone call. Here there has been a lot more attention given over the past couple of years and where analytical technology has evolved to help marketers understand how to improve site architecture and design. There is more work to be done in this area though and the technologies and the processes to manage them need to be more widely adopted.

With retention marketing what we are looking to do is to increase customer value. Here we are talking about maximising on the investments that have already been made in acquisition and conversion so that we don’t have to make those investments again. With a few notable exceptions I don’t think that many organisations are focused on this area at the moment.

Over the next few columns I’ll take a look at optimisation is more detail, looking at acquisition, conversion and retention and examining the philosophy, processes required and data and techniques available to maximise the effectiveness these individual processes. Till then…

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