Agencies Marking Their Own Homework

This week I’ve been reminded of a phrase that follows all agencies around. I asked a charity to upload all of the donors they’d recruited since the drop date of their last Direct Mail campaign. I wanted to show them how many people had received a DM pack a few days before Paid Search took the credit for a donation and what impact the DM campaign had on their web traffic.

“Ooh no,” they said. “We don’t like agencies marking their own homework. Our analysts will report on performance.”

The implicit mistrust in that statement is not entirely unjustified. Some agencies may want to prove they’ve done a great job more than they want to learn from their actions. Plus, an agency never reports fewer sales than in-house analysts see. Ever. It’s easy for a client to assume we’re all on the take.

“If I added up all the sales that all my agencies gave themselves credit for, I’d have twice as many sales and could retire,” as one CEO put it to me a few weeks ago.

And they have a point. Everybody knows that last touch attribution (where a sale is credited to the last thing a buyer did before buying) overstates the impact that some channels such as paid search are having on results and CPA. So we turn to fractional attribution. This tool is used to reallocate some of those sales from one channel to another, giving a clearer picture of how each channel is performing. But there’s just one problem, clients rarely do it.

Why not? Because it’s hard. It’s hard to get all your assumptions right. And it’s hard to reach agreement amongst a team of siloed marketing managers on who should lose their sales and who they should be given to. It’s like redistributing Christmas Presents amongst siblings.

As a result, Agencies do it themselves. But they claim ownership of extra sales for their activity without subtracting those sales from another agency’s channel. It’s not their fault, they are only looking after their bits. And that’s how we end up at our CEO’s statement above.

So clients should do their own fractional attribution but how do you get them to do it? The answer is: don’t.

Fractional attribution is not the final word in understanding the true value of your media investment either. Not by a long chalk. It’s based on subjective assumptions and has absolutely nothing to say about half the channels in the media mix. So we have a bigger problem. And if we find a way to fix that one, we don’t need to worry about making clients do fractional attribution themselves.

And the good news is, there’s already an answer to this bigger problem. The answer lies in putting all your data feeds into one place, supplementing those feeds with tags from your website and piling in lots of clever algorithms. Those algorithms will sort through your data and figure out what the most common customer journeys look like. They will, for example, show you how many people do a Google search after seeing an email or an SMS (instead of just clicking straight through). Fantastic.

They will also tell you which method of contact is the most likely to convert to a sale in any given circumstance. ‘Best next action’ as it’s known can dramatically increase conversion rates and reduce the time an individual spends in the funnel. Great.

You can even set up triggers so best next actions happen automatically 24 hours a day.

Throw in Media Mix Modelling, and your new platform will now tell you what happens across all your channels if you increase or decrease spend in any one channel. You will have yourself a live “Return on Marketing Investment” (ROMI) figure for every channel and can optimise the mix to your heart’s content.

Bloody marvellous. Where do I get it?

Erm, well… Your agency.

I know, I know, I can hear you saying it already – weren’t we supposed to be avoiding letting agencies mark their own homework?

Well kinda, yes. But here’s the thing, you only have to use one of them to do it. The one you pick shouldn’t have a shiny black box. They should be able to open up their system and show you the data underneath. If you fancy having a crack at customising some of the algorithms, with the best of luck to you, you should be able to do that too.

And if you can find an agency that partners with an independent to deliver this work then you’ll have an entirely, well.. independent scoring system. Not only that but you’ll have found an agency that believes the right answer is always better than the answer that makes them look best.

What’s more – you already know where to find me.