As marketing channels have proliferated, marketing has become more of an ecosystem, where the ability to understand the relationships between your customer marketing channels is a critical to understanding your campaign's effectiveness
Minneapolis, MN (Vocus) November 16, 2010
Entiera, a leading software-as-a-service marketing automation provider, looks at one strategy businesses can use to determine the right budget mix for their cross-channel marketing: fractional allocation.
“As marketing channels have proliferated, marketing has become more of an ecosystem, where the ability to understand the relationships between your customer marketing channels is a critical to understanding your campaign’s effectiveness,” said Jeff Hassemer, senior vice president of product development at Entiera.. “If you’ve been able to create a consolidated customer view by tapping into a multi-channel marketing database, you should have a solid understanding of what marketing efforts your customers have seen and how they have responded. But how do you know the best place to spend your budget? For many marketers, one effective answer may be fractional allocation.”
With Fractional Allocation, a marketer can set business rules that account for multiple marketing messages hitting a customer in a specific timeframe. If a catalog was received on Monday, an email on Thursday and a purchase was made on Sunday, both the catalog and email would receive partial credit for the response. How they receive credit is a matter of business rules and discussion within your organization. For example, a particular business may find that direct mail is a higher value driver for the organization.
In this case, the business rule may be something as follows:
- Response within 1 month of send with no other marketing events, 100% allocation
- Response within 1 week, with at least one additional marketing event, 50% allocation
- Response within 2 weeks with at least one additional marketing event, 30% allocation
- Response within 3 weeks with at least one additional marketing event, 20% allocation
- Response within 4 weeks with at least one additional marketing event, 10% allocation
This rule takes into account time as well as additional marketing channels. The complexity of the business rules is determined by the organization and the importance of each channel relative to customer value. The business rules may be fluid over time, but should only be changed after careful consideration.
Fractional Allocation helps to clarify the interaction between marketing efforts and channel responses. It is a more true version of the marketing eco-system than a direct allocation methodology and is an attempt to easily clarify the relationships between marketing events and customer interaction channels. This methodology will allow the marketer to quantify the effectiveness of their multi-channel marketing effort.
Fractional Allocation is both complex and imperfect. Based on business rules, the system relies on human intervention to determine the actual allocation of response to channel and thus is prone to human error. It is a best-guess scenario to understand the marketing ecosystem. In addition, the business rules are too complex to build into a reporting environment; they must be run when the transactions are loaded into the marketing database which increases the complexity of the database build process.
Entiera is the premier provider of the industry’s first On Demand Marketing Platform. As a leading software-as-a-service marketing automation provider, Entiera drastically reduces total ownership costs and deployment times versus traditional marketing solutions. The comprehensive Entiera suite offers campaign management and automation; event-based marketing, marketing analytics and predictive modeling. Entiera was founded in 2005 and is headquartered in Minneapolis, MN with offices in Providence, Denver, London and Bangkok, Thailand.